Emphasising localness in the PSB system

Published 10|12|10

Executive summary

Introduction

1. This report is a response from Ofcom to a request from the Secretary of State for Culture Media and Sport.

2. At the RTS International Conference in September, the Secretary of State set out further his vision for local TV services in the UK, including making clear his intention to begin the process of redefining public service broadcasting for the digital age.

3. In that context, Ofcom was asked to report on how Government might make changes to todays regulatory system to ensure that enough emphasis is given to the delivery of local content. The Secretary of State made clear that not all Public Service Broadcasters (PSBs) would want, or be able, to be local broadcasters. But he also made clear that he was determined that the system should recognise the public value of those that do. A copy of the letter from Government requesting this report is attached at Annex 1.

4. This report, in seeking to recognise the options open to Government both in the short term and longer term, is structured as follows:

• Section 1 considers the importance of localness to viewers by analysing existing research and evidence.
• Section 2 addresses how the concept of PSB is defined today and considers how this might be amended to place more emphasis on localness.
• Section 3 considers the remits and obligations of the current PSB providers and whether and how far these could be amended to emphasise localness.
• Section 4 discusses whether new providers of local services could be afforded some of the benefits of PSB status.
• Section 5 looks at the potential future evolution of the benefits associated with PSB status.
• Section 6 considers some longer term questions that Government could consider as part of its stated aim to introduce a new Communications Act.

The Governments policy

5. The Government has set out its vision for local TV as part of its wider policy goal of decentralising power across the UK. The Government is seeking to create a strong local media sector, both to ensure plurality and democratic accountability at a local level and because of the potential for new businesses and innovation to emerge.

6. To assist in developing the conditions necessary to make local TV viable, the Government has sought the help of Nicholas Shott, Head of UK Investment Banking at Lazard. In his interim report, Mr Shott has set out his initial findings, including that:

• Local TV is likely to be most viable in areas of high population density.
• Audience demand is likely to be driven by news and information programming.
• Digital Terrestrial Television (DTT) remains a significant way of reaching large audiences, but that in the longer term IPTV may provide a more cost effective solution for local TV.
• Some support from existing networks may be required.

7. The potential to deliver public service purposes through local television has been recognised in a number of Ofcom studies, including our recent second Review of Public Service Broadcasting. It is clear that local television has the potential to increase plurality in specific areas, if a sustainable model can be found.

8. As the Shott team suggested in their interim report, new IPTV services (including YouView) will provide new opportunities for the provision of local services. IPTV is likely to provide a powerful long-term distribution means for widely accessed local content.

9. Online local video services and hyper-local websites are also making a contribution to an increasingly diverse local media environment. Such services can be created at much lower cost than broadcast services and can be more targeted and interactive. As broadband availability and take up grows, so the potential for such sites to have a significant impact becomes greater.

10. While this is the future, the Government believes that local TV delivered over existing broadcast platforms is necessary today to ensure high levels of reach. As existing regulatory mechanisms are predominantly built around broadcasting, it is this area that is the principal focus of this report.

11. In considering broadcast regulatory mechanisms careful assessment will need to be given to the overall balance of incentives and obligations of PSB status going forward. It may necessary to remove or reduce existing obligations to ensure a sustainable approach to regulation in the future.

12. It will also be important to understand how the rollout of local television might take place in the nations, where devolution has increased the calls for strong plural media capable of holding devolved administrations to account.

Key recommendations for Government to consider

13. The evolution of local TV in the UK can provide public value if a sustainable model can be found. This public value will not be limited to wholly economic value, but also has the potential to provide social, cultural and democratic benefit.

14. Our central conclusion is that there are a number of mechanisms through which Government could make changes to the regulatory system to increase the emphasis given to the delivery of local content. These include the following:

15. Amending the high level purposes of PSB or the high level remits of the current PSB providers to emphasise localness would be a significant symbolic change, but may not result in very much substantive change in delivery. Amending the licences of the current PSB providers would also be difficult before the end of the current licence period.

16. It is entirely possible to use existing legislation to establish a new licensing regime for local services on DTT which could create a new category of services, used to provide PSB benefits to new providers and which creates a clear regulatory distinction between national and local providers of content.

17. If local services are not available outside the UK, minutage rules could be relaxed to allow either more advertising or different types of advertising techniques (such as split screen or rolling text) on local TV. The Secretary of State may also direct Ofcom to designate specific spectrum for local TV services.

18. In relation to Electronic Programme Guide (EPG) prominence, the Secretary of State can add by Order local TV services to the list of services eligible, but due to the structure of the current legislation, securing first page EPG prominence for those services may be difficult.

19. The Secretary of State could also add channels to the list for must carry designation on all platforms which achieve sufficient reach, thereby strengthening the benefits available to must carry designated services (including local TV services), including determining proportionate carriage terms.

20. In the future, new legislation could be used to clarify and tighten the regulation of EPG prominence, although this would need careful consideration for a variety of reasons set out in this document. Particular consideration will need to be given to how the regulation might be adapted to take account of the evolution of EPGs.

21. In the context of the net neutrality debate, if network operators were to begin charging content providers for premium carriage (including managed services), the Government could also consider taking steps to ensure continued widespread access to important public service content online at an acceptable quality of service, potentially by extending must carry type obligations.

22. A new Communications Act debate provides the opportunity to consider whether the current PSB system needs to be more significantly redesigned.

23. A summary of the key options identified in this report is set out below.

The full document is available below