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Broadcasting (Radio Multiplex Services) Bill

Volume 779: debated on Friday 24 February 2017

Second Reading

Moved by

My Lords, it is a great pleasure and privilege to be asked to sponsor this Private Member’s Bill, which was so ably introduced and taken through the other place by Kevin Foster, MP for Torbay. I thank the DCMS staff for their helpful briefing when passing on responsibility for its passage through the House to me. The Bill completed its stages in the House of Commons without amendment, and enjoys government and indeed cross-party support. Broadcasting is a reserved matter and therefore the Bill relates to the whole UK.

The purpose of the Bill is to enable community radio stations and small commercial services in the UK to broadcast on the digital audio platform. It creates powers to modify the current regulatory framework in the Broadcasting Act 1996 for the licensing of radio multiplex services, thereby creating a new lighter-touch framework appropriate for the licensing of small-scale digital radio multiplexes. Each week 90% of adults in the UK listen to the radio—about 1 billion hours of listening in total, 45.2% of which is accessed through digital radio. This proportion is steadily increasing, and is expected to overtake analogue as the default listening mode in the near future.

I should perhaps dwell a little on the technical aspects of digital radio. The principle of digital is that the audio signal is converted to a digital format, compressed at the point of broadcasting into a single radio frequency and then decoded by the listener’s digital receiver. Digital radio uses radio spectrum more efficiently than analogue, allowing more radio services to be delivered to listeners. All digital radio services in the UK are broadcast on multiplexes, a term that relates to the infrastructure for transmitting digital signals. These are licensed by Ofcom, and licences are currently awarded for either national or local, county-sized coverage.

In the UK, national digital radio stations broadcast by the BBC and commercial radio are transmitted on three national multiplexes. There are currently 200 smaller commercial radio stations and 244 community radio stations still transmitting on FM and MW analogue frequencies, because of the cost and capacity constraints on existing county-sized local digital radio multiplexes. Many of these smaller community and commercial radio stations have indicated that they would like the option of broadcasting on a terrestrial digital radio platform—known as DAB—to their local area if a practical, cost-effective solution were available. It is this problem that the Bill is intended to address by introducing a power to create an appropriate legal framework for a third tier in the system of radio multiplexes: new, small-scale radio multiplexes for sub-county level transmission.

Ofcom has recently completed a two-year programme of work, which has successfully tested the technology to enable small-scale DAB broadcasting and which also suggested that there was sufficient spectrum to license at least one small-scale multiplex in most areas of the country. Ofcom’s work includes 10 trials of small-scale multiplexes in towns and cities, with 70 small commercial and community radio stations now broadcasting on digital for the first time. Based on these trials, Ofcom has concluded that there is demand from smaller radio stations for small-scale DAB multiplexes and that the wider rollout of additional small-scale services is possible.

The Bill is all about giving small radio stations a choice to broadcast on digital. It is not about mandating such a move. It would be a real opportunity missed to provide such stations with a low-cost option for broadcasting on digital if the Bill did not proceed. I recommend the Bill to your Lordships; I thank you all for staying for this Friday sitting; and I look forward to your speeches and the Minister’s reply. I beg to move.

My Lords, I apologise that I did not appreciate that the Bill was coming before your Lordships until the last minute, and it is for that reason that I do not have my name on the speakers list.

I have a long-standing interest, particularly in the technical aspects of local broadcasting. I therefore warmly support the Bill and very much hope that it will soon find its way on to the statute book.

My Lords, we are in a slightly unusual situation because the fine introduction to the Bill by the noble Baroness has covered a lot of the ground. I reassure her from the start—she may be new to this business, and it may be a bit complicated—that my questions will not be directed at her specifically, although they would normally be to the sponsor of the Bill, because I think that they are for the Government to answer. In saying that, I am also aware that some of them raise issues that probably need correspondence rather than an answer at the Dispatch Box today, because they are not necessarily germane to the substance of the Bill.

Secondly, I reassure the noble Baroness that she was right to say that there was cross-party support for the Bill: we support it and will be anxious to ensure that it goes forward. As she may have hinted, the Bill will only make progress if we are disciplined enough not to make any amendments at any point in the process. So the only way we can explore it is by just asking questions and getting something on the record which might be helpful to those who have got to implement the Bill and to those who will be hoping to use the benefits that may flow from it.

We have had the technical background to and rationale for the Bill. We all understand what is happening here and welcome it. It is about extending further the digital audio broadcasting—DAB—system. That raises the question of when we are going to get to switchover. This is an issue for which I am sure the answer will be either “shortly” or “not shortly”, as that is now the way we have to do these things. However, I would be grateful if the Minister, when she comes to respond, would shed some light about where we are going. I understood that it was largely dependent on the number of cars sold, because new cars now seem to be fully equipped with digital audio broadcasting. This is all very well in most places, except it has a very unfortunate squeaky noise when you come to a point where you cannot get the signal. Otherwise, it is much better than FM and I am sure we will all welcome it when it happens. However, we need some government action on this. We need a date and a transition plan, and it needs to be clearly signalled so that we can all get behind it.

My second general point is not really for comment. I always get a bit nervous when I see in a Bill, or in correspondence from Ministers, that they are proposing “lighter-touch” regulation or licensing. I am not quite sure what that means. Who is wielding the stick on this occasion? To whom is it being administered and what force is being applied? These questions are all left skulking in the background. I think what it means in principle is that there is going to be a regulatory framework but it will be responsive to the purposes of the introduction of this new form of broadcasting—which, as I understand it, is primarily to assist with having more community-based radio services on a smaller scale and having wider coverage. The licensing regime for that should, therefore, be appropriately scaled down and I welcome that.

The helpful Explanatory Notes prepared by the department in support of this Private Member’s Bill indicates that we have currently got about 200 smaller commercial radio stations and 244 community ones, transmitting mainly on FM and medium wave, which do not have the opportunity to switch over to DAB or DAB+. In context, this is a relatively recent phenomenon. I have not seen much reporting of it and I could not find anything when I was trying to prepare for this speech. It would be useful if the Government could write to us at some point with some background detail—it does not have to be immediately. This is an interesting area of development in radio; it represents innovation and, sometimes, a distinctive voice which is not often there. If the Bill is about anything, it is about plurality of voices at a relatively modest and local scale. It would be interesting to have a record of what the department has made of that and the figures on it. It would be great if that were possible.

I have two specific questions on the Bill. Ofcom took advantage of an interesting technological development to take up this proposal and ran some trials across the country. I think I am right in saying that these were mainly in cities, so we do not really know yet whether the system is going to have any uptake in rural areas, which would be a good thing in terms of providing an additional service and more voices. I would be grateful if we could learn a bit more about the trials themselves—in writing if it is not possible to do it today. Am I right in saying that they were largely city based, and therefore is it right to conclude that this is going to be a largely city-based phenomenon? There is nothing wrong with that, but it would be interesting to know what the intentions were for this when it sets off.

Finally, there is a carefully worded phrase in the Ofcom briefing for the Bill which states:

“Ofcom’s wider spectrum planning work suggests that it should be possible to provide a small scale DAB multiplex in most areas (however this work is ongoing)”.

I have heard of qualifying statements: this has got about six conditional clauses and sub-clauses in it. Is it possible to throw a little light on whether that spectrum planning has progressed? Is it likely that it will be possible to provide small-scale DAB multiplexes in most areas? If so, what further work is required? That would also be helpful—but, again, it does not have to be today; it could be in writing.

The responses of other people to the Bill fall broadly into two camps. One is the professional independent operators of radio. They have, probably inevitably, raised the question about a provision in the Bill that would prohibit anyone with an interest in a national or local radio multiplex being involved in this development. The question is not unexpected but it is interesting, given that the intention behind the prohibition is presumably to try to restrict the uptake of this type of broadcasting to a particular group, mainly those involved in community radio, and therefore to non-commercial bodies. Therefore, it seems right that there should be a block on the acquisition of these licences by those who already have national or local radio positions.

If, after a few months or even years, there is still no uptake in an area which has the local radio multiplex capacity, will that barrier be permanent? It would be a pity not to have spectrum available that could be used for services. I think this raises a policy issue rather than a matter arising in the Bill, but I hope that the Minister will respond to that point. Will there always be a block on the use of this spectrum in the hope that someone is going to turn up, or might alternative proposals be made in that area?

As I understand it, the Bill is intended to promote community radio activities. The Bill does not specify—and it may not need to—whether these community services are to be commercial or non-commercial, although I think the assumption is made that most community operations, given that they will have some costs associated with equipping and running an operation of this nature, will probably be non-commercial or have sponsorship or be funded in some other way. The question from the Radiocentre—and therefore a commercial interest—is about whether this is really a bar on commercial activity in this area or whether the prevention is intended to encourage non-commercial activity. There is a slight subtlety there. If the Minister is able to respond to that, it would be helpful, but the Bill is relatively clear on it.

The Community Media Association, the body most interested in developing this area, raises a couple of points. There is the usual worry that the draftsman has presumably required those who are responsible for the Bill to use “may” instead of “must” in certain areas. The confusion, as always, is on the question of whether by providing a “may” provision, one is implying that it is permissive: in other words, that those responsible for exercising the power have that option to do it and it is not that they will not do it. In other words, it is not “may not” that is excluded, it is possible that they may do it. The reason for putting “may” rather than “must” is that it is not a requirement; it is just what is expected to happen. The question that is raised by the Community Media Association is whether, if the provision is that by order services may be required to operate on a non-commercial basis, should that in practice turn out not to be sufficient, is there a provision or power available which would exclude commercial services if those services were proving to be too difficult in terms of competition or for other reasons?

The Bill does not limit the number of small-scale radio multiplex services that any one person can hold, which leaves open the possibility, although I think it is rather remote, that a level of concentration is built up whereby people pick up licences right across the country. I do not think that much further work is needed on this matter because I think the intentions are very clear. However, it would be helpful if the Minister could say on the record that the intention behind that is to make sure that these licences are not subject to group purchase, that large numbers of them will not be bought up by people, and that the intention is that purchase should be licence by licence going forward.

This is a very interesting development which could be of huge benefit to smaller communities and groups right across the country. It would be sad if it were not extended to rural areas. However, I recognise that technically and organisationally that may be problematic. I wish the Bill well and hope that it will be successful in getting through its stages.

My Lords, I first take this opportunity to thank my noble friend Lady Bloomfield for introducing the Broadcasting (Radio Multiplex) Services Bill before your Lordships’ House. I also pay tribute to my honourable friend in another place, Kevin Foster, MP for Torbay, who worked so hard to make the Bill happen.

I say to the noble Lord, Lord Stevenson, straightaway —and as a lawyer—that this is indeed absolutely light-touch. The whole purpose is to be light-touch so that we do not put people off taking the opportunities that the Bill will present. I like his reference to the plurality of voices. The plurality of voices and content is absolutely critical, and the Bill will enable that to be supported.

The Government support the Bill because its objective is to create an appropriate framework for licensing the transmission of digital radio on a small scale. At present, many small local and community radio stations do not have a viable option of broadcasting on digital. The Bill will enable the creation of a tier of small-scale digital networks and address that issue.

Radio continues to be a popular medium. The latest industry figures indicate that 90% of adults in the UK listen to radio each week for an average of 21.5 hours, consuming in total over 1 billion hours every week. Although radio’s popularity has been stable over recent years, it is changing. Listening on digital radio continues to grow steadily and is declining on analogue. Currently, digital radio’s share is 45.2% of all radio listening, and 57% of homes own a DAB radio. The radio industry expects that this long-term shift in listeners’ habits will continue, which means that digital will overtake analogue as the default listening mode in the near future.

Noble Lords have made some important points about the key role played by their local radio stations—small commercial and community radio stations—in continuing to provide an important means of informing and engaging with their communities as well as providing entertaining, popular and lively programming. I pay tribute to my noble friend Lord Trefgarne for all the work he has done over the years in connection with this and I appreciate his support for the Bill. The Government also recognise the important role that smaller stations play in supporting the local communities they serve, and the importance of transmission in rural areas, which is indeed very much in the minds of those who have developed the Bill.

Before I move on to the Bill, it may be helpful if I provide noble Lords with more background about the characteristics of digital radio and digital radio transmission services. There are three “layers” of commercial and independent radio in the UK—national, local and community radio stations—and the BBC provides its own national and local radio services. On digital, three national multiplexes transmit national services: Digital One and Sound Digital, which are operated by commercial radio, and the BBC’s National DAB service, which currently broadcast between 10 and 19 stations each. These national services are available to up to 97% of the UK population in the case of the most extensive network. There are also 55 local commercial digital—DAB—multiplexes, which transmit local radio services, covering approximately county-sized areas. Each local multiplex broadcasts up to 14 commercial radio stations, as well the relevant BBC local station for the area. As a result of the programme to upgrade and expand this local tier, around 90% of UK households should be able to receive a local multiplex.

However, there are currently around 200 smaller commercial radio stations—covering small markets—and 244 community radio stations transmitting on mainly FM and MW analogue frequencies which are not broadcasting on digital radio. This is due to a combination of factors. There is insufficient capacity available on some of the 55 county-sized local DAB multiplexes across the UK, especially those serving urban areas. The costs of carriage on these networks can often be too high for many small local stations. Some of the costs are due to larger stations needing and wanting active monitoring, high-quality service standards and the provision of backup equipment to maintain broadcasting of services. Also, multiplex coverage area provided by county-level local DAB multiplexes may be too large for smaller stations compared to their own “core” FM transmission areas. But these smaller stations are concerned that they may lose prominence with local audiences and advertisers as digital radio listening increasingly becomes the default. The majority would like more options for broadcasting digitally and to have the option to broadcast on a terrestrial DAB platform to the localities they currently serve if a practical solution were available and if it could be done in a cost-effective way.

That brings us to the small-scale DAB trial led by Ofcom. Ofcom has been at the forefront of the development of a brand new approach to small-scale DAB transmission using open-source software to multiplex and encode signals and to distribute programme content in a much more cost-effective way. This opens the way for small stations to have alternative options to be carried on terrestrial DAB for the first time.

In December 2013, following a successful pilot in the Brighton area, the DCMS announced funding for two years—from April 2014 to March 2016—for a programme of work by Ofcom to examine the potential of the new software in real-life trials. I know that the noble Lord, Lord Stevenson, wanted more information on this. The programme of work by Ofcom looked at spectrum planning issues, technology testing, small-scale network design and options for licensing small-scale DAB multiplexes. As the main part of the programme, Ofcom licensed 10 technical field trials of small-scale DAB multiplexes in cities and towns across the country. These trials were designed to test the viability of small-scale DAB technology and eventually involved more than 100 small commercial and community radio stations, including some new services, broadcasting on terrestrial DAB for the first time.

Ofcom published a technical evaluation of the trials in September 2016. The report concludes that the trials were generally highly successful and achieved their three objectives. The trials showed that the small-scale approach to DAB transmission is technically sound, and they helped Ofcom, those involved in the trials and the wider industry to understand the practical requirements for successfully sustaining DAB radio transmissions using the small-scale approach. I know that the noble Lord was concerned about the possibility of this being extended to urban areas. Although the trials were run mainly in urban areas, we are reassured that the technology would work equally well in rural areas. Indeed, the areas to be served by small-scale multiplexes are likely to be wider in rural areas which are not currently covered by local multiplexes, such as Cumbria.

The work by Ofcom has shown that small-scale mini-multiplexes work and that they can lower the cost barrier for smaller stations to broadcast on a terrestrial DAB platform. They open up a pathway for these types of radio services to transmit to small geographic areas, as they currently do on FM and AM. Ofcom also considered spectrum needs for new services as part of the trial. The conclusion here was that there should be sufficient spectrum to license small-scale multiplexes across most of the UK.

As a result of the trial, there is strong support from most parts of the radio industry for these trial small-scale DAB multiplex services to be put on a proper, permanent basis and for small-scale DAB services to be rolled out more widely. However, the trial arrangements for the 10 areas have been set up under the Wireless Telegraphy Act 2006 and we have concluded that these arrangements are not a suitable basis for the long-term licensing of small-scale DAB multiplexes. The current legislative framework for the licensing of radio multiplexes is set out in Part 2 of the Broadcasting Act 1996. However, the legislation is not suitable for licensing small-scale DAB multiplexes because it is restrictive and places on multiplex operators large burdens which, while appropriate for national and county-level multiplex transmission, are disproportionate for low-cost, small-scale radio multiplexes.

Given the success of the technical trials of small-scale DAB multiplex technology and the widespread support in the radio industry, particularly from smaller stations, the Government fully support the Bill. Its purpose, which was set out by my noble friend, is to allow for the modification of the requirements for licensing digital radio networks in the 1996 Act in order to create a new, lighter-touch regulatory framework that is appropriate for the licensing of small-scale digital radio multiplexes.

At present, the construction of the 1996 legislation means that all the same procedures, rules and requirements that apply to local and national multiplexes have to apply to small scale. Ofcom has no discretion to adapt the requirements in the legislation to take account of the size and audience share for radio station services targeted at smaller localities—that is, at sub-county level.

Similarly, there is no power for the Secretary of State to adapt or change the requirements to reflect changing circumstances. Under the Bill the Secretary of State will be able, by order, to modify legislation that sets out the licensing framework for radio multiplex services. Some of the requirements set out in Part 2 of the 1996 Act will continue to be important, but other requirements are unnecessary or will have to be applied in a way that is likely to be overly burdensome for smaller stations wanting to work together as consortium to bid for a licence to develop and run a small-scale DAB radio multiplex service. The proposed measure in the Bill will allow for the provisions of the 1996 Act to be modified for small-scale multiplexes, rather than replacing them with entirely new licensing arrangements, enabling a modified licensing regime that will take account of the different needs of smaller stations that will seek carriage on the small-scale radio multiplexes. This approach of modifying broadcasting legislation by statutory instrument follows the precedents used successfully for community radio and for local television—Sections 262 and 242 respectively of the Communications Act 2003.

However, as my noble friend Lady Bloomfield has said, there is more work to do to develop the detailed structure of the licensing regime with Ofcom. Furthermore, an in-depth consultation with industry stakeholders will be needed to thrash out the detail of the new regulatory regime that will apply.

The detail of an order made under this power is likely to be used in the following ways: to allow licence periods for small-scale DAB multiplexes to be set according to the needs of small stations rather than for a fixed period of 12 years, which is inappropriate given the much smaller capital outlay needed to set up small-scale DAB multiplex services; to remove the necessity for small-scale DAB multiplex licensees to provide reserved capacity on the multiplex to the BBC; to set clearer requirements on small-scale DAB multiplex licensees to start broadcasting within a fixed period following the award of the licence from Ofcom; and to restrict the ability of small-scale DAB multiplex operators to overcharge digital sound programme services for carriage on the multiplex. It will also be used to set eligibility requirements for the holding of small-scale multiplex licences—for example, to exclude organisations with any existing interests in either national or local radio multiplexes, mainly large commercial groups, and possibly organisations holding a licence in a national station, from holding small-scale DAB multiplex licences or to require that small-scale multiplex licences can be awarded only to “non-commercial” entities. I hope that answers to some degree one of the questions posed by the noble Lord, Lord Stevenson. Also, to allow Ofcom the discretion to reserve capacity on the multiplex for community radio services, in some or all cases, and to make changes to the definition of “digital simulcasting” for independent local commercial radio stations that have taken carriage on a small-scale multiplex.

There are two areas where more thinking is needed, requiring consultation with industry. One, whether the small-scale licences should be held by a non-commercial vehicle or whether corporate entities should also be able to bid for and hold small-scale DAB licences. Related to this is the question of how Ofcom should decide between different consortia and whether holders or those with an interest in existing national or local multiplexes should be excluded from holding small-scale licences. We will need to consider both questions as part of a consultation on the detail and will need to take further comments from industry. The key point, however, is that it is useful that the Bill highlights these two areas as something that the modified requirements will need to cover.

The noble Lord, Lord Stevenson, asked about spectrum. The response to that has been very positive from Ofcom and work is continuing. However, that is very much dependent on this Bill.

On the question of “may” or “must”, the point of the Bill is to set out what the order to be made using this power is capable of doing, not what it must or will do; hence the wording of the Bill enables the provision on this issue but does not require it do so or to follow a particular policy option.

I want to make it clear that what this Bill provides for is not in the Digital Economy Bill. Put simply, as the Minister in another place, Mr Hancock, said, DCMS needed to see the conclusions of the Ofcom trials before legislating. Ofcom published the evaluation in 2016, several months after the introduction of the Digital Economy Bill.

The Government’s position on a switchover decision remains the same. A decision about the timetable for a future switchover will be considered only once the listening and coverage criteria have been met—that is, when 50% of all listening to digital and national DAB coverage is comparable to FM, and local DAB reaches 90% of homes.

Good progress is being made and we are very much in listening mode about this. I can reassure the noble Lord, Lord Stevenson, that it is not just about the number of cars sold. This Bill and other measures will contribute to when that decision will be made. Digital’s radio share of listening continues to grow steadily—it now stands at 45.2%—and the radio industry expects this trend to continue. Therefore, with the funding by DCMS and the expansion of local DAB coverage, along with the BBC and commercial radio sector building 182 new transmitters across the UK and making technical modifications to 49 other sites, the programme will expand local DAB network coverage from around 75% of UK homes in 2013 to 91%, which is about 4 million extra, and from 56% to 77%, an extra 4,400 miles of major roads, by early 2017. So we are well on the way to considering when switchover can take place.

A key success of the small DAB trials has been the strong support from smaller stations, including community radio. The majority of trials of small-scale multiplexes are full or nearly full. Overall, based on the trials and other work, Ofcom believes that there is a significant level of demand from smaller community stations and commercial radio stations for carriage on small-scale DAB multiplexes and that a wider rollout of additional small-scale services into more geographic areas would be both technically possible and commercially sustainable.

This Bill will provide the vehicle to create an appropriate and lighter touch licensing and regulatory framework, which is a necessary prerequisite to facilitating the development of a tier of new small-scale DAB multiplexes across the UK, and for that reason the Government are fully supportive of it.

My Lords, I thank the noble Lord, Lord Trefgarne, for his support, coming as it does from a position of greater knowledge and experience in this field than I have. I am also grateful to my noble friend the Minister for her constructive comments and support.

I am grateful that the noble Lord, Lord Stevenson, has raised important concerns relating to multiple ownership and non-commercial purposes of these multiplexes. These were debated at length in the other place and were addressed by the Minister in her response. As to lighter touch regulation, as the Minister mentioned, the Government have stated that there will be a full and careful consultation on the detailed arrangements for this.

As this is the first Bill I have had the privilege of leading in this House, it is encouraging to know that it enjoys support from all sides, if not perhaps the same level of interest as was evidenced in the debates held earlier this week. I ask your Lordships’ House to give the Bill a Second Reading.

Bill read a second time and committed to a Committee of the Whole House.