COMMUNICATIONS BILL UPDATE
No. 4 March 2003
ITC COMMUNICATIONS BILL BULLETIN – HOUSE OF LORDS
The ITC welcomes and supports the Communications Bill, which has been the subject
of extensive consultation with the regulators, the industry and the public. Several
amendments made during the Commons Standing Committee and Report stages arose
from recommendations made by the ITC.
Nominated News Provider
Broadcast news is fundamental to the public’s access to impartial information and to
the democratic process. The ITC strongly supports the Bill’s provisions to ensure that
independent television news is adequately funded, universally available and able to
provide nation-wide competition to BBC news.
The ITC welcomes the Government's commitment to ensuring that the public has
access to a range of well resourced television news services and, in particular, that
news on ITV competes effectively with other television news programmes broadcast
nation-wide. ITV and ITN have recently argued for the abolition of the Nominated
News Provider clauses, which require ITV to source its news from an independent
provider and allow similar arrangements to be triggered for Five if its share of
audiences is broadly equivalent to that of ITV.
The ITC has sympathy with the argument that consideration of these provisions
should be an early priority for Ofcom, but believes the clauses should stand part of the
Bill. ITN’s current status enables it to supply news services to a number of important
outlets, including Channel 4, Five and Independent Radio. As a result, its revenues
and investment in news are nearly three times what they would be for ITV alone.
Audiences gain significant benefit from such critical mass, which is essential to
provide a viable alternative to the news provision of the BBC and to BSkyB. It is also
possible that ownership changes will follow legislation both for ITV and Channel
Five, with unknown consequences for news sourcing.
In recent years, increased competition has led to pressures to reduce investment in
news and move bulletins out of peak time. If Ofcom is to review ownership provisions
for news, it is recommended that extra safeguards be written into the Bill to give
Ofcom tools in respect of investment and scheduling. This would provide the
necessary safeguards in the event of changes to NNP provisions. But it is
recommended that decisions about news provision are best made on the basis of
Ofcom’s assessment and in the light of industry changes once the Bill is law.
Programme Supply Market Review
Following the report of the Pre-Legislative Scrutiny Committee, chaired by Lord
Puttnam, the Government asked the ITC to review the television programme supply
market in the UK, in the context of the Bill’s proposals for deregulation and for
liberalisation of ownership. As a result, the Bill now contains clauses that:
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strengthen the longer term viability and growth potential of the independent
production sector;
safeguard original UK production against the background of the Government’s
proposed changes to media ownership rules;
support production in the Nations and Regions; and
strengthen commitment to training across the sector.
The Bill also now contains powers for Ofcom to agree and enforce new codes of
practice to govern the process whereby public service broadcasters commission
television programmes from the independent sector (Clause 280), new powers of
sanction if any broadcaster fails to meet an independent production quota (Clause
273), and a toolkit of measures which Ofcom may use in the event of a change of
ownership of Channel 3 or Channel 5 (Clauses 344 to 347), including:
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targets for investment in original production as well as hours transmitted;
powers, on a change of ownership, to set obligations for original and regional
production at the level achieved over the past year;
the ability to extend Five’s commitments if the channel becomes a more
powerful force.
As a result of ITC recommendations, the Bill allows Ofcom to apply enforceable
commitments for investing in programmes made outside of London to Channel 3 and
Channel 4, with mirrored arrangements in the proposed new BBC agreement. In its
report, the ITC recommended that these broadcasters be encouraged to find
imaginative ways to develop symbiotic relationships between broadcasters, their own
producers and the independent sector in each major creative centre. The ITC also
supported and endorsed the recommendations of Skillset, the Sector Skills Council, to
encourage training for freelance workers and smaller independent producers.
Independent Production Quota
As part of the ITC’s Programme Supply Market Review, the ITC examined the case
for allowing ITV regional production companies to count as independents when
making programmes for broadcasters other than ITV. We concluded that such a
change in definition runs a risk, at this stage of development of the market, of
swamping the quota and pushing out smaller providers. The independent production
quotas should be readily available to smaller and newer entrants to the market most in
need of support and encouragement.
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Regulation
The ITC welcomes the proposed ‘three-tier’ system for broadcasting regulation. It
enables greater self-regulation for the commercial public service broadcasters in the
delivery of their remits combined with a limited number of robust, objective,
quantifiable measures (e.g., on original production) in Tier Two to ensure that the core
of the remit is delivered. These measures will apply to all public service broadcasters
 including the BBC  and will be increasingly important in providing insurance that
quality will be sustained.
The ITC has now had two years’ experience of piloting this system for the commercial
public service broadcasters. A number of lessons have been learned:
 the importance of broadcasters accepting responsibility  in a self-reporting system
 for accountability to viewers for the delivery of their remits. The Charter for the
Nations and Regions is a good example of this. Through the Charter, ITV has
guaranteed investment levels in the regions; local non-executives on each of the
regional Channel 3 Boards; and viewer panels to provide a direct mechanism for
feedback and accountability.
 the need for clear and distinctive remits for each of the public service broadcasters
which reflect their particular contribution to the overall ecology and the benefits
they bring to the viewer. Although ITV has a number of duties scattered through
the Bill, its statutory remit (Clause 261) still does not adequately recognise its
particular contribution to regional programming and high value original
programming in the schedule (e.g., in landmark drama and entertainment).
Additional competition powers for Ofcom (Clauses 309-311)
The ITC welcomes the Government's commitment to providing Ofcom with the
necessary powers to ensure fair and effective competition in the broadcasting sector.
Ex-ante powers are a necessary third string to Ofcom's bow for the regulation of
broadcasting - alongside concurrent powers with the OFT under the Competition Act
and the Enterprise Act. These additional sector-specific powers will enable Ofcom to
act effectively in the event that there is a strong risk to competition, and when post
facto use of competition powers would be too late to be effective, as when – for
example – there is a danger of market foreclosure. This provision rolls forward the
ITC's current power, which has been used successfully in a number of areas; for
example, to prevent excessive cross promotion and ensure competition in airtime
sales.
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Government powers to disapply regulatory regimes to broadcasters (Clause 259)
Broadcasting has always been at arm’s length from Government and the political
process; hence the importance of independent regulation. In many areas, the Bill
rightly makes changes to the regulatory framework by the Secretary of State
contingent on consulting Ofcom (e.g., for changes to matters to be covered in Ofcom’s
codes on standards). This is an important safeguard, to prevent the Government of the
day being drawn into particular broadcasting controversies. The ITC believes this
would be a useful safeguard to apply also to the Secretary of State’s power to remove
public service obligations from Channels 3, 4 or 5 in Clause 259. It would be
preferable if this clause, as is the case with other provisions for future change, (eg
Clause 267) required the Secretary of State to make these changes in consultation with
Ofcom.
For further information
The ITC will be producing further bulletins on particular aspects of the Bill as it
makes its way through Parliament. In the meantime, if you would like briefing on any
particular aspects of broadcasting regulation, please contact:
Bradley Brady
Tel: 020 7306 7707 Fax: 020 7306 7737 email: bradley.brady@itc.org.uk
MPs or Peers wanting information from Ofcom about any aspects of the Bill can
contact:
Dominic Morris, Ofcom
Tel: 020 7297 2910 email: dominic.morris@ofcom.org.uk
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