Culture Secretary struggles to balance broadcasting interests

Chris Smith, the Culture Secretary, is walking a tightrope. In fact, he’s walking several and they are interlinked, like a cat’s cradle. Fall off one, and the chances are he’ll fall off them all – so, as he made clear last week to members of the Broadcasting Press Guild, he is proceeding very cautiously.

The first tightrope is labelled “digital television”. 1998, you will recall, was going to be the year of digital TV. Only last autumn, Mr Smith was telling the Royal Television Society Cambridge Convention that one of his goals was to hasten the move from analogue to digital, in order to unleash benefits for viewers and the economy: more channels, widescreen pictures, better-quality sound and the huge financial potential of the freed-up analogue spectrum, which could be auctioned off to mobile-phone companies and other expanding telecoms ventures.

Now his message is very different. He has ruled out an early switch-off of the analogue system and refused even to give a date for such a switch-off. He’s launched a consultation into how the move from analogue to digital should be accomplished and insisted that those people who cannot afford the new technology should not be made to pay for it – raising the obvious question as to who will.

One reason for Mr Smith’s caution is that since last September, digital television has run into problems. The Astra satellite due to carry BSkyB’s digital services blew up on launch – fortunately the Astra organisation, SES, can simply move one of its back-up satellites to replace it.

Other problems are not so easily solved, because they involve Mr Smith’s other tight ropes, like the one labelled “competition and regulation”. This is hampering the launches of both digital satellite and digital terrestrial TV.

BSkyB, which is expected to be the trail-blazer for digital, as it was for multichannel television, is still awaiting clearance from the European competition authorities. At the heart of its operation will be its set-top box and British Interactive Broadcasting (BIB), its joint venture with BT, Midland Bank and Panasonic. BIB makes the system commercially possible, by unlocking the potential of home banking and shopping and so bringing the cost of the box to an affordable level. But the combination of BSkyB and BT is proving hard for Brussels to swallow.

A similar competition/regulation issue is causing problems for the terrestrial digital company, British Digital Broadcasting (BDB), which – alongside BSkyB – must play a crucial role in convincing Britain it wants to go digital. As this column has pointed out before, the neat linking of the names of these companies – BSkyB, BIB, BDB – may have seemed a good idea in corporate identity terms, but it also conveyed the impression that the then seemingly all-powerful BSkyB was running the show.

Sky executives scoffed at the suggestion that changing names would make any difference – but since then BSkyB has been forced to sell its shareholding in BDB, causing further problems for the successful launch of digital.

It was the Independent Television Commission that ordered BSkyB to sell its BDB stake, leaving the digital terrestrial company in the hands of just two companies, Carlton and Granada. BSkyB is still contracted to provide some of its channels to the venture – as is the BBC – but it no longer has the commercial incentive to make digital satellite and digital terrestrial TV work hand-in-glove to bring in the new technology. The enforced separation revives the threat of “box wars”, with the public being offered competing set-top boxes.

One factor in the decision was the competition between regulators. Chris Smith will soon be launching a consultation on whether the convergence in media – between TV, telecoms and computers – should lead to convergence in regulation, with the functions of the ITC and the telecoms regulator Oftel being merged into a single “Ofcom”. MPs on the Culture Committee are already holding such an inquiry.

The ITC insists its lawyers advised it that the BSkyB shareholding in BDB could not stand – but it was also well aware that Oftel had said the BDB combination was too powerful. The result is that digital must now move forward with two competing systems.

I suspect Chris Smith would much rather the ITC had not ordered BSkyB out of the BDB consortium. Competition is all very well – but, as the director general of Oftel Don Cruickshank always makes clear, it is not monopoly that is wrong, but the abuse of monopoly. Sometimes there is a greater public good that may justify the restriction of competition and, arguably, switching the nation to digital broadcasting might be such an issue.

Which brings us to Mr Smith’s third tightrope, namely “the BBC”. How can this publicly-funded organisation be allowed to become more commercial, and help Britain move into the multichannel age, without unfairly hindering its commercial competitors?

Last week, GWR complained about Radio 3’s promotions, claiming they knocked Classic FM. BSkyB has complained about News 24 being offered free to cable companies. And now the BBC has asked Mr Smith to approve the move of studio and production resources into a commercial subsidiary.

Mr Smith says the answer lies in tightening regulation of the BBC. He wants its governors to represent the public interest, rather than that of the Corporation.

Mr Smith has a clear grasp of broadcasting issues the Government faces. However, he has evaded the question of his own future in any possible Cabinet reshuffle. If Westminster gossip is to be believed, these tightropes won’t be his to walk for very much longer.

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