The transcripts of the official inquiry into the culture, practices and ethics of the press. More…


  • Thank you very much. Please make yourselves comfortable. Could you please state your full names to the Inquiry? I'll start with you, Dr Bowe.

  • I am Colette Bowe and I am the chairman of Ofcom.

  • I'm Edward Charles Richards and I am the chief executive of Ofcom.

  • Thank you very much. You've both provided statements to the Inquiry. You should find them behind tab 1 and tab 2 of file 1. The statements to the Inquiry aren't signed but could you please confirm that the contents of your respective statements are true and accurate to the best of your knowledge and belief?

  • Thank you very much for all the work you've put in to prepare them.

  • The way I'm going to conduct this session is I'm going to ask the questions, feel free to answer them. You will decide between yourselves who is the best person placed to answer the question, and if you both want to answer it, that's fine as well.

    I'm going to touch first of all on your career histories, if I can. I'm going to start with you, Mr Richards. In your statement which is behind tab 1, you explain at 1.1 that you are Ofcom's chief executive, that you were appointed in October 2006; correct?

  • At 1.3 you explain that you in fact joined Ofcom in 2003. At that stage, you were partner, strategy and market developments, before becoming its chief operating officer responsible for strategy, market, research, finance, HR and other functions in 2005. Prior to joining Ofcom, you were senior policy adviser to the Prime Minister, at that time Tony Blair, for media, telecoms, the Internet and e-Government, and prior to that you were controller of corporate strategy at the BBC.

    Pause there. Is that all accurate?

  • Thank you. Dr Bowe, you explain at paragraph 1.1 of your statement that you have been chairman of the Ofcom board, which is Ofcom's main decision-making body, providing strategic direction for the rest of the organisation, since 11 March 2009. You explain your other appointments at 1.2, but you explain at 1.3 that you were first appointed to the board of Ofcom on 1 January 2008, and then you explain that you held prior to that a number of senior roles in both the public and private sectors?

  • That's all correct.

  • So that we can focus our discussion today, we can't possibly hope to cover everything that Ofcom does, it's a very large organisation, it has a very large number of functions, many different powers and duties. What we're going to do is we're going to look at various aspects of the Ofcom regulatory models, picking out some aspects which might be particularly interesting to the chairman of this Inquiry in considering his terms of reference.

    So, for example, we'll be looking at the fact that Ofcom in some senses and some areas is a true statutory regulator, various aspects of that, it's a co-regulator in other areas, we'll be discussing how those roles work in practice, and we'll be looking at the strengths and weaknesses of different models. That's essentially how we'll take it through today.

    I'm going to start by touching briefly on the statutory basis of Ofcom and questions about independence of government. I'm going to start with the witness statement of Mr Richards, behind tab 1, paragraphs 2.1 onwards.

    Before we turn to the legislation, Ofcom is the central and competition regulator for the UK communications industries. That covers, correct me if I'm wrong, fixed and mobile phones, broadcasting, wireless telegraphy and also very recently postal services. But it has no regulatory role at all in relation to newspaper content?

  • And only a very narrowly defined role in relation to regulation of newspapers at all, which I will come back to in more detail. We know that it's a statutory body, created by section 1 of the Office of Communications Act 2002, and all its powers and duties are statutory; correct?

  • In relation to broadcasting, it's a real statutory regulator, as I've described, subject to what we'll come on to discuss about self-regulation in different forms. Although it was created by the 2002 Act, most of the functions of Ofcom are conferred on it by the Communications Act 2003, that would be accurate. I'll probably refer to that as the Comms Act for short and we'll be looking at various of its provisions.

    First of all, I'd like to look at the Office of Communications Act 2002, and that's behind tab 6. I'm going to ask you about appointments to the board and so on. If we look at section 1 of the Act, we can see that Ofcom is set up thereby, and if we look first of all at the appointment of the chairman, that is obviously you Dr Bowe.

  • Section 1(3)(a) you're appointed --

  • It's not section, I think it's in the schedule, isn't it? According to my copy, in any event. That's a schedule to the Act.

  • Yes, you're absolutely right, the paragraph is in the schedule.

    You were appointed by the Secretary of State, you can see that from paragraph (a), and then there may be a number of other members appointed by the Secretary of State as he may determine. So you're appointed by the Secretary of State, the non-executive members are appointed by the Secretary of State, and we can see from subparagraph (6) that Ofcom must have a majority non-executive board. Accordingly, the board majority is appointed by the Secretary of State. Would that be fair and accurate?

  • You, Mr Richards, the chief executive, you're appointed by the chairman, and we can see that from paragraph 5. Internally it will say page 7 of 15 or 03369 at the bottom. You see that?

  • There shall be a chief executive of Ofcom. You're appointed by the chairman and other non-executive members with the approval of the Secretary of State?

  • The executive members of the board are appointed by the chairman, the chief executive and the non-executive members of the board.

    Now, the questions arising out of that are this: given that the non-executive members of the Ofcom board including the chairman are appointed by government, how can they be independent? And since they're a majority on the board, how can Ofcom be independent?

  • Perhaps I could begin by explaining in more detail the process of my appointment in particular.

  • I, like my predecessor, was appointed after an open competition. The process of the appointment was conducted not by ministers but by two permanent secretaries, who were advised by two people from outside of Whitehall, with substantial knowledge of the sector. My name, and I assume that of at least one other person, was then put forward to ministers, who then announced that -- and this is the important point -- subject to a confirmation hearing by Parliament, they were minded to appoint me.

    I then went, as other chairmen of similar regulatory bodies have been, in front of a joint committee of two different parts of the Select Committee structure of the House of Commons and they -- I would say they grilled me for several hours in order to determine whether they believed that I had the right competence, experience and skills to lead this organisation.

    It was only after they had so determined that ministers then announced that I would indeed be the confirmed chairman of Ofcom.

    Now, I mention that in some detail because it illustrates a very important point about independence and accountability. From the moment at which the House of Commons said that they believed that I was the person who should be appointed to this job, I regarded, and my colleagues on the board so regard, our accountability for the exercise of our functions as being accountability to Parliament.

    I would like to emphasise this because I think it's an important spectrum to understand, the spectrum between independence on the one hand and the kind of accountability that may constrain, quite properly, that independence.

    That appointment having been made in that way, I now appear regularly in front of committees of normally the House of Commons, but sometimes the House of Lords, in order to account for my stewardship of the board of Ofcom. I normally do that with Mr Richards. We normally do this together. But I would like the first point that we make today about our independence to be this one about where we regard our line of accountability.

    All of this that I have mentioned about accountability is enshrined in my contract of employment, which mirrors the provisions of the legislation, which in turn are now buttressed by a European directive, and effectively what those documents taken together say is that unless for reasons of financial disaster, if I were to become bankrupt, for example, unless for reasons where I was deemed to have an unacceptable conflict of interest, or unless I were deemed to have become unfit to do the job, which I always take to mean something about a medical condition, absent any of those conditions, I cannot, without such cause, be removed from this position.

    If ministers, notwithstanding that, were to decide they wished to remove me or indeed any of my colleagues on the Ofcom board, we have the right under European law to ask for a public statement as to why we are being removed from our positions.

  • Can I pause you there?

  • I'm sorry, I've gone on at some length but I thought it was important to understand the way the independence of this role is buttressed.

  • I just wanted to assist you by looking at the statute. If you look back at paragraph 2, which is page 5 of 15, the page before the one you've been looking at, you'll see that there is a section on tenure of office.

  • Which makes just these points. The Secretary of State has to be satisfied that the chairman or another non-executive member of Ofcom either is an undischarged bankrupt or has another financial or other interest or has been guilty of misbehaviour or is otherwise incapable of carrying out the functions of his office.

  • Then it goes on to say at subparagraphs (5) and (6) that the Secretary of State must give you a statement of reasons for the refusal and, if so requested, publish it. So that confirms the same principles that you've just been explaining.

  • That answers my question about the independence of the chairman. Is there anything you would like to add about the fact that since the chairman and non-executive members are a majority on the board, this might lead to a question mark as to whether Ofcom overall is independent?

  • I'm sorry, I didn't hear the very end of that. Whether Ofcom is?

  • As a whole, the board as a whole is independent.

  • As you've seen from my witness statement, it is the board of Ofcom that is the ultimate decision-making body of the organisation, which ultimately takes responsibility for all actions of the organisation. It doesn't just set its strategic direction, but as I say, it takes full responsibility.

    So I think that the important safeguards that we've just discussed around the independence of the chairman go to the question of the independence of the organisation.

  • Shall we move on to the role --

  • May I add one small point, which is I would say that the importance of independence in the organisation is difficult to overstate. It is exemplified by the approach and attitude of the board, beginning with Colette, but I would say that it is probably the most prized characteristic of the entire organisation. Culturally, the independence of the organisation is in many ways what matters more than anything else, or as much as anything else, to almost every employee. It is part of what they believe they are there to do. It is absolutely at the heart of the functioning and meaning and purpose of the organisation.

  • All right. Let's talk very briefly about the chief executive. We saw earlier that you were appointed by the chairman, but that the appointment must be approved by the Secretary of State. To your knowledge, has the Secretary of State ever vetoed the appointment of a chief executive? I know there's only been two --

  • I think I had better be the person that responds to that, with the rather unhelpful comment that I don't know, as I inherited Ed Richards. Inherited him very happily, I have to say, from my predecessor, but you may well have ways of discovering the answer to that question from my predecessor. I would be most surprised, but I don't know.

  • Do you have any understanding of what "approved" actually means in practice? Do you have any understanding of the basis on which someone would not be approved?

  • It's never come up in my tenure as chairman, and I think it would be foolish to speculate. What I do know is that the structure of that approval is that the Secretary of State is given one name as the proposed chief executive of the organisation. The Secretary of State is not given a menu of names and asked to choose.

  • I understand. So there's no choice, they either approve or don't?

  • You either approve or you don't approve.

  • I understand. Given what you've said about the structure, the way that you're appointed, the cultural importance of independence, is there anything more that could be done? Do you think that the independence of Ofcom would be greater if government wasn't involved in the appointment of the board?

  • I think there's two ways you could answer that. One is in practical terms and one is in perception terms. I think in practical terms, the answer is no, because, as I hope I've explained, the primary relationship is with Parliament once one is appointed.

    I have noticed, however, that at various points throughout both this hearing and in other parts of life where people comment on regulatory matters, there is occasionally comment about whether the independence of boards such as ours, and indeed the board of other regulators, could be buttressed by an alternative appointments mechanism. I have to say I've never been able to think of one that betters this system we have of Government proposes and Parliament disposes, which is essentially what it is, and I and I believe my fellow chairmen of economic regulators actually take a lot of comfort, I would say, from the deep interest that Parliament takes in our appointments and our affairs.

  • In the light of the evidence that I heard yesterday, it may be that the press would not take such comfort in the fact that Parliament were involved in the appointment of such a regulator.

  • Yes. I understand why you say that. I have to say that from my point of view an active, engaged, well-informed select committee, which holds me and the chief executive to account for what we do on behalf of our fellow citizens, seems to be not a bad model for public accountability.

  • Does Ofcom allow board participation from people who are active in the industry being regulated? I'll ask you a follow-up question in a moment.

  • Sorry, the question is?

  • Does Ofcom allow board participation from people who are active in the industry --

  • No. We have quite strict rules around that. And if in some oblique way a board member may even peripherally become involved in, let us say, a business that might have some connection with a regulated firm, then a judgment is made about the seriousness of that connection, and very occasionally a board member who has got a very peripheral connection with a regulated business has stood aside from part of a discussion, but we do not have people on the board who are part of the regulated industry.

    What we do have is people who have been in various ways parts of it.

  • For example, as I'm sure we'll come on to discuss, the board member who leads the work on the enforcement of standards in broadcasting is himself a well-known, very distinguished broadcast journalist, formerly of the BBC and then of Channel 4, who brings a large amount of experience to that role, but we do not regard it as appropriate to have people who are engaged very actively in the industry as members of the board.

  • Because of conflicts. I'm sure you're familiar with the sorts of issues that arise, and you can manage small conflicts on boards; you can't manage large, endemic ones.

  • I understand. I think you've probably answered my next question, which was going to be: if you don't allow such participation, how do you ensure that you have the relevant expertise, but is the answer to that simply that you appoint people who have in the past had significant expertise in the area?

  • Yes. I'm sure you have in front of you the list of names of those who are on the Ofcom board and you will see that they have a range of expertise. Some in broadcasting, some in quite different parts of the other industry sectors that we regulate.

  • And you don't find it a disadvantage that they're no longer working in that capacity?

  • No. No, we don't, because these are all people who are extremely well-informed professionals, even if they are no longer actively engaged.

    For example, my deputy chairman, Dame Patricia Hodgson, who was formerly the chief executive of one of the previous regulators, the Independent Television commission, and until very recently a member of the BBC Trust, brings a very active, informed experience of the matters we're talking about today of a kind that does not rapidly, as it were, decay.

  • I'll move away from appointments to functions and duties of Ofcom. Mr Richards, again, I will look at your statement. Look, please, at 2.4 of your statement, tab 1.

  • Statement 1. You explain in summary that Ofcom's main functions since creation have been as follows: broadcasting regulatory functions, mainly under the Broadcasting Acts 1990 and 1996, functions in relation to electronic communications, networks and services from under the Communications Act 2003, spectrum management functions, now under the consolidated Wireless Telegraphy Act 2006, and concurrent competition and consumer enforcement powers under the Competition Act and the Enterprise Act 2002.

    But you say as time has passed, you've been given more functions under the Digital Economy Act 2010 and the Postal Services Act 2011 which I don't think we will need to look at.

    I said at the outset that I recognise that Ofcom had this wide range of roles, but much of the question here will focus on evidence relevant to Ofcom's broadcasting regulatory functions.

    I'd like to start, before we move on to specifics, with the general duties of the regulator and I will need to look at the Comms Act in order to do that. Look behind tab 8, at the Communications Act section 3. For the technician, the last five numbers will be 03405. It's internally page 26 of 879.

  • I promise we won't go through all 879 pages of the contract, but I do want to look at the general duties of Ofcom under section 3. Starting with section 3(1):

    "It shall be the principal duty of Ofcom in carrying out their functions (a) to further the interests of citizens in relation to communication matters, and (b) to further the interests of consumers in relevant markets, where appropriate by promoting competition."

    It then goes on at subparagraph 2 to set out the things that Ofcom are required to secure in the carrying out of their functions. There's a number of them. For the purposes of this section, I simply want to concentrate on the duties to uphold standards in broadcasting. If we look at subsection (2)(e), there has to be application of standards that provide adequate protection to members of the public from the inclusion of offensive and harmful material in such services, and then (f):

    "The application in the case of all TV and radio assistance of standards that provide adequate protection to members of the public and all other persons from both (i) unfair treatment, and (ii) unwarranted infringements of privacy resulting from activities carried on for the purposes of such services."

    I'll come back to the specific standards to be applied in a moment, but I just want before we move away from this section to point out that the broadcasting duties go much wider than simply the application of standards, so in particular, you are required to secure a sufficient plurality of providers -- that's subsection (2)(d), so section 3(2)(d), maintenance of a sufficient plurality of providers, and you also have to secure, by subsection (2)(c), the availability throughout the UK of a wide range of TV and radio services which are both of high quality and calculated to appeal to a variety of tastes and interests.

    Before I turn back to the standards aspects of the matters that you're required to secure, I want to ask you about the meaning of high quality services. Is it an appropriate role for a regulator to ensure high quality services rather than simply services that comply with published standards?

  • It clearly was regarded as being so by Parliament, but for me, to be a bit more helpful, I think the distinction to make is between what we typically call negative content regulation, which are standards and we'll come on to those, and what we also refer to as positive content regulation. So we really have two functions in this area. One is the standards function; the second is to use a range of powers to secure high quality content. Now, that is principally associated with public service broadcasting and the levers that we have at our disposal to secure certain positive outcomes.

    So not just that a broadcaster adheres to the standards side of life, but also that, for example, they are investing a substantial amount of money in original British production, that that original British production is of a wide range of genres and therefore appeals to a wide range of people, that that production reflects aspects of the whole of the UK, rather than just London, for example.

    So those are some of the examples of the dimensions of what we think about in terms of high quality broadcasting, so it's a rather different task than the standards task.

  • Who decides, who judges what that high quality is?

  • There is -- I think that takes place in different forms. I think the first determinant of that is really set out in more detail in the statute, so Parliament sets out more detail later in the Act as to certain aspects which are taken to be proxies for quality. So, for example, your level of original British production, for example the amount of production outside of London. Those are some of the things I've referred to already. So those are in a sense proxies.

    After that, there is a degree of judgment available to us about how we set obligations in that context on commercial broadcasters. We have to make that judgment in the context of that detail set out by the statute, using our own expertise built up over many years, drawing on what we know from the public about the public's views about quality and where their interests lie in relation to diversity and so on, and then also finally I think also importantly in relation to the commercial value of the licences, so in other words the relationship between what the broadcaster is able in a sustainable economic way to deliver.

    It's not good for us to say, "We'd like you to do all of the following things", if they're economically unsustainable, so the last piece in the jigsaw is ensuring that this is a credible challenge or credible task for the broadcaster.

  • Could I just add to that. You might be wondering how it is we think we understand what the viewing public wants, we undertake a large amount of research at Ofcom in this and other areas, which we constantly update to try to ensure that we do keep ourselves aware of how all the people in the kingdom rate their broadcasting, what they want, what they like to see.

  • What high quality means to them?

  • Before we turn away from section 3, we also need to look at subparagraphs (3) and (4). These are the factors that you must have regard to in performing your duties. So we see subparagraph (3): in performing your duties under subsection (1), those were the general duties that we've looked at, Ofcom must have regard in all cases to a number of things. The first of those is:

    "The principles under which regulatory activities should be transparent, accountable, proportionate, consistent and targeted only at cases in which action is needed."

    We'll come back to that in due course. It must also have regard in all cases to any other principles appearing to you to represent the best regulatory practice.

    Then at subsection (4), you must also have regard to a number of other factors if they are relevant in the circumstances.

    We don't have to look at all of these, but I'd like to look at (c) and (g). (c) is:

    "The desirability of promoting and facilitating the development and use of effective forms of self-regulation."

    Which again we will come back to, because it's important. And then (g):

    "The need to secure that the application in the case of television and radio services of standards falling within subsection (2)(e) and (f) is in the manner that best guarantees an appropriate level of freedom of expression."

    Taking those three things together, only taking action when it is needed, best guaranteeing an appropriate level of freedom of expression, always having to have regard to the desirability of promoting and facilitating the desirability and use of self-regulation, together do these principles, these requirements, effectively mean that you are required to adopt a light touch approach as a regulator?

  • I think I would put it slightly differently. I think the problem with the phrase "light touch" is that it means different things to different people. I think what this is really saying needs a more precise formulation.

    I think it's asking to us be -- to find the least intrusive, the least burdensome mechanism of achieving the public interest objective, and that will vary. It's asking us to exercise judgment in relation to that, and sometimes, for a whole set of reasons that I'm sure we will come on to, it's possible to do that, to achieve the public interest objective in a very unintrusive way, which might involve self-regulation and a very minimal role for us. And other times, on other occasions, that is far harder, and because of conflicts of interest, the fact that the public interest is not the same as perhaps the industry interests or the interests of a particular company, that requires much firmer and in some ways more intrusive regulation.

    I think it's inviting us to do that rather than adopt a phrase like "light touch", which seems to me to not actually help very much.

  • If I could just add to that, my approach to this as a regulator is that our touch should be proportionate, and I think lightness or heaviness is not exactly the right dimension along which to judge that.

  • Thank you. We'll come back to discuss self-regulatory and co-regulatory models, but that leads me neatly into myth-busting. Can I ask you about prior restraint duties? I think there is still a section of people who believe that somehow there is a duty in broadcasting cases for Ofcom to watch or pre-approve programmes before they are broadcast. Is that something that happened, is that a requirement?

  • It's absolutely not a requirement. It is something that we never do, but it is also true that I still meet people regularly who presume that we do do that, but we don't. We're a post-broadcast regulator. We do not intervene in advance of the broadcast of any programme, and if anybody asked us to do so, we very calmly would explain to them that that's not what happens and if there is an issue after the broadcast, then of course they can complain and raise the issue with us, and that's what is typically happens, but we do not intervene ever in advance of broadcast.

  • Do you think there would be any merit in being able to do so?

  • I think the negatives way outweigh the positives, in my view. I think you are then into a very difficult territory which, not to overdramatise it, takes you potentially into the area of censorship and suppression, and I would feel extraordinarily uncomfortable having to discharge a duty of that kind.

    I think the way our system works is far preferable, which is that the broadcasters understand the code, they understand the approach we will take if they make an error, they understand that there are sanctions, to which they will be liable if they do make errors, and they therefore incorporate that into their judgments and then make a judgment about the broadcast. I think that is a far, far better method than having me or members -- the colleagues at Ofcom seeking to exercise pre-broadcast judgment about whether something should or should not be shown.

  • I could see you nodding --

  • I'm nodding because, as you will see from my CV, I previously worked in -- 25 years ago in a broadcasting regulator that operated a different regime, and I would strongly agree with what Ed Richards has said, that that poses real difficulties in a sense of a danger of restrictions on freedom of speech and expression, and I lived through one particular episode, which I'm happy to say was firmly resisted by the then chairman of that regulator, when a very serious attempt was made by the government of the day to impede the broadcasting of a programme whose tenor they did not agree with, and I saw that at first hand, and I have seen the dangers of that approach, which I think take us into an area where, in this country, we do not want to be.

  • I'm going to ask you now about broadcast licensing, if I can. We know that Ofcom regulates television and video broadcasting in the UK through a statutory licensing scheme, and all TV and radio broadcasting services that you regulate must be provided under a licence issued by Ofcom. A fair and accurate summary?

    I'm not going to go into public service broadcasting or the different types of licence. Suffice it to say that not all TV and radio services are regulated by Ofcom. Most are, and there are a ranges of different licences available which impose different requirements. I should also probably point out that the BBC doesn't need to be licensed in the same way, it's a regulator in its own right, but its charter and also the Comms Act do provide that Ofcom regulates BBC radio and TV in certain ways, importantly in relation to the privacy provisions of the Broadcasting Code, and we'll come back to that in a moment.

    I'm going to turn back to your statement, Mr Richards. You deal at sections 6 onwards with television and radio licensing. I appreciate that it wasn't your decision to create a licensing scheme for broadcasters, but what's your understanding, please, of the rationale for licensing broadcasters in this way?

  • Well, I think it's a historic rationale. I think this an extremely interesting subject. Historically it was, as I understand it, to do with spectrum scarcity. So there is a limited amount of spectrum, so it has to be licensed. Not everybody can use it. So that was the origin of it.

    Clearly it's now possible -- actually, that was the first origin of it, that was the technological origin. The other argument for licensing broadcasting historically was also the one that is associated with the scale and the impact and the nature of the medium, and that argument is concerned with the fact that broadcasting very quickly became an act of absolutely enormous scale. It was in everybody's house and became universal, with many millions of people watching it. So that's a scale and significance argument.

    But it was also to do with the medium, and that is something to do with the fact that you have very vivid moving pictures being beamed into everybody's living room, and some people have called that -- have said that television is therefore an intrusive medium, it's being broadcast in -- what it's broadcasting is decided by somebody else and it's particularly graphic and vivid because of the nature of the pictures, in contrast, for example, to a still photograph.

    Those are the two historic reasons. Clearly today you can run a broadcasting service and you don't actually need spectrum at all. You can run it over satellite, over cable, over Internet protocol television and so on.

    I think there have become two other reasons which are at the heart of why the licensing model works and why we do it the way we do. They are firstly what I would call convention. It is a system which has grown up. New broadcasters have seen the system, have been comfortable with it and have therefore adopted it without any apparent objection. So a satellite broadcaster, for example, we don't come across difficulties in that area, so there's a set of reasons about convention.

    The fourth, which I think is in some ways now arguably the most important, is to do with audience expectations and what the viewer understands and is comfortable with, and ultimately, since we're concerned here with the public interest and what the public feels it wants and how that's expressed through Parliament, that is very important, and I would say that that aspect of this, in other words audience expectation, where viewers are comfortable, is now equally important, if not more important, than any technological justification or indeed actually the justification about the nature of the medium.

    So I think it's that collection of reasons that bring us to where we are today.

  • Do you have any views on whether that is fundamentally different, the rationale for the licensing system is fundamentally different from the rationale that would be applied to for example licensing of the press?

  • I think you have to consider all those four elements of why we are where we are in broadcasting and I think they are important. The press starts with a very, very different tradition in relation to every single one of those arguments, I think. It didn't have the same technological provenance. Indeed, it was the opposite. Any of us could go and publish at will, we didn't need spectrum, so I think its origins in that sense were very, very different.

  • Absolutely. So I think the fact that I could go home this evening and publish a blog in about 20 minutes in my bedroom, and anybody else could, is highly relevant to that fact. It is a different nature. The medium has historically been different, in the sense it's still pictures, it's not as intrusive as a medium, it's more selected by the individual. Though that is, of course, blurring, and we might come back to that. That is a less strong argument in a digital environment. That seems to me to be an argument which is weakening.

    But then you also have convention and audience expectations and it is self-evidently the case that the press and indeed the Internet publishing world starts from a very, very different set of conventions and orthodoxies and culture to broadcasters, and I do think that's pertinent.

    And finally, audience expectations, where again people I think understand that if they go and buy a newspaper they understand that it is regulated in a very different way and they understand that they should expect something very different to that which they expect beamed into their television through a broadcaster.

    So I think saying what's different today and should there be a difference, in my view you do have to go back and really understand the underlying arguments as to why broadcasting is as it is.

  • Moving back to the licensing system, the Broadcasting Act 1990, part 2 of schedule 2, sets out bodies which are just disqualified from holding a licence. We could turn them up, I don't think we need to. There are a number of bodies that would be disqualified. Examples are bodies whose objects are wholly or mainly political, religious bodies, various publicly funded bodies and so on. Can you just again -- I know it wasn't your decision to disqualify those bodies, but what's the rationale for excluding bodies just because of particular attributes? Some might say is it not an unjustified limitation on freedom of expression.

  • You certainly can mount that argument and I think any judgment of that kind needs to consider the freedom of expression argument extremely carefully. I think -- it clearly wasn't our judgment, but I think the rationale for it would go back to the argument that I made about the power of broadcasting. I think the judgment would have been associated with the concern that if political bodies or religious bodies could exploit the unusual ubiquity and power of broadcasting, that would be a concern for all of us as citizens, and I think in essence that is what it's about.

  • I do think it's worth noting as well that this is not a truth universally acknowledged. We are all aware of other countries, other jurisdictions, in which a completely different approach is taken, and I think the point you're on here is about something that is cultural to the United Kingdom, which is expressed in the views of the legislators at the time.

  • I understand that we may need to have a short break, and I was just wondering whether, since I'm about to move on to something else --

  • If that's convenient, that's fine. All right, we'll just give the shorthand writer a break.

  • (A short break)

  • We've just been discussing the need to have a licence. In general terms, in order to broadcast you must have a licence. I now turn on to other requirements, and that takes me neatly on to the fit and proper test. Under section 3(3) of both the 1990 Broadcasting Act and the 1996 Broadcasting Act, Ofcom cannot grant a licence to any person unless satisfied that the person is a fit and proper person to hold the licence. If we look at your statement, Mr Richards, at paragraph 9, 9.1, we see the provisions there. So you can't grant a licence unless the person is considered to be fit and proper, and you must also do all you can to secure that if you cease to be so satisfied in the case of a person holding a licence, that person does not remain the holder of the licence.

    So it's an entry requirement, but it's also a continuing obligation.

  • The fit and proper test is imposed by statute. Again, what's your understanding of the rationale of applying a fit and proper test?

  • I think the rationale, again concern at the significance and role of broadcasting in our society. I think it was recognised by Parliamentarians at the time, this was a very, very powerful medium with enormous potential to influence the country and public opinion and so on, and that therefore there should be some sort of general safeguard against that power being exploited by people who perhaps should not hold power. And I take that to be the original purpose of the fit and proper test, and obviously there is also a dimension in which a broadcasting licence is something that has responsibilities with it, and if you want those responsibilities to be met, then clearly you need to ensure that the people who hold those licences, you would expect to meet them.

    So in a sense, the other function it performs, I think, is a sense check or a guard against giving licences to people who may not actually adhere to the standards and the codes which you want all licensees to do so.

  • All right. So is there any guidance on the meaning of fit and proper?

  • There's no formal guidance, but the guidance really manifests itself at the inception. So whenever a licence is granted, or indeed when a licence is transferred from one party to another, we ask a series of questions and those questions essentially form the guidance against which people I think widely in broadcasting understand are the background for the fit and proper test, and those questions concern I think probably what you would expect. They concern criminality, the propriety of the directors, they concern whether or not the individuals who will hold the licence have breached broadcasting regulations in any particular -- in previous incarnations. There is also a relatively open catch-all, which enables us to exercise some discretion and judgment, should that ever be necessary.

  • No. Plurality is not a test that we associate with fit and proper. Plurality, in a sense, is a separate standard and a separate test, which may be invoked or may be relevant at the point of transfer of a licence, but it's not a part of the fit and proper application environment.

  • So it's just focusing entirely on the human being or the entity that wants the licence, there's no wider consideration than that?

  • No. I think that's right.

  • We'll come back to discuss plurality issues if we can, but still remaining on the fit and proper test at the moment, would the decision, for example, of a proprietor of a newspaper group to withdraw from a different regulatory body be relevant to the assessment of whether or not they are a fit and proper person? You've probably guessed who I'm referring to there.

  • There is, as I mentioned, a general catch-all which permits us some discretion. So we have a degree of discretion in which we can take into account quite a wide range of factors. So I think I wouldn't want to say that things of that kind could never be considered, because I don't think that's right, but it's not our -- it wouldn't necessarily be our primary focus. Our primary focus would be on the specific questions that are set out, so I think in relation to something which is out beyond those sorts of questions, we would be in the territory of asking ourselves, well, how significant is it, how pertinent is it to the holding the broadcast licence, and how do we make a judgment about it?

    So it's in the area -- something like that would be in the area of that broad discretion.

  • The problem is, you'd have to unpick the reasons and indulge in an entirely different inquiry, which is a complete siding to your primary responsibility. A red herring, if you like.

  • You would, I think that's right.

  • Let me perhaps give you a different specific example of a situation where you've decided to revoke a licence on the basis that someone was no longer fit or proper to hold it. It's the Bang Media decision. If we look at tab 28, which is in file 2, I don't want us to go into this in a huge amount of detail, but I just want us to understand in previous terms why the decision was made to revoke.

  • I think you talked about this during the course of the --

  • Yes, you did. I don't want to go into it in any detail, but just give us an overview. The reason I turn it up is so you can refer to parts of it, if you wish.

  • I'm struggling with my file, slightly.

    In essence, this is really concerned with the compliance regime. It's as straightforward as that, to be honest. The question in our mind here was -- or we were confronted by serious and repeated breaches of the code. So we would not revoke a licence for a single breach of the code, unless it was of such an extremity that we felt that that was the right thing to do, but I would say that is extremely unlikely, and I cannot think of a case in which we even considered that.

    In this case, we had repeated breaches such that we concluded that there was no compliance regime in place, there was no prospect of compliance, and that therefore we were really left no alternative but to revoke the licence.

    In no circumstances, I should emphasise -- this is not something we like doing. In some ways, we feel a degree of failure, or at least disappointment, if we ever reach this point, because we, as you know, I think we have a gradation of sanctions. We work very hard to try and ensure that licensees understand what is necessary for them to be compliant. We, I would say, bend over backwards to do that. We would have invited the company in, we would have sought to talk to them and offer guidance.

    But in a circumstance like this, where there are serious breaches and repeated breaches, and they have had warnings and sanctions and there's still no compliance, I think we felt that ultimately we had no alternative but to revoke the licence.

  • And applying the fit and proper assessment, you note at 1.39 of that decision, right at the end, that on that basis, and that includes the repeated breaches, Ofcom had ceased to be satisfied that the licensees are fit and proper persons to hold licences under the Acts and has decided to revoke them.

  • I want to understand regulatory position from there on in. Presumably Bang Media could, if they chose, set up an Internet site providing the same content, so revocation of a licence doesn't prevent publication of the content, does it?

  • That's absolutely right. In fact, there's a number of things they could have done. They could have sought to go to other platform operators and say, "This is just a broadcast licence and surely we can stay on your satellite platform", for example, but happily the broadcast environment works rather well in that case, and, for example, the satellite operator has, I think, a clause in its contract which says that services they carry must be compliant with the Ofcom Broadcasting Code, so that dealt with that issue.

    But certainly there is nothing to stop them, to address the question directly, setting up an Internet site, operating an IP TV service, locating it anywhere in the world and they could carry on running the service in that form, and they may well be doing that, for all I know. What I do know is they are not broadcasting in the UK any more.

  • What effect does the revocation of a licence have then?

  • It takes them off the broadcast platforms, and that's both the terrestrial and, because of the judgments made by the satellite and cable operators, off the satellite and cable platforms as well. That is very, very significant, because that means that you have eliminated your route to market, your way of reaching the audience, through by far the most significant distribution platforms today.

    That will change over time, but it will change very gradually over time, so it does seem to me to still be quite an effective sanction.

  • I say that it wouldn't be regulated, but of course I suppose it would depend, if an on-demand service was being provided, there might be regulation through at body.

  • But it all depends, and you tell me they're not broadcasting so we don't have to worry.

    Moving back to standards, section 10 of your statement, I said we'd come back to standards and content and here we are. If we take up file 1 again. If we look back at the Comms Act, please, it's behind tab 8, section 3. It's just for your reference. We've looked at this in some detail, and I don't want to read it out again.

    The Act confers statutory duties to Ofcom to regulate the content of TV and radio services, as we've seen, but as we've also seen, you must only interfere where action is needed and in a manner which best guarantees an appropriate level of freedom of expression.

    Now, section 319 of the Comms Act, which again we don't need to turn up, but that requires you to set standards for the content of programming on television and radio that are designed to achieve a number of standards objectives which are laid down by Parliament.

    We can turn that up if it would assist. If you look on in the same tab to internally page 846 of 879, you will find section 319. For the technician, it's 03611. This section is headed "Programme and fairness standards for television and radio" and it sets out at 319 Ofcom's standards code.

    At subparagraph (2), you'll see the relevant standards objectives. Many of them will not need to be read out, but we can summarise, for example, persons under the age of 18 have to be protected, material that's likely to encourage or incite the commission of crime or lead to disorder can't be included, news has to be presented with due impartiality, news also has to be accurate, and there are various provisions relating to religious programmes, offensive and harmful material and so on. Again, it would take too long to read everything out.

    That leads us on, achieving those standards objectives leads us on to the Broadcasting Code, because by -- not turning this up but by section 107 of the 1996 Broadcasting Act, you must prepare a code which gives guidance on principles and practices to be followed by broadcasters in connection with the avoidance of -- and then I'll read out the relevant part:

    "... unjust or unfair treatment in programmes or unwarranted infringement of privacy or in connection with the obtaining of material included in such programmes."

    Have I accurately summarised how we get to the code?

  • Again we could turn the relevant provisions up but I don't think it's necessary to do so, but if you at any point want to look at any of the references, let me know.

    You set out the standards for the content of programmes in the Broadcasting Code, which is at tab 16. We will need to look at that, so we can put away file 1 and take up file 2, which contains the Broadcasting Code. If we just turn to the first page of it and then I will -- I see you have your own little copy.

  • You get used to the heavy lifting of these files.

  • We will come on to look at the fairness and privacy standards. They're found in the code at sections 7 and 8. But just some general questions and some general points. The most recent version of the code is February 2011 and it's accurate to say, isn't it, that broadcasters are required as part of their licence terms to observe the Broadcasting Code, breach of it is a breach of the licence conditions and enforcement action may be taken?

  • That is absolutely right, yes.

  • The first thing to note about tab 16, if you flick your finger through it, is that the code is long and detailed. In your view, is that an advantage or a disadvantage? Can broadcasters be expected to know it inside out, remember all the relevant parts?

  • I'm not sure how long it is, actually, in the sense that if you look at your copy in the file, or indeed my actual version here, a substantial body of it is appendices.

  • A very substantial body of it. And I think if you concentrate on the main code, what we've tried to do there is deal with principles and the main issues, and I don't think for working journalists, for example, or working producers, it is a massive or particularly highly complex document.

    One of the things we've tried to do over the years is to simplify and to make sure that principles lie at the heart of it. If people understand principles, and are incentivised and inclined to adhere to the principles, I think that takes you a very, very long way, and in my experience that is broadly the case in broadcasting, and when you look at the principles, most of them are reasonably straightforward, in my view, so there is a degree of complexity that lies behind in the legislative scheme, in the details set out in the appendices, but I think I would want to say to you that we strive, and I hope we've made a reasonable job of setting out the core issues in a reasonably succinct way at the front end of the code.

  • And also written in plain English.

  • And in plain English.

    If we flick now to section 7, we'll --

  • Before we look at the detail, who is responsible for compiling it?

  • For putting it to together? We are.

  • Yes, but do you have a committee that does that?

  • No, the way the code would work is so we review it from time to time and it's right this version is from last February, so it's just under a year old, so we try and update it in the light of practice. It would be drafted by full-time Ofcom employees, and it would then go through our decision-making process for approval, and in this case would be approved by our content board, which is where the hub of our broadcasting expertise lies.

    It could always, as with any Ofcom decision, be then referred upwards to the main board, but as I recall, I think this would have been signed off by the content board in their delegated responsibilities.

  • Have you found it necessary -- I'm sorry, Ms Patry Hoskins -- to involve actual programme makers or editors in the creation of this document?

  • I would say that they are involved very closely in its evolution. We have a very close dialogue with actual programme makers, actual journalists, currently practising but also those for whom we can -- those who we can draw on who are no longer practising but still have a deep well of expertise, and we draw on that very heavily.

    So just to underline the point, what does not happen is that half a dozen people in Ofcom hide in a room and write a code. What actually happens is that those people talk on an open way over an extended period, test ideas, examine them, review them, and that process would involve working journalists, working producers, working editors, as well as those of -- with previous experience, but the decision on the code would then be ours, and the decision would be made by the content board, so it's incorporating, understanding latest practice and things of that nature, but the decision absolutely remains with us.

  • I was coming on to ask you about section 7. I was going to ask you the same question about who is involved in writing this section, but is that the same as the answer that you've already just given?

  • Section 7, fairness?

  • Can we start, please, with the foreword to section 7, because it says this:

    "This section and the following section on privacy are different from other sections of the code. They apply to how broadcasters treat the individuals or organisations directly affected by programmes rather than to what the general public sees and/or hears as viewers and listeners."

    In that sense, it is rather different.

  • Yes, it is subtly different, that's right.

  • In relation to fairness, if we look at the general principle just under the foreword:

    "The general principle is to ensure that broadcasters avoid unjust or unfair treatment of individuals or organisations in programmes."

    And then it sets out practices -- well, there's a rule and then it sets out various practices to be followed. That's set out right through to 7.14. There's essentially some guidance on how to ensure that you avoid unjust or unfair treatment of individuals or organisations.

  • Can I just make one quick observation?

  • Because that is -- in a sense, there we are, that is fairness in one, two, three, four short pages. What of course also lies behind this is substantial, in a sense our caselaw of judgments made in relation to fairness cases, and you will find that the broadcasters are highly familiar with those judgments. So the two sources for them understanding and making their own judgments on this are not only four pages here with the appendices, but also all the caselaw and the judgments that we've developed over some years.

  • How would they be aware? You said they would be very aware of those.

  • Those judgments are published and any judgment we make carries a reasoned decision and they are transparently available to everybody.

  • All right. Thank you. I don't want to read out this section, I'm sure that the chairman can read it at his leisure. Is there anything that you particularly want to draw out from this before I turn to the privacy section?

  • I don't think so, no. Probably merely to highlight again the point I began with, which is if you look at the principle, it's very simple, and so long as it is backed by the organisations involved understanding that if they don't adhere to it there will be sanctions and enforcement, it takes you a very long way.

  • Actually, it's rather more than that, because what you say in the foreword is:

    "If you follow the letter of this but not the spirit, you can still be in breach."

  • And even if you follow every letter --

  • That's absolutely right.

  • -- you can still be in breach, but if you don't follow, you won't be in breach if there's no unfairness. So actually you've put it both ways. You are seeking to identify a way of working and, if you like, a culture of fairness, making the point that, unlike legislation, we're not trying to set it down in such black and white rigid terms that you can say, "Oh, well, I actually did this", and still not be in breach.

  • I think that's a very important point.

  • Yes, it's trying to get away from ever having a sort of box-ticking compliance culture that doesn't really go to the heart of what people do, and we've tried to express this in a way that encourages people to think about what they actually do, rather than "Have I ticked a box?".

  • Turn to section 8, which has a very similar provision halfway down the first page:

    "Following these practices will not necessarily avoid a breach of this section of the code."

    If we look at the general principle in section 8, it is:

    "To ensure that broadcasters avoid any unwarranted infringement of privacy in programmes and in connection with obtaining material included in the programme."

    I want to explore, please, what "warranted" or "unwarranted" means. It appears there within the general principle. It's defined just below it, the meaning of "warranted". It has a particular meaning. I will read it out, it's important:

    "It means that where broadcasters wish to justify an infringement of privacy as warranted, they should be able to demonstrate why in the particular circumstances of the case it is warranted. If the reason is that it is in the public interest, then the broadcaster should be able to demonstrate that the public interest outweighs the right to privacy. Examples of public interest would include revealing or detecting crime, protecting public health or safety, exposing misleading claims made by individuals or organisations or disclosing incompetence that affects the public."

    No further guidance on what "in the public interest" means, but what is clear, I hope you'll agree, is that "warranted" is wider than "in the public interest".

  • Because it specifically says if the reason is that it's in the public interest, then X.

    What other reasons could there be, other than it is in the public interest? Can you help us with that?

  • I'm sorry, I'm slightly struggling here. I don't think either of us really understood the question.

  • Sorry if I haven't made it clear. There's a definition of "warranted", and an infringement of privacy would have to be, or must be, warranted, right?

  • One of the reasons it might be warranted would be because it was in the public interest. What other reasons other than being in the public interest would mean that an infringement of privacy was warranted? What other kinds of reasons have you seen advanced?

  • I think the direct answer to that is very few, and I think we may be inferring more than is intended. I think our primary expectation of a broadcaster in this area, if they are infringing privacy, is that it has to be warranted, and our typical expectation of that would be that there is a clear public interest justification. So I don't think there is a significant area here which is in some way obscured or hidden.

    The typical justifications that we receive we deal with a fair number of these cases, as you can imagine, and I would say they are overwhelmingly concerned with the items on that list.

  • And the language is identical to the language that we've been looking at in relation to the public interest in the code.

  • I'm not trying to test you on that.

  • I'm simply seeking to understand whether "unwarranted" or "warranted" would be a better, more inclusive term than "public interest", but it sounds to me from what you say that by and large the reasons advanced usually are that it's in the public interest.

  • I think actually we're talking about this in slightly different ways. I think why we're using the word "warranted" is we're trying to convey the necessity for making a judgment, where you on the one hand have, let us say, the exposure of crime or independence, versus the right to privacy, and we are using the word "warranted" to describe that process of making a defensible -- and I emphasise defensible -- judgment about how that balance has been struck in the journalistic decision-making. In other words, warranted isn't the end of the argument, it's a description of how you've made the judgment.

  • All right. That's very clear.

    If we look underneath the definition of "warranted", we can see that there are various practices to be followed. There's a heading, "Private lives, public places and legitimate expectation of privacy", and then the code goes on to define the meaning of "legitimate expectation of privacy". Again I'll read it out because I have a question to ask you about this:

    "Legitimate expectations of privacy will vary according to the place and nature of the information, activity or condition in question, the extent to which it is in the public domain (if at all) and whether the individual concerned is already in the public eye."

    Then it goes on to say a number of other things which I don't need to ask you about.

    Why is it a relevant consideration that the individual concerned may already be in the public eye when determining whether they have a legitimate expectation of privacy?

  • I think it's probably connected to the last element, or at least in part, and really significantly connects to the last part of the meaning of "warranted". So in my mind there is a connection between, for example, the disclosure of incompetence which affects the public, and I think the connection to somebody in the public eye is that there could be or we might expect there to be some sort of connection to a position of power or influence, which might -- through which they could influence the public more generally. So I think that's the key connection that's being made there.

  • And in absolute fairness, we should read out the final part of the definition of legitimate expectation of privacy which is that you recognise that people under investigation are in the public eye and their immediate family and friends retain the right to a private life although private behaviour can raise issues of legitimate public interest.

  • So you don't simply say someone's in the public eye, that might warrant --

  • I think that's very important to us. So there is -- if you are in the public eye, you're taking decisions of that kind which affect the public, you are in a different category to an ordinary private citizen, but it does not mean that you have no rights to privacy at all. I don't think it could possibly mean that.

  • I don't want to go through all the practices to be followed. I want to alight on two, and the first is at 8.11, "Doorstepping":

    "Doorstepping for factual programmes should not take place unless a request for an interview has been refused or it has not been possible to request an interview, or if there is good reason to believe that an investigation will be frustrated if the subject is approached openly and it is warranted to doorstep. However, normally broadcasters may, without prior warning, interview, film or record people in the news when in public places."

    And then there's a definition of the meaning of "doorstepping".

    Is that something that you have to consider -- I appreciate that you may not individually have to deal with this on a regular basis. Is this something that Ofcom has experience with that it could share with us?

  • The origin of this is interesting. I don't have an encyclopaedic memory of all previous broadcasting codes, but I suspect this is something that would not have been in the original code. This is one of the things that has emerged as the evolution of media practice has changed, and doorstepping became a phenomenon, and therefore the code had to adapt to deal with it.

    That would have been some years ago, but you can see here its latest manifestation.

    We can come back to you and provide some information on the extent to which doorstepping is a problem with which we're dealing at the moment. I don't recall off the top of my head many recent instances.

  • But we can provide the Inquiry with a precise answer to that.

    Generally speaking I think the code here is relatively clear and I think I would be right in saying that generally speaking broadcasters understand it and adhere to it.

  • I only raise it because in some circumstances some witnesses to this Inquiry have come and said, especially when they're being asked about photographs taken in a doorstepping situation, "It wasn't just us, the TV cameras were there as well". So I want to understand what the requirement is here. It seems to be that doorstepping shouldn't take place unless one of these situations arises and it is warranted to doorstep, so we come back again to a requirement that it be warranted.

  • I think there are variants of doorstepping. You notice the final line of 8.11, where we say:

    "However, normally broadcasters may, without prior warning, interview, film or record people in the news when in public places."

    I think that kind of context is quite different to some of the incidences of doorstepping which I have seen, which is a far more aggressive and surprising intervention in relation to someone who is not at that point in the news. I think if somebody is in the news, they know that the media are interested in them, they know if they walk down Oxford Street there is going to be interest in photographing them. There is a difference between that and the more aggressive form of surprise doorstepping, on the doorstep of someone at 7 am or 6.30 am with a microphone thrust into the face and things of that nature. That seems to me to be a quite different approach.

  • Which side of the line would it fall if somebody in the news -- and we could take an example from today without identifying it -- would it be appropriate and within the rules to knock on his door because he's in the news?

  • I hesitate to answer --

  • Because you might have to, that's fair enough.

  • Absolutely. I think it is all about judgment, and I think that is a possibility that we might have -- it's conceivable we could deal with it.

  • You're entirely right, Mr Richards. I see the point. But before I forget on this doorstepping issue, the PCC have developed this anti-harassment policy. Are you involved in that?

  • We are. This was a -- I think a fairly straightforward positive step by the PCC with our agreement. Media scrums had become a problem. We were aware of that. We could have done something and were indeed, I think, considering doing something about it under our powers. The PCC succeeded in securing the commitment to an approach in this area amongst the newspapers, and there was a discussion or a proposal at some point about could the broadcasters join as well and we were very happy to support that.

  • Is that in the code or not?

  • It's not set out in the code, but it's well understood and as far as I'm aware, it works reasonably well.

  • Does it mean you have to get involved to notify?

  • I think the system is that an email is sent around by the PCC, the broadcasters we have encouraged to be recipients of that email, and therefore the system works in that way, and we're perfectly content for that to be the case.

  • You don't have to send it on, it goes to everybody?

  • No, I think it goes to everybody.

  • It's a constructive step forward.

  • It goes back a bit to the question we were on much earlier about proportionality. In this case, if another regulator or another organisation has got a perfectly good approach that you can hook onto, that seems to us to be a good way to develop.

  • The second practice I wanted to look at is contained at 8.13 onwards; it's about surreptitious filming or recording. Again, it should only be used where it's warranted and normally it will only be warranted in certain circumstances, so again there needs to be some evidence of a story in the public interest, reasonable grounds to suspect that further material evidence could be obtained, and it's necessary to the credibility and authenticity of the programme. That could seem to rule out fishing expeditions; is that right?

  • It is intended to rule out fishing expedition. The first bullet point of 8.13 is intended to be the spirit of ruling out fishing expeditions, so you can't just go and have a look. Prima facie evidence of a story on public interest seems to me to be reasonably clear in relation to that.

  • All right, I don't think we need to say anything more. I want to move on to your adjudication role in fairness and privacy cases. Just so we understand where we are, I'll summarise it in this way: obviously a member of the public can view a programme and then complain about what they see in standards terms, so they can complain about accuracy, harm, that sort of thing. That's clear. But there's also a specific duty that Ofcom has to consider and adjudicate on complaints that relate to unjust or unfair treatment, or unwarranted infringements of privacy. Have I accurately summarised the two routes of complaint, if I can put it that way?

  • Section 10 of the 1996 Broadcasting Act, which we don't need to turn up, gives you that specific duty to consider and adjudicate on such complaints, so unfair or unjust treatment or privacy. But you can also consider and adjudicate on complaints which relate to the obtaining of material included in such programmes. Is that fair and accurate?

  • Okay. So you're not limited to considering whether the content of a programme was an unwarranted infringement of privacy, for example, but you can also investigate whether the manner in which the material was obtained amounted to such a breach, would that be fair?

  • Okay. What I want to understand now is who can complain on this basis. You explain in your statement, Mr Richards, that you are limited in your capacity to entertain privacy and fairness complaints. If we look back at your witness statement in file one, you'll find this at section 12.3. I say first witness statement; I know there are three.

    I forgot to check at the outset, sir, that you have all three statements?

  • We'll have a tiny pause while I see what you're missing.

  • I'm not sure I have more than one statement.

  • Oh, okay. I'll hand up a copy of the second statement, which is important, because I'll be asking questions about it. It's very brief and I won't be covering it before lunch.

  • That's good. I need reading material, yes.

  • You don't need to read it --

  • No, I will read it, don't worry.

  • The third statement was received yesterday and it was a response to some questions which had been put to Ofcom at rather a late stage, so it's no fault of theirs that it was received very late in the day, but again I don't think we will need -- I will provide you with a copy, of course, over lunchtime.

  • But we may not need to refer to it.

  • I certainly want to read it.

  • Of course, we'll provide it.

  • 12.3 of the first witness statement. You explain that by sections 111 to 114 and 130 of the 1996 act, they provide for certain statutory criteria which must be satisfied before you're entitled to proceed to consider a fairness or privacy complaint. In summary terms, so that we don't have to turn it up, you explain that fairness and/or privacy complaints may be made by an individual or by a body of persons, but you are normally under a duty not to entertain such a complaint unless it is either made by the person affected or by a person authorised by him or her to make a complaint on their behalf. And in relation to privacy, "the person affected" means a person whose privacy was infringed.

    Although there are other provisions, for example, if someone has died, a complaint can be made on their behalf --

  • Up to five years after the death.

  • Exactly. So those are the limitations in the act on who can bring a complaint. That's in direct contrast, as I understand it, to the right of a viewer of a TV programme to complain about harm or accuracy; is that correct?

  • That is correct, and that's because harm and offence is primarily concerned with viewers, so the receiving parties, and fairness and privacy is about those affected by the making or broadcast of the programmes.

  • Exactly. So we can see it's a matter of general principle why that might be. A person who's been unfairly treated or a person whose privacy is being invaded may well be the person who should bring the complaint on that basis.

  • But that would mean that the technical statutory interpretation would be that even where a broadcast contained a really egregious invasion of privacy, Ofcom would be unable to consider any privacy complaints unless the person affected had made a complaint. Is that how Ofcom interprets those provisions?

  • No, not quite. We regard the central locus of our responsibility here as to concern with those affected, hence the primary expectation is that a complaint would be made by the individual or organisation affected or someone acting on their behalf, but we also interpret the statute to include a degree of latitude, through which, under what we describe in our procedures, I think, as exceptional circumstances, where the general duty to provide adequate protection to the public at large in relation to unfairness and infringement of privacy would permit us to initiate an investigation or consider a case without a complaint from the individual.

  • Pause there. That's going back to the general principles in section 3 of the Comms Act?

  • So you would interpret section 3 and your general duty to secure the application of standards that provide adequate protection, et cetera, you consider that to mean that you can, in exceptional circumstances, consider a complaint even when the person affected has not complained?

  • Is that a contentious application of the section or --

  • Yes. Well, "contentious", I would say, is slightly too strong. It is not an application with which everybody wholeheartedly agrees. There are -- there is a body of opinion amongst the broadcasters that that is an extension beyond which we should go, so in other words there are some broadcasters I know -- and I'm talking about individual practitioners rather than a corporate position here -- there are certainly some people who would argue that it should be absolutely restricted to complaints made by the individuals affected. We have not taken that view. We have taken the view that there is a degree of latitude, it's not a huge degree of latitude, we wouldn't embark upon a case of this kind without very careful consideration, but that there is a degree of latitude which would permit us to take action of that kind, and in one notable case we have, and I am sure I can think of one or two other cases where we weren't sure if a complaint would be forthcoming, and where we would certainly have considered using that power as well, if a complaint had not been forthcoming. In those cases that I can recall, a complaint was forthcoming and we ended up addressing it --

  • So it might be one of two ways. It might be that somebody else, who is not the aggrieved person, complains; a viewer.

  • Or might it also be you've seen something which you feel breaches your standards and without anybody saying, "I complain about this", you could initiate a complaint? Is that right or does that go too far?

  • No, that is right, but the threshold in both cases is high.

  • It's considerable. So these are exceptional cases. I don't want to give you the impression that because we had a flurry of complaints whipped up by media interest that somehow that would lead us to making a judgment of that kind. I think that would be extremely unlikely. I think the cases we're talking about are where we have particular evidence before us which would make us consider it, even though there were no specific complaint, or where the case appeared to be so egregious or extreme that we felt it did place a question against our fulfilment of the more general duty.

  • Although, presumably, somebody would have had to have brought your attention to the programme. You've not got people monitoring every programme.

  • Somebody has to have seen it.

  • Yes, and typically where something is particularly egregious, someone will be making a noise somewhere, we obviously monitor what's happening and therefore we would expect to have noticed it.

  • All right. But you say to me exceptional circumstances would not necessarily simply arise because there was a media frenzy about a particular issue. Let me give you a specific example. The Russell Brand/Jonathan Ross example. As I understand that, there was no complaint by Andrew Sachs or Georgina Bailey in that case, but nevertheless there were a number of -- clearly something that the press took an interest in. What was the application of exceptional circumstances in that case?

  • Particularly interesting case because there was a huge media outrage about it, and therefore that was taking place, but that was absolutely not the reason that we took that case forward.

    There were two sets of reasons for invoking the exceptional circumstances for that case. The first was the particularly extreme nature of the offence, so Andrew Sachs and Georgina Bailey, very, very serious infringement of their privacy. They did not seek to be on the programme, they did not seek to be subject of the broadcast, and that's a big distinction with some other cases. The infringement was repeated more than once, and it was then indeed underscored or amplified by the apology, which, of course, was largely sarcastic. So you had a particularly egregious case.

    You also had a situation in which the BBC themselves said relatively quickly that there was substantial editorial compliance failure, there was editorial misjudgment, and there were compliance -- procedural compliance issues weaknesses as well, in addition to the fact that the BBC Trust then said, quite openly, this was a wholly unacceptable breach of privacy.

    So we had both the facts of the case in front of us already, we then also had concrete evidence of the significance of the case accepted by the broadcaster, and in those circumstances, we took the view that this was an exceptional case, Andrew Sachs and Georgina Bailey did not complain, but we invoked the exceptional circumstances when confronted with that body of evidence.

  • And you would argue that was absolutely in the public interest?

  • I absolutely would argue that was in the public interest. I think it was entirely the right thing to do and I think it was extremely important for not only the BBC Trust but then ourselves as the statutory regulator for all of broadcasting to send a very, very clear signal that this kind of behaviour was wholly unacceptable.

  • Yes. My next question was going to be: some may say that this duty or this power to act independently of complaints is what strengthens your position as a regulator. Would you agree with that sentiment?

  • I think it's very important that we have the power, for the reasons that I think we've just been describing. It's obviously also important that we exercise it very carefully and in light of the facts. I say that because I'm not in favour of us having such latitude and such unqualified power that we would be exercising that power in an undue or incautious way, so I think it's important that it's pitched appropriately, but the general point you're asking me about: is it important that we have, in a sense, an own initiative power?

  • I think yes, it's extremely important.

  • My last question before lunch is this, and it touches on what you've just said: why is there a need to limit the exercise of such powers to exceptional circumstances?

  • I think because everybody needs to know -- everybody needs to know where they stand, and you don't want to take the risk of a regulatory authority or any public authority that has power that is unchecked or unqualified. I think that's wise in all circumstances.

    It's particularly important in these circumstances, because of the risks of such overweening power in relation to freedom of expression, so it's always important, but I think particularly important in this context.

  • Very good. Well, we'll resume at 2 o'clock. Is that right? Thank you.

  • (The luncheon adjournment)

  • Good afternoon, Mr Richards, Dr Bowe. Just before we move away from the discussion we've just been having about the Russell Brand/Jonathan Ross complaint, can I raise with you something that was said yesterday in evidence about the time in which it takes to deal with complaints.

    It was said yesterday by Lord Grade that when the complaint came in to them at the BBC, the matter was resolved very quickly. They were able to deal with the complaint in the course of a week or ten days.

    But of course the same complaint to Ofcom, he said, would take much longer to resolve, and that was a disadvantage of statutory regulation in his view. Do you have any comment to make about whether or not that's a disadvantage of statutory regulation?

  • Perhaps one or two observations.

    I think the first is that we have a very, very wide range of complaints, and some of them are dealt with very quickly. Those are the easy ones. When a complaint takes a longer period to resolve, it's typically more complex and requires more consideration.

    I think the second point is that you would expect the organisation responsible, the governance of the organisation responsible for a situation of that kind to act swiftly, because there are editorial compliance issues, there are managerial responsibility issues and things of that nature.

    I would always expect any of our licensees or people we regulate to make their own judgment about something that happened under their watch in their organisation, and you'd expect them to do that reasonably quickly.

    We in this regard are a statutory regulator, so we, of course, have to consider due process, we have to make sure representation is taken, we have to make sure that in exercising our powers we do so properly. So in a complex and difficult case, that is likely to take longer.

    I think the other peculiarity of that particular case is that I think I recall that we knew the BBC were doing their own investigation --

  • -- we knew the Trust were looking at it, so we bided our time because it would clearly be relevant to any finding, particularly in the context of any possible sanction, as to what response the BBC themselves had taken.

    So I wouldn't myself read too much into that, and I would emphasise that sometimes we have cases that I think can be and are dealt with very swiftly because they are relatively straightforward.

  • Presumably in a case such as that, you will also be thinking about the wider ramifications beyond the specifics of Mr Brand and Mr Ross.

  • Absolutely. And as we mentioned before lunch, that was a case which -- through which we used our exceptional circumstances. There was no complainant. And therefore it did raise wider implications, and therefore I don't think I would want to remotely apologise for taking due consideration to come to a conclusion.

  • No, I don't think it was a question of requiring an apology. I think the point that Lord Grade was making was rather different. He was saying "As a self-regulatory body we can act extremely quickly and get it done in short order, whereas statutory regulators have compliance procedures and it's much more formalistic and all terrified about judicial review, et cetera, et cetera". I possibly don't do him full justice.

  • There's clearly an element of truth. If you are subject to judicial review in that way, then you need to take the right amount of care and so on. I think the BBC Trust were making the other decision in the Ross/Brand case, and they are a statutory body as well.

  • Slightly different. So it is true to say that we have to exercise our power carefully and with due process. It's probably true in a perfectly formed, well-functioning, self-regulatory environment that decisions potentially can be made quicker, and that's probably potentially the case, but I think it's much more important in the long term that whether it's self-regulatory, co-regulatory or statutory regulation, it's much more important that there is respect for the decisions at the end of the process. What matters far more is that the decision is the right one and has been taken in the right way, rather than it has been taken quickly.

  • Is that even true from the point of view of a complainant?

  • I think a complainant is far more concerned to have the right answer, or have a fair process, and then in their mind ideally the right answer, but certainly a fair process. I think complainants would be far more concerned about that than the speed of the answer, generally speaking.

  • The second point I wanted to raise before I moved on was on the Broadcasting Code. You'll remember that the Chairman asked you a few questions about who has input into the code.

  • And you pointed out that industry figures would have input in the way that you explained. But I wanted to understand whether there's any form of public consultation or any other procedure that would involve the public.

  • Yes, absolutely. So the Broadcasting Code is very similar to anything else we do in that respect. We would consult on any revision to the code and we would expect to receive responses and input on that from practitioners but also literally members of the public, bodies representing members of the public, bodies purporting to represent, bodies of opinion of the members of the public and so on, and typically on the code we would have a very wide-spread range, a diverse range of consultation responses, but we would always consult widely for a revision to the code, that's right.

  • That's helpful. I'm going to move on now to the adjudication of complaints, please, and the procedures that are in place. The procedures for considering and adjudicating on fairness and privacy complaints are set out in a document headed "Procedures for the consideration and adjudication of fairness and privacy complaints". It's in tab 18 in file 2. It's a different process from other content complaints, as far as I understand. I have given you the reference so we can turn it up and refer to it if necessary, but again I'm going to summarise the procedures in the interests of saving time. Tab 18. It's 05144.

  • In essence, there'll be an investigation and it will -- I'm summarising in very general terms and then I'll come onto the specifics. In general, there will be an investigation, it will look into whether there is an issue to be considered under the code and if so whether the code has been breached.

    Can I start from this point: complainants are firstly encouraged to approach the broadcaster directly before complaining to Ofcom.

  • We can see that from paragraph 1.7 of the procedures document.

  • Do you provide any kind of assistance with that stage? Is there any mediation service or are they simply referred to the broadcaster?

  • I think our general approach is to refer to the broadcaster, so what we call a broadcaster-first approach, and we encourage people to take the complaint and seek immediate redress for their concern or explanation from the broadcaster. The reason for that is, in a sense, linked to the earlier question, which is: if that does offer resolution, then that is very speedy and very efficient, so that's a preferable route, and that's what lies behind that.

  • Okay. So they're encouraged to follow the broadcaster's own complaints procedure, but if they don't, are they in any way precluded from coming to you?

  • Moving back now to when you were considering a complaint, I'm going to summarise again: the complaint needs to be made within a reasonable time and generally speaking that means within 20 working days after the broadcast of a programme, although it can be extended.

  • You decide whether or not at that stage to entertain the complaint. If it is entertained, then representations are invited from the broadcaster. You then come to a preliminary view and there's then publication of an adjudication.

    I know I've summarised it in very basic terms and probably missed some stages out, but is that a fair assessment of the process?

  • It is and there are occasionally cases where the 20 days is extended. We had a particularly celebrated one during the course of the last year or two. So there are circumstances in which that 20 days is moved.

  • That's absolutely clear from 1.10 of the document. It actually explains that -- yes, ordinarily you won't accept a complaint after that, but there are circumstances in which the time can be extended?

  • That's right, and that does happen.

  • What I want to understand is a bit more about the process. Let me ask you a series of questions, the first being: to what extent can you require the production of evidence by broadcasters? I mean, require it, say, "Look, provide us with X, Y and Z material"?

  • Yes, we are absolutely able to do that and there is an obligation on broadcasters to keep records. So we would -- I can -- I'm not going to quote the exact obligation, but we can provide that to the Inquiry, but we expect and there is an obligation for broadcasters to provide such evidence, that's right.

  • Right. And then going back to the timeliness point, do you consider yourself under an obligation to adjudicate quickly and if so, how do you ensure that all the necessary evidence and issues are considered in an effective way?

  • I think this is again an echo of what I said in answer to one of the earlier questions. It often depends upon the complexity of the case.

  • So we have internal measures to ensure that we are not being lax or slow or inefficient, but that would be an average or for a typical case, so we test ourselves against that efficiency measure, but within that there will always be fairly straightforward cases which come well within the time period, and complex cases which typically take longer, and that is to do with the body of evidence you need to gather, the time it takes to assess that evidence, take representations and so on and so forth.

    So I think it's quite closely linked to the complexity of the case.

  • All right. Still sticking with procedures when you're considering fairness and privacy complaints, the document does allow for an oral hearing to be held. Is that something that happens on a regular basis?

  • It doesn't happen on a regular basis. It has happened and it is important to say that the opportunity is there. Typically we don't find it necessary, and I would say that is predominantly the case, so we -- it's not a common occurrence, but the opportunity is there.

  • Right. If an oral hearing were to be held, is it very legalistic, are lawyers invited, do lawyers represent the parties?

  • I think they can do. I think people have that opportunity. What you mainly want to get to, of course, is an accurate understanding of the case, the concern and the circumstances, so I wouldn't want to exaggerate the legal nature of it. It's more about really understanding the source of the concern and the nature of the circumstances of the complainant. And then also, of course, the broadcaster's side of the story. It's very important to take both sides, both perspectives, to make a judgment in this kind of area.

  • So if I were a complainant on a fairness or privacy complaint, I would put in my complaint to you, I could request an oral hearing -- if it was entertained then I could put in a request for an oral hearing, I could attend, I could be represented if I want to, the broadcaster could also be represented presumably in those circumstances as well?

  • And is there any cost jurisdiction?

  • No. I think one of the key parts of our whole approach is what I would call -- I would say it is essentially free at the point of use. I regard that as something that is extremely important here. The threshold of being able to complain and to pursue a complaint is very low, and I think we regard that as at the heart of making sure that we're an effective organisation, and it's simply about accessibility. The right of complaint is not really a right if it costs a significant amount of money to exercise it, so we try and minimise any cost and the core activity is free at the point of use.

  • I understand. Can I move on to statutory sanctions. As I understand it, sanctions apply equally to standards and fairness cases. Again I'll attempt to summarise it so we're not going through lots of pages of legislation.

    In the event of the breach of a condition of a licence you have the power to impose statutory sanctions on the broadcaster under provisions which are contained by and large in the Broadcasting Acts?

  • Can we make it absolutely clear, just because there's a finding by Ofcom that there's been a breach of the Broadcasting Code following a complaint doesn't necessarily mean that there will be a sanction, there can just be a finding there's been a breach?

  • Absolutely. In fact, I don't have the statistics to hand, but a very significant volume, a very significant volume, are simply breaches. And that is about not seeking to use the sanction powers unnecessarily or gratuitously. It is quite often the case that sometimes an error of judgment has been made, good compliance was in place and -- but in our view it's fallen the wrong side of the line and we need to make that clear, and broadcasters learn from that and make better judgments, we hope, next time. But in many, many cases we do not consider a sanction at all; it's just clarity that that was a breach and we leave it there.

  • All right. We'll come on to consider the situations in which you would consider imposing a sanction, and in that respect can we turn to the next tab, tab 19, "Procedures for the consideration of statutory sanctions in breaches of broadcast licences". I congratulate you there on your use of plain English.

    It's obviously a document which sets out the various different procedures, and if we look, please, firstly at paragraph 1.10, which is on the fourth page, I think this reflects what you've just been saying, Mr Richards:

    "The imposition of a sanction against a broadcaster is a serious matter. Ofcom may, following due process, impose a sanction if it considers that a broadcaster has seriously, deliberately, repeatedly or recklessly breached the relevant requirement."

    So that's the threshold, am I right?

  • You have various sanctions available to you, and I will again attempt to summarise them in this way: you can issue a direction not to repeat a programme or advert, you can issue a direction to broadcast a correction or a statement of your findings, you can impose a financial penalty, you can shorten or suspend a licence (that's only applicable in certain cases) and/or you can revoke a licence again. That's not applicable to all channels, for example the BBC would be excluded from that, but have I accurately summarised the sanctions available?

  • One of those is obviously a financial penalty, and I'll come on to explore with you some of the examples of financial penalties, but in some cases they can be considerable. We will come on to see penalties imposed of hundreds of thousands of pounds. To what extent do you consider the existence of a financial penalty to have a chilling effect on your broadcasters?

  • A chilling effect on the broadcasters?

  • Yes, a chilling effect is one of the buzz words -- buzz phrases?

  • Yes, but I hope it would have.

  • Well, I would distinguish between the chilling effect on bad behaviour contrary to the code on the broadcasters, where I think it is extremely effective, and any chilling effect on, for example, investigative journalism, which I am not at all persuaded that it has.

  • How can you tell that there's a difference?

  • I think the difference is in our own experience over many years and indeed our predecessors in relation to the effect on the effectiveness of compliance, the attitude and the response of broadcasters when there is a threat of or when there is an actual financial sanction. It is -- it focuses the mind. It has significant reputational impact, it obviously has an economic consequence and it is a very effective deterrent. Very effective deterrent. But the effect it is having is on the effectiveness of compliance, the procedures, the focus withing the broadcaster, both individual journalists or producers and higher up the editorial chain on ensuring compliance with the code.

    I think that is quite different, and I'm happy to explore this in more depth, from a financial penalty having any alleged impact on the conduct of investigative journalism.

  • Of legitimate journalism.

  • There is no reason at all why the presence of a financial penalty should deter good, effective investigative journalism, because good, effective journalism stays within the code and is therefore not subject to it, and indeed there are plenty of examples of broadcast journalism, broadcast investigative journalism, which has been both controversial, highly challenging, which has been done entirely within the Broadcasting Code. So the notion that it is simply not possible or somehow there is no investigative journalism in broadcasting because of the presence of the code or the possibility of a financial deterrent simply, to me, is not supported by the evidence.

    That is my perspective, that is a perspective borne from my experience here, it's a perspective borne from talking to dozens of journalists in broadcasting who I know, and you will have taken your own evidence from practitioners.

  • To me it doesn't make sense. If you can do the job properly, then that's what you do.

  • If you have to break the rules, then you're breaking the rules.

  • Right. I think that's right.

  • If you want to read a good account of how this looks to a current broadcast journalist, I'd suggest you might like to have a look at Jon Snow's recent Cudlipp lecture, which is on precisely this point, where he vigorously challenges the proposition that the kind of statutory regulation that he works within has a chilling effect on his journalism.

  • Yes, that's the slightly different question, isn't it? That's going to the statutory self-regulation issue, rather than whether it's appropriate to impose a financial penalty.

  • Well, it's connected, though, I think, because I think a lot of the comment we have heard in recent weeks has slid very quickly from statutory to chilling, as it were, in the way that this topic was first introduced.

  • I understand the point that you're making.

  • Perhaps another way of looking at it would be this, would be to consider the caselaw, if I can put it that way, of decisions that you have -- adjudications that you've handed down over the years with a view to seeing whether financial penalties have ever been imposed in situations where all that was really happening was good investigative journalism. Are you aware of any case in which a financial penalty has been imposed where the breach was as a result of some kind of true investigative journalism?

  • I'm struggling to recall one. I don't want -- there is a difference. I don't want to convey the idea that we think the broadcast environment is identical to all other environments like the press and so on. There is a difference. And I think it's clear that people in the press are able to, shall I say, take more risks, might be the way of putting it. But what I think I would challenge and hopefully have done is the notion that investigative journalism, robust, effective investigative journalism is somehow inconsistent with the regulatory model that we have, because I simply do not think the facts support that.

  • But on your precise question of instances of financial penalties, I think we're going to have to provide information to you on where there have been financial penalties and in what context. You will see from the fact that we are both struggling to think of a case where there has been a financial penalty in respect of some investigative broadcast journalism, there's nothing that springs straight away to mind, but it might exist.

  • The only one that suddenly springs to mind is the Carlton TV case to do with the drug wars, as I recall, many, many, many years ago. It predates Ofcom by many years, but that's literally the only one I can at the moment recall.

  • I'm sure you can provide answers. If there was an example, we'd be grateful to receive it.

    Again, I just want to wrap up one other point, that's the extent to which Ofcom seeks to impose penalties that are proportionate to the broadcaster's revenue and also to the severity of the offence and also to the financial gain that's attributable to the breach. Can I summarise this very briefly without turning up the rather complex provisions: in most cases, the maximum financial penalty for commercial TV or radio licensees is £250,000 or 5 per cent of the broadcaster's qualifying revenue, whichever is the greater?

  • And in terms of licensed public service broadcasters it's very slightly different. For the BBC, the maximum financial penalty is 250,000?

  • These are very complex provisions. I just want to make sure that I've summarised them correctly?

  • And you have penalty guidelines which set out the procedure for assessing an appropriate penalty in the event of an unfairness finding and again all those factors will be taken into account.

  • I'm now going to ask you very briefly about some adjudications of complaints in practice --

  • Before you come to practice, I want to ask a different question.

  • How much more significance is attached to the imposition of a financial penalty over and above a direction to broadcast a correction? My question is linked -- I'm sure you see the parallel.

  • The Press Complaints Commission require a publication of an apology, or some redress, but can't impose a financial penalty; you can do both. I rather gather, if only looking at the bullet points and the way they're set out, you see the issue of a direction as coming below the imposition of a financial penalty, so you might very well issue a direction without imposing a financial penalty.

  • But would I be right in saying you wouldn't issue a financial penalty without also giving a direction?

  • I think that's right. It depends upon the nature of the case, but generally speaking that is right.

    I think the other point to make in drawing the parallels that you're inviting us to do, the other key aspect of our direction in relation to corrections or statements is that we determine its form and its location and its visibility. And that is non-negotiable.

  • I think that's very interesting. And more than one witness has expressed the view that the PCC could do rather better at this, or whatever comes out of the review of regulation of the press. But I'm just keen to get your view upon the additional value of the financial sanction.

  • I think the -- if you affect the bottom line, that always makes a difference. I think it's probably broader than that, though. If you require a correction to be broadcast, what we would typically do is require that correction or our determination to be broadcast at a similar time, with similar visibility, such that the people who would have been watching the original programme will also see it. So, for example, if the programme was a current affairs programme that went out at 9 o'clock on one of the main channels, which secure millions of viewers at that point in time, we would not even countenance the idea that the correction should be broadcast at 12.30 at night on a remote channel. It would go out at 9 pm, at the same time, in the same slot, ideally in front of the next episode of the same programme. So the 5 million people who watched the programme in which the problem arose are highly likely the same 5 million would see the correction. That's, I think, a key point.

    The advantage of a financial penalty is firstly the bottom line, obviously, but much more importantly, I think is that it tends to have far more significant reputational consequences, so a financial fine is not just a correction which the 5 million people watching that programme would see, but it's something which will then be reported by the rest of the media, and which a broader, far wider range of people would also be aware of, and therefore I think it has an additional deterrent benefit.

  • Also, I think I would add to that the fairly obvious point that the financial penalty is something that will probably gain the undivided attention of those who are responsible for the management of the business, as distinct from those who are responsible for the editorial side of the business, and that is another issue to bear in mind in thinking about how one constructs the appropriate sanction.

  • That's very useful. Thank you.

  • I was going to ask about the adjudication of complaints in practice. I'll deal firstly with standards cases and then move on to fairness and privacy adjudications.

    Dealing firstly with standards, this is dealt with, Mr Richards, in your statement, but we probably don't need to turn it up. You tell us that in the financial year to 2011, Ofcom received just shy of 25,000 complaints about broadcasting standards. If you want to turn this up, it's paragraph 29.2.

  • Just to remind myself.

  • Of course. File 1, first tab, paragraph 29.2.

  • You tell us that 9,031 of those complaints resulted in published decisions, of which 168 cases were found to be in breach of the Broadcasting Code. 36 were resolved. 8,827 cases were found to be not in breach.

    My first question is: what does "resolved" mean?

  • "Resolved" is actually a very important categorisation. It sounds neutral, but it actually isn't neutral. It's a situation in which the complainant has raised a concern, we are entertaining it, we're considering it, but the broadcaster then offers redress of some sort, offers something, typically redress, to the complainant and the complainant is satisfied with their redress. At that point, the case can be declared resolved and we don't have to issue a judgment.

    But the key to that is that the complainant is satisfied with the redress on offer, so it's again a more efficient and speedy way of a satisfactory resolution.

  • But of the 25,000 complaints approximately that you receive, 168 were found to be in breach of the code. Why, in your view, were so few complaints upheld? Does this have anything to say about public expectations compared to Ofcom's application of the code?

  • The short answer is I don't think it does, but let me explain why.

    Firstly, we have that number of complaints, but those complaints are often about the same issue, so on some occasions we have a single programme, a single incident on a programme, and that might attract thousands of complaints. We have had extreme cases where there have literally been many thousands of complaints for one incident. So the number of complaints is not a reflection of the number of issues.

    Once one is then looking at the issues, there is a very, very wide range of issues. At one end there are serious matters which end up with a breach finding. At the other end, there are frankly very -- relatively trivial matters. The most well-discussed is the one in which a viewer called us to complain about an episode of Tom and Jerry, and they complained that Tom had set fire to Jerry. That, I can understand, may have caused that individual some offence, but under the Broadcasting Code it was relatively easy to dispatch. So some cases are quite easy to rule out.

    So you then gradually distill down to a number of issues which you then fully consider, and then assess them on their merits.

    I would be much more concerned the other way, if we were finding hundreds and hundreds and hundreds of in-breach decisions every year, because all that would tell me is that our code and compliance with the code was ineffective. So I don't think it tells you that we are out of kilter with public expectations. I hope what it tells you is that the public generally speaking knows where to complain, feels comfortable complaining, does complain. We then look at them on the merits and that because the compliance is generally pretty good, the actual number of cases that are found to be finally in breach are, as a proportion of the total number of complaints, relatively few, but I would be far more concerned the other way around, that we sat here today reporting that 5,000 cases a year we were finding as breaches of the Broadcasting Code. That would be far more troubling.

  • I thought from what you just said that I was thinking to ask the question that if you had 9,031 complaints, some of them may be multiple complaints, how many issues, but I'm not sure that's right, Mr Richards, because you say that 8,827 cases were found not to be in breach. So unless most of your complaints were multiple complaints that weren't in breach --

  • I think that's probably the case.

  • We can do the mathematics --

  • I'm just quite interested to know the number of issues, but that would suggest, rather oddly, to my mind, that more complaints not only doesn't mean breach established, it might be quite the reverse.

  • I think that's the case, and to pick up from where we were before lunch, in the Jonathan Ross/ Russell Brand case, there were hardly any complaints at all, and yet it ended up being a very serious in-breach finding with sanctions and so on. So there is absolutely no clear relationship between --

  • -- the volume of complaints and the breach finding or indeed the seriousness of the breach finding. I think the Ross/Brand case illuminates that very clearly.

  • Of course, a member of the public who complained wouldn't necessarily come within your complainant group, would they?

  • For fairness and privacy, that's right, they wouldn't.

  • We're on standards cases at the moment.

  • I understand, I understand.

  • Perhaps it would be illustrative then to look at the only three standards cases which were considered serious enough for statutory sanctions in the financial year 2010/2011. In the interests of time, I'm not going to turn them up, but I'll give the tab references so that the Chairman may look at them in due course.

    The first of the three standards cases that attracted a statutory sanction was the Teletext Limited case. That's behind tab 27. We don't need to turn it up, but Ofcom in that case imposed a financial penalty of £225,000 in respect of Teletext's failure to provide the public service content of the licence. Can I assume from that that that was something that didn't attract a huge number of complaints, but nevertheless was a very serious finding of breach?

  • You can, and it was I think an exemplary deterrent sanction. It was all about being clear that when you have obligations that you've signed up to as part of your licence, we expect you to deliver them.

  • The second is the DM Digital Television Limited case. That's behind tab 46. This is a situation where the Advertising Standards Authority referred three breaches of their code, or their broadcasting code, to Ofcom for consideration of a statutory sanction. I'll come on to discuss the authority both with you and with them later on this afternoon, but they referred these three breaches to you in relation to the broadcast of an advert which they had held to be harmful and in breach of the code, and in that case you imposed a financial penalty of £17,500 and required the licensee to broadcast a statement of your finding on their service. Again, is that a fair and accurate --

  • So again that's not something that's been dealt with because there have been numerous complaints but because you've been referred the complaint by the authority?

  • That's right, it was an ASA reference.

  • The last one is the Bang Channels and Bang Media case that we've looked at in part, tab 22. In that case you imposed financial penalties of over £150,000, and again that was multiple breaches of the Broadcasting Code and licence conditions, but in that case it was to do with adult chat and daytime programming on those services, and there there had been a wholly inadequate compliance system, as you've already explained, and you also revoked the licences on the basis that they were no longer fit and proper to hold the licences. Again can we take it from that --

  • Yes, you concertinaed that a bit I think Miss Patry Hoskins because as I read the decision, you imposed fines for one set of breaches, and while all those breaches were being investigated, they carried on breaching.

  • That's exactly right. So there was a separate finding.

  • Absolutely right, two separate findings. But again not linked to the number of complaints -- the seriousness of the penalty is not linked to the number of complaints necessarily but linked to how serious the breaches were considered to be.

    In the other cases -- so if my maths are right, there were another 165 cases where there was held to be a breach of the Broadcasting Code. Were sanctions imposed in those cases or can you give us a feel for whether any sanction at all was imposed in those other cases?

  • No, most of those would be an in-breach finding, as I mentioned earlier, so that would be a reasoned decision that is published that is available for everybody to read and ideally learn and understand from, and we in those cases would not have judged it necessary to take or impose a sanction.

    I think by and large that is what we vastly prefer to do.

  • Can I ask you this question on sanctions before we move away from standards: you will remember right at the start of this session we discussed the approach under section 3 of the Comms Act and in particular the principle that essentially regulatory activity should be transparent, accountable, proportionate, consistent and targeted only at cases in which action is needed.

  • Would it be right to say that sanctions are imposed only in cases where action is needed?

  • Yes. That's the approach I think we take, and that's why quite a large number do not have sanctions.

  • I understand. Let's move on to fairness and privacy adjudications, please. You explain to us that in the financial year 2010/2011 you published 171 decisions relating to fairness and/or privacy issues, very much fewer than the standards cases. Pardon me, 171 decisions were published, sorry, that's not the number of complaints, but of those 171 cases, nine were upheld as in breach of the code, 36 not upheld, 13 resolved, and 113 were either not entertained or discontinued after initial consideration.

  • You tell us that in that year there were no fairness or privacy cases considered serious enough for consideration of a statutory sanction.

    Can I ask you this: do you find the entertainment stage to be a useful stage or does it prevent you from investigating complaints that might be legitimate? What is the -- what process do you undertake when you're deciding whether or not to entertain a complaint?

  • We are assessing it against the -- so the complaints come in and let's take the most obvious example. We have to satisfy ourselves that it meets the statutory criteria.

  • So in relation to fairness and privacy, for example, one of the questions we're asking there is whether the complainant is in fact the person or representing the person affected by the broadcast. Sometimes that isn't immediately obvious. If it isn't the actual individual, we have to establish whether or not the individual has been authorised by the affected party or not, and sometimes that's very quick and clear, and other times it isn't. So it's those kind of things that we're considering when we are going through that process.

  • So it's an essential stage?

  • I think it is an essential stage, yes.

  • And it doesn't prevent you from investigating complaints that might be legitimate?

  • You've provided us with examples of fairness and privacy decisions. We have discussed the Russell Brand/Jonathan Ross decision. You've told us quite a lot about that, but for the sake of completeness, you imposed a financial sanction in that case, £150,000, and I want to ask you about an earlier decision that also related to Jonathan Ross. That was a standards complaint, as I understand it. This was the incident where Jonathan Ross, who has a chat show, a late evening chat show, was interviewing David Cameron, and made a number of comments about Margaret Thatcher. I don't think I need to say anything further.

    In that case, that was a standards complaint by a viewer or viewers, and there hadn't been any complaint by either David Cameron or Margaret Thatcher, and I want to ask you about the difference between the two, because, of course, technically in the Jonathan Ross/ Russell Brand case the fact there had been no complaint may have excluded the complaint, but in the standards case you were able to take on board the complaint despite the fact that neither David Cameron nor Margaret Thatcher had complained. Do you see a slight issue with the way that the structure is set up?

  • I don't think so. I think it's in both cases a question of judgment. It is right that the complaints around the David Cameron appearance on Jonathan Ross were largely -- well, they were entirely from members of the public, and therefore could be considered under offence, but there was a broader question about whether or not there was unfairness to David Cameron, and that is something I recall we did consider.

    Let me try and draw a distinction for you, because I think there is a distinction between that case and the Jonathan Ross and Russell Brand case. It's probably in these areas.

    Firstly, David Cameron went on to the Jonathan Ross programme voluntarily, knowing full well that Jonathan Ross is a provocative interviewer and that sometimes he takes a risque approach to issues, so he was a voluntary participant in a programme in which that was the context. That was the editorial context. It was actually broadcast at 11.30 at night, so that was the context.

    In contrast, Georgina Bailey and Andrew Sachs had nothing to do with the broadcast, were not invited and accepted to go onto a broadcast. They were minding their own business in complete privacy and suddenly they were treated in the way that is now very familiar.

    So I think there is a very significant difference between the two cases, and in a case like that, where I think there were questions about fairness because of Jonathan Ross's approach to David Cameron, we didn't have a complaint from Mr Cameron or anyone authorised on his behalf, and therefore the question we're asking ourselves is whether the circumstances of that case are sufficiently extreme or whether they raise a broader set of issues such that we use our exceptional circumstances clause, and I think in this case our judgment was that it fell the other side of the line, whereas for some of the reasons that I explained earlier, the Russell Brand/Jonathan Ross case I think fell the other side of the line.

  • I understand. That's very helpful.

    It's clear from your evidence, though, that sanctions are rarely imposed and some of the reasons might be the reasons we've discussed. Do you consider that the level of sanctions imposed is sufficient to deter breaches of the code more generally?

  • I think generally speaking we do. I think we are comfortable with the ascending order. It's important to see them in that way. I think that's widely understood, that the world hasn't ended if you have a breach of the Broadcasting Code. It's important, it matters, you need to take it very seriously, but it's not the end of the world. And that thereafter we can step through those sanctions, up to and including revocation of licence, where, in a sense, the world does end.

    So I think we feel comfortable with that, and that that gives us an armoury, if that's the right word, it probably isn't, a set of tools, which enable us to make, I hope, good judgments about what is necessary for deterrents and to ensure overall compliance. By and large, I think, if we come across repeated failures of compliance, repeated or serious, reckless failures to adhere to the Broadcasting Code, we can go up through those responses and I think generally speaking we find it effective.

  • It takes us back to two points that we touched on this morning. One is proportionality, and as Ed says, we have a range of things we can do, and I always think that's an important regulatory technique.

    The second thing is that as Ed has touched on a few times, the publication of the report of breaches that have not been sanctioned is a very important part of people working in the industry understanding what's good, what's not so good, what works, what doesn't wok, where the boundaries are. In terms of having a clearly understood set of requirements for the industry, I think those breach reports are actually extremely useful to people in indicating where the boundaries are for a working journalist.

  • On breach reports, I've read, among others things in your papers, but just to prove I have read it, a complaint made by Mrs Yan Polcwiartek. It's a building dispute case. And what impressed me about this complaint, which was not upheld by the way, is that it is 17 closely typed pages, and this obviously involved an enormous amount of work. How long do these things take?

  • Well, rather than respond off the top of my head on that, we can provide you with the actual data. We've actually been conscious of the time that it takes for a little while, and about a year ago we modified the procedures to try and make them quicker and more efficient, and again it does depend, as I said earlier on, on the nature of the case. Some do take some months, and others can be done fairly quickly. It really is quite case specific.

    The fact that it has -- I mean, the team we have are experienced in this and they are used to writing reasoned decisions in relation to these case, so the fact that it's 17 pages, I wouldn't place too much weight --

  • No, I'm not being critical, I'm merely asking the question. As somebody who spends his recent life writing judgments, I know how long they take, and I'm supposed to be experienced doing that.

  • They don't happen overnight for exactly the reason you're describing, but we are -- we're very happy to give you the actual data.

  • I'm just interested because it's relevant to --

  • It's case specific is the answer.

  • Ed has mentioned that we've had a good look at these processes in the course of the last year to make sure they were as efficient as we can get them, but in the end you have to do a proper job and I would not be happy, frankly, if people came to the board and said, "Wonderful news, we've sped it all up so we're now turning them all around in 24 hours". That would make me feel, on behalf of complainants, a bit uncomfortable, to put it very mildly.

  • Before we move away from adjudications, I just want to touch on appeals against decisions of Ofcom.

    Can I summarise it in this way: if a complainant or a broadcaster or a directly affected third party is unhappy with an Ofcom decision relating to both content and standards, the route of appeal is by way of application for judicial review to the Divisional Court, as I understand it, and in your witness statement you describe a recent challenge in the Jon Gaunt case in relation to a finding that there had been a breach of the code although no sanction had never been imposed but nevertheless there was still the right of judicial review and that's the process.

  • Yes, that's right, and that's the most obvious recent case that, as I recall, went all the way to the Court of Appeal.

  • It went first to the Administrative Court and then from the Administrative Court to the Court of Appeal?

  • And there was an application for permission to the Supreme Court.

  • I think it's been refused.

  • There's nodding at the back of the room. I think I'll accept that as evidence.

  • Well, it doesn't really matter. It is a potential risk, because this complaint has presumably taken a very, very great deal of time and cost an enormous amount of money.

  • In that case, that's absolutely right. That one has consumed a lot of time and a lot of money. However, it was a difficult and interesting case. I think we were never uncomfortable about the fact that it was being appealed and we weren't uncomfortable because I think it's an interesting area of interpretation of the law, and we're obviously pleased that we won the case and made the right judgment, but we were certainly not uncomfortable with it being appealed and our judgment being tested. I think from time to time it's important that that takes place.

  • Would you like me to look at that decision or not?

  • Not particularly. It is a freedom of speech-type decision.

  • It is. That's exactly what it is.

  • But all these things are always so fact-sensitive that it's quite difficult to derive enormous lessons from that.

  • I think the general lesson is that our decisions can be appealed, and sometimes they are. And we are, I think, comfortable with that and I would expect any regulator to be comfortable with that.

  • I'm going to move on to investigatory powers. I want to explore the extent to which Ofcom is an investigatory body and whether it can launch investigations when there is suspicion of unethical activity. You'll understand why that's important.

    I'm going to do this by reference to the premium rate phone services case, because in between 2006 and 2008, as you know, you made a number of investigations into the use of premium rate phone services in television quiz shows, not exclusively quiz shows, but by and large, and the result of those investigations was that a number of broadcasters were fined substantial sums for breach of the licence conditions.

    There was also a report of Richard Ayre, behind tab 3, in which he found there was a systemic culture of denial amongst the main broadcasters about their responsibility to ensure that the programmes that they devise, commission or produce fully deliver on the transactions they offer to viewers.

    I won't call this the phone hacking of Ofcom, although I just have, but it was clearly a very serious issue which arose. What I want to understand is with your ability to investigate a problem that arose, how you went about it and whether or not you feel that the outcomes are satisfactory. So in your own words, I'm going to allow you to tell me as briefly as you can what happened and how you felt you were able to investigate it.

  • What happened, if I go back to the start, was that there was a lot of pressure on commercial businesses at the time. It was a difficult time in advertising, and a new stream of income was identified, this was so-called revenue sharing from premium rate telephone lines, and it was a tremendous discovery at one level, because it combined both the interaction between the viewer and the quiz. You could -- suddenly the viewer could participate in the quiz by phoning up with the answer or voting or whatever, with the fact that they would pay to do so, so suddenly the broadcaster would not only have an engaged audience but also be receiving money, so it was fantastic.

    As a result, it took off incredibly fast. Suddenly almost every mainstream broadcaster was doing it. You could not conduct a quiz show without having phone calls coming in, and they were commissioning third party suppliers, premium rate telephone service providers as fast as they could find them.

    The regulatory backdrop to this environment was that when the Communications Act was passed, we were given the duty or we were asked to have regard for self-regulation or co-regulation where we could, and, as you know, we've done that in relation to advertising and we'll come back to that. We were, however, bequeathed an organisation called ICSTIS, which was the premium rate telephone regulator. It pre-dated Ofcom. It existed and it was established already as a co-regulation body.

    When this development of premium rate use on quizzes on television began, I think the challenge for everybody, broadcasters, operators, but ourselves and ICSTIS as well, was it wasn't absolutely clear who was in charge of what. We took the view initially that this was essentially a premium rate telephone service and therefore we would have said it was primarily ICSTIS, but suddenly it was the broadcasters who were involved as well.

    So one observation that I begin with is that it was novel, it grew incredibly quickly and there was a degree of lack of clarity about who was responsible for what, both from broadcaster and premium rate supplier perspective and from an ICSTIS/Ofcom perspective. That was the backdrop.

    What then happened was that a number of wholly unacceptable practices began, the best example of which I can give you is the cut-off of voting. So the winner of the competition will be determined or the result of the vote will be shown after the break at 9.30, and, you know, vote now, and you're voting for the winner. And what had actually happened was that the voting had been cut off at a quarter to 9, hundreds of thousands or tens of thousands of people then voted, paying £1 or more a time, between 10 to 9 and 20 past 9, and their votes were never actually counted. So it was direct consumer harm. Consumers were paying for something, they were not having the service --

  • I might call it something else as well, but that's fair enough.

  • Now, the real point about describing this in that way, because I think everybody recalls it, is that there was an element of invisibility to it. The viewer had no idea that their vote had not been counted. No viewers did. I voted in some of these competitions and you happily voted, you did not have a clue that the vote had stopped. So you were perfectly happy, and nobody was doing what they would normally do with us in those circumstances, which is saying, "I don't like that, I think I've been ripped off, I am going to phone Ofcom"; nobody knew.

    This went on for a period, until, as I think you'd expect in a situation like that, it becomes revealed by whistle-blowers who are actually working in that environment and know it's taking place.

  • And they're rather troubled that it seems to be a fiddle.

  • Absolutely. It was a good example of whistle blowing. They went to the press, went to the TV broadcasters, paradoxically or ironically in due course whistle blowers came to us. And suddenly this series of scandals was unearthed, and it turned out that it had not just been happening in one or two incidents, but as we looked at it more, it turned out that it was really quite commonplace.

  • Just pause there for one moment. This is where the third witness statement might have come in helpful, because there's a whole table which sets out all the different television shows where this was happening. Have you received a copy of it yet? I'll give you mine. It's section B onwards and I'll mark the place where the table is so you have some idea. (Handed). (Pause).

  • This is a way to solve the national debt.

  • It made a modest contribution at the time, I think.

  • Thank you. I'll let you have your statement back. I would want a copy. Let me immediately comment how grateful I am to you for responding to questions that you had very, very late in the day so fully. But I will study it.

  • Sorry to interrupt. I just wanted to make sure that the chairman had that.

  • Shall I pick up the story from there?

  • Yes. You told us that whistle blowers brought it to your attention. I want to understand now on what statutory authority an investigation was launched and what happened from that point.

  • From that point, once it was all clear, I think we then immediately said this is clearly not incidental, it's quite widespread, and we need to do something really very serious about it. We then investigated using our powers of investigation against a couple of parts of the Broadcasting Code to do with misleading audiences and quizzes and competitions being fair, so we found a locus which worked for these quite novel cases, but we were able to do that.

    We then used the investigatory powers and were able to access everything we wanted, really, from the broadcasters. It's important to say that in this context we were not able to access by legal right information from the premium rate suppliers, but from the broadcasters we were able to secure data, audited information, witness statements, everything we needed, we were able to secure and require that of them.

    We then did a very thorough investigation of all the cases we could find. At that point, the broadcasters themselves realised thoroughly what was happening and, in my judgment, they were in full collaborative mode at that point. They said, "We need to sort this out, the house needs to be cleaned, and you can have whatever you want", and we had whatever we wanted, we assessed it and the outcome of that was this series of sanctions which you were shown a moment ago.

    Some were fairly modest sums, others were the highest fines we have ever levied in our history and involved millions of pounds, not even thousands of pounds. That was the sanctions process.

    But it's very important to go on from there, I think. The question for us then was: what led to this and what lessons do we need to learn and what lessons do the industry need to learn in general? So the sanctions, I think an effective deterrent, everybody knows where they stand on that front. But we also then had to go back and make sure there was appropriate regulatory clarity, so we recast our relationship with ICSTIS in a very clear way. That was clarified.

    We introduced new licence conditions for the broadcasters so there was no doubt that the broadcasters themselves had a responsibility, which there was an uncertainty about before. We introduced an audit requirement, such that we could have confidence that the broadcasters would comply in the future, and we tied all that together with a cross-industry event and programme around compliance, education and understanding which we did jointly with the BBC Trust.

    So it wasn't just about the sanctions. It was then about ensuring that we had the right powers looking forward, that there was regulatory clarity and that compliance could be secured, and that there was understanding about that compliance on a widespread broadcasting industry basis. So it was quite a broad-ranging approach once the problem had emerged, which rested upon having the right powers, following through with those powers and then ensuring there was regulatory clarity thereafter.

  • You could get the information from the television companies but you said you couldn't get it from the premium phone suppliers.

  • That's right. That's because the investigatory powers that we have in broadcasting are licence-based, and this is a very interesting subject because it's in contrast to our information-gathering and investigatory powers that we have under the Communications Act in relation to telecommunications, or, for example, our information-gathering powers, investigatory powers under the Enterprise Act or the Competition Act, where those powers are general, and we can apply them in any case to any party, so long as we do so in pursuance of our duties.

    Actually, interestingly, reflecting upon this, what I would observe is that our broadcasting investigatory powers are extremely effective when it comes to broadcasters, but are limited to broadcasters, whereas in contrast, if you look at our competition powers and our economic regulatory powers, they're actually more broadly based and more substantive.

  • But have you found -- this is actually an important question -- the limitation on your investigatory powers in connection with broadcasters a disadvantage that if you had a magic wand you would wish to change?

  • I think the practical answer to that is that we haven't. I think the vast bulk, overwhelmingly, where we've needed to investigate and where we've needed to acquire or gather information relevant to a case, we've been able to do that through our broadcasting powers.

    I'm not going to say that it can't conceive of a situation where that limitation may not be or may be relevant, but I can't really think of a practical one.

    Premium rate phone incidents were the closest we've come to it. The vast majority of what we do, as we've been discussing this morning, is around the Broadcasting Code and therefore it's about the broadcasters.

    I think the problem with the premium rate affair was that some of the data and some of the activity where the problem was taking place in operation centres run and controlled by premium rate phone service suppliers, nothing to do with the broadcasters. They were a very different third-party supplier. And therefore that could have thrown up a challenge but I think in the event, even in that circumstance, we actually were able to access the information.

  • You navigate your way around it, because of course the premium rate supplier has a contractual obligation to account to the broadcaster.

  • So you hoover up the information that way.

  • And I think that's exactly what we did.

  • I guess finally on this subject, as a function of a regulator, how important in your view is the ability to launch such an investigation?

  • I think it's extraordinarily important. I think the -- it's difficult for me to conceive of doing our job effectively in the absence of effective investigatory powers. It's such a key tool, not necessarily because we routinely use it, but because the broadcasters know that we could. And what that means is that it massively helps with compliance, with record-keeping. I think it's an absolutely critical tool in the effectiveness of a regulator.

  • I was going to move on to media mergers and plurality issues unless you had any other questions, sir, on that particular topic.

  • No. I have a little task for Mr Richards, but I'll mention it at the end, thank you.

  • Yes. I'm going to ask you about your first witness statement again, Mr Richards, paragraph 24.1 onwards, dealing with media ownership and plurality. I want to understand simply here the role that Ofcom plays here. You explain at 24.1 that a variety of detailed rules apply in relation to cross-media ownership. You then explain some principles at 25.1 onwards, relating to merger control.

    I'm going to try and summarise what's a quite complex area quite briefly because we only really need to understand the role that you play.

    You do not have jurisdiction over mergers in the sectors that you regulate, by and large. Some fall within the jurisdiction of the EC merger regulation and are dealt with by the European Commission.

  • And some are considered by the OFT and, if appropriate, the Competition Commission?

  • Yes, that's right, and I think for completeness sake it's worth saying that when -- the OFT will lead on a relevant merger of that kind, but we would expect to work very closely with them --

  • I'll come on to that, but in terms of jurisdiction it's theirs --

  • It's either the European Commission's or it's the OFT's?

  • I was coming on to say that the OFT and the European Commission do often ask you for significant input when a merger is being considered in an area that you regulate?

  • Very considerable input usually, yes.

  • In media mergers which involve newspaper publishing, radio or TV broadcasting, you're asked for what's known as a local media assessment?

  • For local media mergers, yes.

  • You also have a formal statutory role in relation to certain media mergers which are triggered by an intervention notice issued by the Secretary of State which specifies a particular media public interest consideration, and those are set out in paragraph 25.5 of your statement that currently recognised media public interest considerations are set out there. We would be here all afternoon if I tried to go into those but they're set out there clearly, the Chairman can note them.

    Where there has been an intervention notice, Ofcom is required to report to the Secretary of State on whether it may be the case that the merger may be expected to operate against the public interest.

  • We are summarising it. It will then be for the Secretary of State to determine whether or not the merger should be referred to the Competition Commission for further review, and other than that, you must also carry out regular reviews, at least every three years, of statutory provisions on media ownership and the public interest test.

    I appreciate I've probably condensed that considerably, but I just want to understand roughly where Ofcom fits into the position.

    You explain at 32.1 that there have only been two occasions in which the Secretary of State has issued an intervention notice in relation to a media merger.

  • And on both occasions the public interest consideration was the need, in relation to every different audience in the United Kingdom or in a particular area or locality of the United Kingdom, for there to be a sufficient plurality of persons with control of the media enterprises serving that audience.

    You tell us that the two occasions were firstly the acquisition by BSkyB of an almost 18 per cent stake in ITV and you set that out at paragraph 32.2 onwards. We're not going to go into that in any detail.

    The second occasion on which an intervention notice was issued was the recent proposed acquisition by News Corporation of the remaining shares in BSkyB which it did not already own, would that be correct? That's the very recent and well-known example, obviously.

  • Again, I really don't want to go into a massive amount of detail on this, but I want to understand the role that Ofcom played in relation to that proposed acquisition.

    We start, I think, in the process at paragraph 32.3. You explain that the proposed acquisition was an EC merger. You remember at the start of this short session I was explaining that there could be an EC merger or an OFT jurisdiction merger.

    The Secretary of State's intervention notice specified the public interest consideration that we've set out, and you report it.

    By that stage, and it's important to note this, the European Commission had already cleared the merger for competition purposes?

  • So before you were even asked to report. Ofcom recommended a reference to the Competition --

  • No, it was before Ofcom were due to report.

  • That's what I meant to say.

    Ofcom then recommended a reference to the Competition Commission, considering that as a result of the proposed transaction there may not be a sufficient plurality of persons with control of media enterprises providing news and current affairs to UK-wide cross-media audiences, and you say:

    "The effect of the proposed transaction would have been to bring together one of the three main providers of TV news and the largest provider of newspapers, significantly increasing News Corporation's ability to influence opinion and control the agenda. Further, in circumstances of 100 per cent ownership and control, you did not believe that cultural safeguards and internal plurality could be relied upon to ensure plurality."

    And all the relevant reports are within the bundle. I don't want to take you through them but I want to accurately summarise what your role was.

    You reported and those were your conclusions.

  • You then say at 32.5 that News Corporation offered undertakings in lieu of a reference to the Secretary of State, and they're known as UILs. You were then brought into the picture again at that stage because the Secretary of State asked you to advise on whether or not those undertakings met the plurality concerns identified in your report and also asked the OFT to advise on practicability. After a period of negotiation and public consultation, during which changes were made to the undertakings, Ofcom and the OFT recommended that the undertakings be accepted.

    But then, of course, as we know, events were overtaken before the Secretary of State had come to a decision, News Corporation withdrew the undertakings and then its offer to acquire the shares in BSkyB.

    Does that accurately and fairly summarise the role that you play? You were asked to provide two specific reports, but ultimately the decision was not that of Ofcom.

  • Was there anything else that you would like to say about that?

  • No. I think that's a full, accurate account.

  • I guess the only small thing is to emphasise the nature of the negotiation period. That is a vigorous exchange. So the process between the offer of undertakings and the acceptance is not a benign exercise. I think that perhaps doesn't entirely come across from the wording.

  • And that's between you and News Corporation?

  • Perhaps the important point for the Chairman's interest is that in the course of considering the proposed merger, and this is what you say at 32.6, you came to the view and advised the Secretary of State that the current statutory regime is not effective to secure plurality.

    You said in your report that you recommended the government should consider undertaking a wider review of the statutory framework to ensure sufficient plurality in the public interest, and specifically you argued there may be value in providing for intervention where plurality concerns arise in the absence of any transaction involving media enterprises and which are not safeguarded by the current media ownership rules.

    Can you update us on that? As a result of that report and the views and the advice to the Secretary of State, has there been any further correspondence or input between you and the Secretary of State on these issues?

  • There's been discussion of it. The Secretary of State -- we included that point in every single public document or every single document that we have produced on this topic, both the original report, recommendation, undertakings and I think even in a separate letter to the Secretary of State. So it has been a matter of discussion ever since the original report was submitted on 31 December in 2010. So there has been discussion about it, and our impression is that the government is considering it and certainly appears to be sympathetic or certainly understands the point that we're making in relation to the deficiency of the legislation.

  • I would even go further than that and say I believe I'm correct in saying that when the Secretary of State spoke in Parliament on his decision following our report of 31 December 2010, he indicated personal sympathy for the view that had been expressed about there being a possible lacuna that would have to be corrected.

  • Finally on this, I'd like to take you to section 37 of your statement, where you tell us a little more about the statutory duty to review the operation of the media ownership rules, 37.8 onwards. You explain that in some detail. I don't want to go through it other than to note that your last review was sent to the Secretary of State on 13 November 2009, and then to note this, 37.11:

    "The Secretary of State has recently asked Ofcom to advise him on the options for measuring media plurality across platform and to recommend the best approach. We will make this available to the Inquiry when completed."

    I'm aware that your witness statement has now been in for some considerable time. Has there been any update on that?

  • In relation to that work?

  • No, the work is under way and we will consult on it I think probably late February/March, and we will aim to conclude it by -- before the summer, June, July.

    It's probably worth emphasising two or three points. Firstly, obviously we will pick up the point about the lacuna in the legislation. Secondly, I'm sure we're obviously going to look at the issue of measurement and how you assess plurality from a -- from the perspective of things that you can actually quantify. Important to underline how complex that is, but we will try and do that, and that really allows you to assess diversity of voice and things of that nature.

    I think the other dimension which we will also consider in light of the events of the last 12 or 18 months is that only one perspective here is the perspective of how many voices, how many different newspapers, media voices are there in the market, as it were. A second factor, and I think which is also at the heart of people's concerns about plurality, is the risks around concentration of ownership and media influence, and the conventional analysis of that is, well, how many viewers or readers do I have?

    But I think we can now see there is another analysis, which is what influence in the political process might I have by virtue of a control of particular media assets. And I think we will also want to look at that, whereas in the past we've tended to concentrate on the former, but I think it's now clear that that needs sufficient attention as well.

  • That work cuts straight across some of the material that I've been asked to look at as well, so I would be very grateful if you would keep me --

  • -- as up to date as possibly can be, and speaking for myself, if it's at all possible before the end of June, because July I hope to be discussing various options and therefore I want to factor in your views.

  • I'd be very grateful. If you keep in touch with the Inquiry team --

  • -- that would be valuable. Could you help me with this: you were asked a specific question about whether the proposed undertakings met the plurality concerns that you'd identified, and having negotiated the undertakings, you said they did. But parallel to that you said but actually this regime doesn't really do the job properly.

  • Could you please explain that a little bit, because people might feel that by saying, well, yes, it's all right, you're actually giving a green light, whereas in truth at the very most you're giving an amber light, but it may be it was your statutory remit that prevented you from going further. I think it would be quite useful if you could just elaborate upon that.

  • Certainly. There's probably three points.

    You're absolutely right, we had a very specific question in relation to that merger and the question before us was: you've expressed a view that it should be referred, that there are concerns about plurality; would the undertakings offered be sufficient to meet that concern? What would our recommendation be there?

    As I think, as I'm sure is in the public domain now, the original undertakings offered to the Secretary of State and considered by us, we said that they would not be sufficient, and hence why I emphasised earlier the process of what is called negotiation.

    By the end of that process we felt that the specific concerns we'd recognised could be addressed by the revised undertakings, and therefore we made a specific recommendation to the Secretary of State. That was all around a specific proposal around a specific merger, an event, if you like.

    The weakness in the legislation is the following: the legislation is entirely driven by events, by transactions, by mergers. The problem that we immediately saw, when confronted with this specific situation, was that you could take an organisation who didn't merge or acquire anybody, but by virtue of just the dynamics in the market, by virtue of somebody else closing down an operation, for example, suddenly or gradually had a very, very, very substantial share of the media market. There has been no transaction, there has been no merger, but suddenly you turn around and over a number of years, because of organic growth or because of others exiting the market, this organisation suddenly has far too much power.

    At the moment, the legislation has no means of addressing that situation and that seemed to us to be a very serious deficiency, particularly so in the context of a highly dynamic market where many media enterprises are under extraordinary commercial pressure, some of them indeed rely on intra group subsidy to survive, and therefore the scope for both change and indeed exit of the market is, I think, considerable.

    So if we ask ourselves the fundamental question, which is: is there a regime in place which ensures that, as a country, we have a framework which ensures that there is always sufficient plurality, and we can rest assured that there is nobody with too much influence, then we don't in our view have that at present.

    I think the third point I'd make in relation to your question is really to echo what I said a moment ago about our future work. I think if we look at those issues again today, we would place the same amount of emphasis on the diversity and the range of plurality and the provision of media, but I think we would also place more emphasis, in light of events, on the risk to the democratic process of the influence of concentrations of media power. I think it would be impossible for us not to do that, given what has emerged over the last year or two. So I think a bit more emphasis there, but as much emphasis on the question of the range and calculation of media voice and share of audience.

  • I'm sure you'll appreciate that both those topics fall very much within my remit.

  • We absolutely do and that's why the Secretary of State has asked us to do this piece of work and we were fully expecting to provide it to yourself.

  • I'm very grateful. As you know, one of the modules that I'm considering is the relationship between the press and politicians, which plays absolutely four square into the third of the points you've just named.

  • We will do our utmost to ensure the work we do is available to your Inquiry and that we can keep you informed about what we are doing.

  • I'm very grateful about that because I would be very, very keen to ensure that we didn't run down parallel tracks.

  • Exactly, exactly, exactly.

  • And on this topic alone, besides anything else that I might think of as I will come to, I think you can apprehend that I'll be very keen to hear you again.

  • Yes. Well, look, in the light of this -- we have of course been aware of this as an issue, but in the light of this further exchange, we will look very closely at our planned timetable on this work and, Ed, we will have a very careful think about how we can best conduct it to ensure that it were able to contribute.

  • I'm grateful. Please do not hesitate to contact the team here.

  • So that we can appraise you of our broad timetable.

  • Not all of which is at least yet in the public domain.

  • I don't have a huge amount to go but is this a convenient moment?

  • Yes, certainly, certainly, we'll have a break.

  • (A short break)

  • I want to move on to ask you a few questions about self and co-regulation, the principles that underlie those. We've discussed section 3 of the Comms Act that stipulates that you should have regard to the desirability of promoting and facilitating the development and use of effective forms of co-regulation. I know it's not for you to suggest any form of model of regulation of the press but it would be helpful to understand the conditions in which you consider self and co-regulation are likely to be effective.

  • Before we do that, and I'm sorry to interrupt your flow, there was one final point I was wanting to make at the end of our previous session about this lacuna.

    In terms of Ofcom's powers to look into the development of what we would call significant market power, absent a transaction, I would just like to draw the Inquiry's attention to the fact that we do have those powers already in respect of the telecoms sector and it is probably of interest to you to note that I think that is why it was so obvious to us that we did not have analogous powers in respect of the work that we did on media plurality. In other words, the proposal that one should be able to look at significant market power without waiting for a transaction to happen to trigger it is something that is widespread across the regulatory, certainly the European regulatory world of telecoms. So it's not an unusual or novel power and it's one that we practice ourselves.

    I'm sorry to interrupt you.

  • No, that's very helpful.

  • Do you remember my question?

  • Perhaps I'll kick off on that. I think that every case is different, but I do think there are some features of different circumstances which tell you quite quickly whether something is likely to work as a self-regulatory or co-regulatory or statutory regulatory environment, and they -- by far the most important issue are what I call incentives. To my mind, if you have a situation where the incentives of the public interest or the regulatory objective may be regularly or frequently at odds with the industry's own interests, the commercial interests or the specific company's interests, you should be extremely sceptical about the scope for self-regulation.

    Self-regulation is likely to work where the incentives -- where the public interest is aligned with the industry's interest, and you have that natural reinforcing cycle.

    If you don't have those things, to me, I think -- I'm very, very sceptical about self-regulation. Now you do get that and you can get it quite often and I think a weak form of what I call a weak co-regulatory environment, which is closer to self-regulation, again the same is true. Look for aligned incentives and if you find them, you're likely to have something to work with.

    A very good example of that, which we may come on to, is the advertising case. The reason it's interesting is because in that situation you have the advertising industry, who sell advertising. Now, what they require to be able to do that is for there to be public trust in advertising as a product. If adverts are routinely misleading or harming or misrepresenting, then public trust in advertising would decline and their currency, their product, would be undermined.

    So what you have there is a situation in which the public interest in not having misleading or harmful advertising is actually very closely aligned with the advertising industry's own interests, and in those circumstances you tend to find co- or self-regulatory environments successful. Everybody broadly wants the same thing.

    Let me take a different example. If you take an example from our economic regulatory work, we are a price controlling company with significant market power in telecommunications, for example. In those circumstances, the interests of the public lie in having the price controlled -- the price as low as possible consistent with sufficient investment and sensible returns. The interest of the company lies in having the highest price possible to secure monopoly profit, so the interests are fundamentally opposed.

    In those circumstances, self-regulation is never ever going to work. You have to have effective independent and in this case statutory regulation.

    So by using those two examples, I illustrate, I think I have illustrated what to me is at the absolute heart of this issue. Ask yourself about the incentives and interests of the industry and then you will find very quickly that you can establish whether or not pure self-regulation will work.

    Now, there's a whole host of others factors which we might come on to, but underneath it all, that to me is the kernel of the answer.

  • I am going to turn on to advertising now simply because it's well regarded as a successful co-regulatory relationship, the relationship between the Advertising Standards Authority and Ofcom. It's obviously interesting to understand how it works and why it works well, but I'm conscious that we have Mr Parker from the authority coming, so I don't want to go into it in a huge amount of detail. Can I summarise it again and you tell me if I've oversimplified it or relayed it back inaccurately.

    You have entered into a memorandum of understanding which has delegated some of your regulatory functions in the field of advertising to the authority and the Broadcast Committee of Advertising Practice. The authority is responsible pursuant to that memorandum for complaints handling and resolution and the committee is responsible for setting a code of practice and monitoring the code. There are precise wordings which we don't really need to go into. So far so good?

  • You remain the backstop regulator. In that role, you don't interfere with the day-to-day work of the authority as long as the undertakings, agreed processes and targets contained in the memorandum are met. You seek -- the memorandum seeks to respect the self-regulating nature of the arrangement and notes that while you retain the right to make changes to the code that's been developed by the committee, because you have to ensure that it remains appropriate, you won't normally seek to do so because you recognise that the committee is the "self" in self-regulation. Is that a sort of accurate summary?

  • I want to ask you about two aspects s of that relationship. One are changes to the code, and then the application of sanctions.

    You explain in your witness statement, Mr Richards, that in 2007 you decided that certain types of advertising should be excluded from children's television programmes.

  • They were advertising with -- is it foods with certain --

  • HFSS, so high in fat, salt and sugar.

  • Yes. That change was imposed by Ofcom in a situation, you say, where the committee were unable to agree the changes considered necessary.

  • Is that an accurate summary?

  • Imposed by Ofcom, not on Ofcom.

  • Again I'll come back to ask the authority about this, but I want to understand it in a nutshell. Again applications of sanctions, as the backstop regulator you can assist the authority in ensuring compliance with decisions and because it doesn't have statutory powers of sanction, it can refer complaints to you and we've already look at the DM Television ruling where just that happened?

  • Now you talked about incentives and it's interesting because while the authority regulates advertisers, you regulate broadcasters.

  • So there's an incentive there on broadcasters to ensure that advertisers comply with the code, would that be correct?

  • Can you tell us in brief terms what you consider the benefits of that co-regulatory model for the authority to -- where are the disadvantages, where does it fall down?

  • I think the advantages are that we were able by doing that to bring together a single port of call for advertising regulation, so the transfer of broadcast advertising responsibilities was pre-dated by the establishment of the Advertising Standards Authority in the first place, so there was a body of expertise, a body with respect, a body with established codes and a body with whom practitioners could work and knew how to do so.

    So it was the grafting on almost the completion of that process which seemed to make sense and I think the ASA felt the same way, so it allowed advertisers to have a single point of call for their advertising regulatory codes and guidance. From that respect I thought it seemed to us fairly straightforward.

    The disadvantages -- I don't think there are very many disadvantages. The issues that we would be concerned about all lie in the area you introduced the question with, which are: do we have -- in a sense delegating this, adopting a co-regulatory route -- do we have sufficient safeguards, should anything go wrong? Do we have confidence that we can oversee, if it is necessary? And do we have confidence in the body and its make-up? And there are various hooks in our relationship, in our memorandum of understanding with the ASA which provide for that, and I think what we've seen is that it has worked by and large extremely well.

    You have one or two cases of the kind that you mentioned, the HFSS case, where it's difficult for a co-regulatory body to say we're going to introduce prohibitions or limits on certain forms of advertising when that is our revenue, so it didn't surprise me that that was a moment in which we had to exercise our backstop powers, and we did so.

  • How often do you have to get the big stick out? By the big stick I mean either you force changes to the code or you enforce sanctions on behalf of the authority?

  • Very rarely. In that case, in the ASA's case, I can scarcely think of any. In our history with co-regulators, so far I would say generally it is also very rare, but there have been one or two moments where I wouldn't say we have got the big stick out, there have been one or two moments when we have ensured the big stick was visible. Let me put it that way.

  • That is, of course, to go back to the very beginning of your question, one of the ways you make co-regulation work, is that everybody knows that that backstop power, whatever it is, exists. And the fact of that is of itself important.

  • Can I mention another quick addition to what Ed said about why we were very keen -- very happy to sort of partner with the ASA was not only did it have a good, established track record of respect with its industry, it also has very good complaint-handling procedures, so from the standpoint of doing a good job for consumers, we felt quite confident that here was a body that had a well-established way of doing that.

  • I'll ask them about their complaints handling. I'm sure we'll hear about it.

    There are two final things I want to ask you about. The first is the thorny issue of convergence and then I'll ask you about the costs of Ofcom.

  • I'm going to try and take the convergence issue quite shortly because it's an issue that you, Mr Richards, and Ofcom have considered quite recently, both in a document entitled "Protecting audiences in a converged world", which is behind tab 61, and also summarised in your recent speech to the Oxford Media Convention which is behind tab 58. Would you like to describe for us just briefly please the problems of convergence as you see it and your brief thoughts on how the regulatory system could seek to resolve those?

  • I'll deal more with the former because I think the latter is obviously harder.

  • The challenge of convergence I think goes right back to the question you asked me earlier today about why is broadcasting licensed. Broadcasting used to be licensed because of spectrum scarcity and the nature of the technology. We all understood that world very, very clearly. As time has passed, that world has become less and less clear and the historic boundaries between different distribution media have become more and more blurred. Let's put that in absolutely clear terms.

    When I was growing up, I knew there was a printing press, I knew what that was and I knew what that produced. There was a television transmitter and I knew what that was and I knew what that did. Today, when I'm consuming my media, I have no idea, necessarily, where it comes from in digital form. I know what a newspaper is and I know what terrestrial broadcasting is, but that is not where the future is. The future is in digital form and in digital form you don't have these fixed silos, these separate physical distribution media through which we can adopt separate regulatory structures. And that is at its heart.

    If you imagine a world not only today for those who use iPads or smartphones, but in five, ten, 15 years' time when everybody has a television which is itself immediately connected to the Internet, you have to envisage a world in which people are not only watching the linear broadcasting as we've all grown up to know it, but a world in which they are selecting applications, watching video television-like content which may in fact be being provided by a server located not only in the UK but perhaps in a completely different country.

    That content, which may be highly video rich, may well be provided by something that calls itself a newspaper, or it could be being provided by something that calls itself a broadcaster.

    Actually, in due course it's quite possible that the viewer in those circumstances would have no idea. They certainly will have no idea which distribution mechanism is providing it. They won't know if it's a satellite, IP television, terrestrial, over the air and so on. So the boundaries of digital media are highly blurred and, crucially, fairly invisible to the viewer, to the consumer, and that is the heart of the challenge.

    As we approach that, we can, I think, take comfort in the fact that linear broadcasting is not going to go away. Linear broadcasting, so channels BBC 1, BBC 2, ITV and so on, despite the claims of the technophiles, have proved remarkably resilient. People still like ordinary television. So we can take that as a relatively secure position for the next decade or two, I believe.

    But we then have to cope with the fact and think about the fact that people will also be consuming digital media that is not like that and what regulatory context do we place around that?

    What I said in my speech was that, and this was an initial set of views, I think you have to think about probably three principal areas. You have to think about broadcasting, and in my view that works well, don't tinker with it too much, people value it. At the other end of the spectrum you need to think about what I call the open Internet, and again this is back to something we touched upon earlier. It is now possible to just publish a blog in 15 minutes, anyone can do it, anyone can be a publisher. We have to accept that there is going to be a space, and we have to be comfortable with and I think be delighted about the fact that this extraordinary phenomenon exists and it has created remarkable freedoms and remarkable access to information. So that is going to be there and it's going to be open and I think it's a fool's errand to try and regulate it.

    The really difficult area is the space in between the two, and it seems to me there are two important areas there. The first is what we call video on demand, and that is the digital content, video content, which is available on demand, so that's not linear broadcasting, but to the viewer opening or downloading or accessing video on demand, it looks remarkably like television. It's very similar. And over time, the more so.

    My question there is: given that that is going to be on the television in the future, in the living room, do we have the right level of regulation to meet public expectations? And what our research told us was that people say if you are telling me this is going to be on my television in my living room with my family watching it, I would like a little more protection than is currently on offer, because it's more like television.

    That is, I think, the first problem.

    The second problem is the evolution of the newspaper industry into digital form. I do not know when printing presses will be retired, and I wouldn't like to make a prediction. I'm sure they will be with us for many years. But it's equally clear from everything that's happening in the newspaper industry that the digital form is as much part of the future, if not the future.

    It's also clear that a lot of that content is not only text and graphics, but is also likely to be increasingly audio and video rich. So you have a digital product there which a called a newspaper but which is beginning to tiptoe and in some cases move quite swiftly towards that area that we call video on demand. It hasn't often crossed that line, but it's heading towards it.

    You have another factor in relation to the press, which is I think the significance and scale and influence factor. If these were services which really nobody accessed, very minuscule audiences of no significance, I think we can then take a very relaxed view about it, but as we all know, newspapers, whether in digital or physical form, have significant scale influences in our society and therefore we need to think about what the right regulatory regime is.

    The key point I would make from a convergence perspective, just to draw those threads together, is that as the newspaper becomes more and more and over time I think ultimately in digital form, we have to make sure that that area, between the open Internet at one end and conventional linear broadcasting at the other, that is the difficult area and that is what we need to anticipate, because I think that is where we're going to end up, and in some cases fairly soon.

  • The only other question I have is about costs. This is your second statement to the Inquiry. If I can summarise it in this way: at the seminar, one of the Inquiry seminars --

  • Hang on, you said that you've identified the problem. You said the solution was rather more difficult.

  • The regulatory solution.

  • The regulatory solution is more difficult because of all the different histories and so on. I don't -- what we have said is that we do not think that the solution is broadcast style licensing regulation, for all the reasons that I think a number of people have submitted to the Inquiry.

  • And also importantly because of possibly the changing ways in which people are expecting various things from various communications media, and I would put that in very tentative terms because our recent research on this is no more than indicative, but it is -- the reason why Ed described this as something it's difficult to find a solution for is not only is the whole technology changing in the way Ed has described, but how people behave around it is possibly also changing, and to find something that meets people's expectations and needs is not straightforward.

  • Costs. At the seminar on 12 October reference was made about the costs of Ofcom compared to the PCC. Obviously costs of any news body would be relevant if the industry had to pay for it, so in some regards what was said was quite worrying. I think it was Mr Paul Dacre who said at the seminar that your budget of £115 million compared rather unfavourably with the PCC's budget of £2 million.

    You've provided a statement which deals with this in some detail. Can you summarise for us whether you think that's an accurate comparison or a fair comparison?

  • The comparison that Mr Dacre made is, no, it's wholly inaccurate, and let me explain why.

    The £115 million that is our budget is a budget which covers every single one of our activities. That is all the things that you began with: fixed and mobile telecoms regulation, the management and interference management of the entire UK spectrum, consumer protection, concurrent competition powers, it now absorbs postal regulation and so on. Only a relatively small part of our activity is broadcasting standards regulation.

    If you ask the correct question, which is how much does our broadcasting standards regulation cost, because that seems to me the closest analogy to what the PCC does, we provided the Inquiry with an analysis to the best of our ability, which would replicate or copy the closest similar analysis that we could do. In doing so, we've erred on the side of caution, I should say. In other words, if we've done anything, we've overstated, I think, rather than understated. When you do that analysis, you discover that our budget for broadcasting standards is about £3.4 million falling to £3 million this year, and that's what we would expect it to be on an ongoing basis.

  • And that includes complaint handling and --

  • So there really is quite a substantial difference.

  • Mr Richards and Dr Bowe, those are all my questions. Obviously the Chairman may have some additional questions, but on my behalf, thank you very much.

  • Two things. First of all, as we've just commented, on 12 October you took part in one of our briefing sessions on regulation. Are you content that the transcript of what you said there can be incorporated into the record of the Inquiry?

  • I'm content, subject to -- I'm not sure I've checked it, but subject to my checking it, yes, absolutely, of course.

  • Fine. Thank you very much. It's a rather formal matter. It's only because what is within the record has to be clear.

  • The second is this, and let me make it abundantly clear that I am not saying that this should be taken as a hint by anybody, and neither am I suggesting that Ofcom are anxious to move into press regulation, but it's abundantly clear from all you've said that you have a very great deal, indeed in this country a unique deal of experience of media regulation beyond the pure press. Therefore I would welcome your views, not now, I ask you just to think about it but not at the expense of your other work, on how the press could be regulated in a way that preserves their independence and of course the rights of free expression. I leave it as open textured as that, but it is something you've clearly had to think about in the context of your various activities and if you could write to me on that subject at some stage, I'd be very grateful.

  • Thank you very much for the invitation. You are correct in your assumption that Ofcom is not seeking to regulate the press. You could not be more correct in that assumption. But of course we're very happy to try to help this Inquiry in any way we can, and we will think carefully about what we can say that might further assist you.

  • Thank you very much indeed. Thank you both very much, and thank you for being so prepared to give up your time in a field that is not your field to help me in the work that I have to do. Thank you very much.

  • I think we should move seamlessly to Mr Parker, who is the chief executive of the Advertising Standards Authority.