Report to the Secretary of State on the public teletext service

Published 02|12|10

Executive summary

1.1 Under the Communications Act 2003 (CA03), Ofcom must do all it can to secure the provision of a public teletext service. A holder of the public teletext service licence benefits from access to both analogue and digital terrestrial TV (DTT) spectrum, but in return must fulfil public service requirements referred to in CA03 and specified in the Ofcom licence, in relation to national news, regional news and other regional information.

1.2 The public teletext service licence was held from 1993 until January 2010 by Teletext Ltd. However, in December 2009 Teletext Ltd ceased to provide the required service. The company explained that it no longer considered the service economically viable. Ofcom revoked the licence, and imposed a financial penalty on the former operator, for its failure to continue providing the service to the end of the licence term (2014).

1.3 Ofcom has not to date re-advertised the licence to other bidders. This is because of provisions in the Digital Economy Act 2010 (DEA). The DEA requires Ofcom to make a report to the Secretary of State (for Culture, Media and Sport) including:

• an assessment of the advantages and disadvantages for members of the public of the public teletext service being provided (taking into account alternative uses of the capacity); and
  
• an assessment of whether the public teletext service can be provided at a cost to the licence holder that is commercially sustainable.

1.4 This document constitutes Ofcom's report to the Secretary of State, as required by the DEA. It is for the Secretary of State to decide, according to the DEA, whether to replace the duty on Ofcom to secure a public teletext provider with simply a power to do so. Should the Secretary of State decide this is appropriate, it would require approval of an order by both Houses of Parliament. Further detail on the legislative background is contained in Section 2.

1.5 In our assessment, we have considered the advantages and disadvantages of the provision of a licensed public teletext service compared with an alternative scenario: the market provision of text information services which exists elsewhere, and the likely alternative uses of the reserved capacity which the public teletext service formerly occupied. We have also drawn on the experience of the previous licensee and considered what would be required to make the licence commercially sustainable.

1.6 The conclusions of our assessment are:

• Use of the public teletext service has declined in recent years. This would be likely to accelerate as digital switchover progresses; the pattern with Teletext Ltd was that the digital service was not nearly as much used by viewers as the analogue service. The reach of the public service was relatively low (only 10% of all TV households used text), although we note that some of these households (especially those that are analogue only; and those with elderly or hearing impaired viewers) may currently benefit from the public service more than the average household. Ofcom recognises the importance of teletext to these groups, but considers that, following analogue switch-off, the benefit to them of digital text will be very much less than that of analogue text in the past.
• Following digital switchover, nearly all households will have access to DTT. A number of text-based information services provided by the BBC and commercial operators will remain widely available on DTT and other platforms and may be complemented by online services. These services provide plurality and meet many public purposes in terms of content for users. Most of the advantages of the public teletext licence to viewers are therefore likely to be met by alternative means.
  
• However, the commercial market is less likely to provide a service with nationwide (to 98.5% ) coverage on DTT, regionalised distribution and regional news and information content. These are the key requirements of a public teletext service, but are also the major source of cost to any potential licence holder.
  
• The experience of the previous licence holder suggests that the licence as it stands was not commercially sustainable: the licence obligations to universal coverage and regional news and information are a significant source of cost.
  
• There are a number of alternative uses of the DTT capacity reserved for the public teletext service, which could potentially have greater advantages for members of the public. Notably, the capacity could be utilised to help make space for additional TV services on the relevant DTT multiplex.

1.7 Ofcom therefore considers that the advantages of the public teletext service being provided are limited and diminishing, and outweighed by the disadvantages of reserving capacity for the service on DTT Multiplex 2.

1.8 Additionally, we consider it unlikely that the public teletext service could be made commercially sustainable: if so it would be likely to involve the reduction or removal of the obligations of the licence to regionalised transmission and regional content which would negate much of the public value of awarding the licence.