There are two immediate priorities for this review to address.
One is the requirement for us to review the development of digital radio. Section 67 of the Broadcasting Act 1996 requires the Secretary of State to keep under review the development of digital radio, for the purpose of considering for how long it would be appropriate for sound broadcasting services to continue to be provided in analogue form. The Act requires the review to look at:-
(i) the provision in the UK of radio multiplex services;
(ii) the availability in the UK of digital sound programme services and the availability there in digital form of national services (within the meaning of Part III of the Broadcasting Act 1990) and the sound broadcasting services of the BBC; and
(iii) the ownership or possession in the UK of equipment capable of receiving the services referred to in sub-paragraph (ii) (above) when broadcast or transmitted in digital form.
The Broadcasting Act 1996 also requires the review to look at the likely future extent of such provision, such availability and such ownership or possession.
Ofcom was asked by the Secretary of State to report to her on these matters by 31st October 2004. We duly presented that report, which is incorporated into this review in section 71.
While the statutory review was framed in terms of DAB digital radio and this remains the primary focus of the report, other platforms such as digital television and the internet now offer digital radio and we consider them within the review.
The other immediate priority is the requirement set out in section 314 of the Communications Act for Ofcom to produce guidance as to how we consider that the requirements for local material and local production in commercial radio should be met. We address these issues in section 6.
Beyond these two immediate priorities, in preparing this review it became clear that these two aspects of the radio market cannot be considered in isolation. The analogue and digital radio sectors are very closely related, being operated largely by the same companies and sharing some of the same content, so it does not make sense to review digital radio without considering the analogue market. In addition, the major role played by the BBC in radio, accounting for over half of total radio listening and almost half of total radio funding, means that any review which considered only commercial radio would be deficient in its understanding of the factors which influence industry and audience behaviour.
These factors, together with the changes taking place in the industry in general, suggested the need for an overarching review of the future direction of the UK radio industry.
This review, therefore, considers the whole radio market, both the commercial sector and the BBC, and both the analogue and digital sectors. It aims not only to address the immediate priorities but also to raise some questions about where radio is headed in the long-term, including:
- whether there are particular public purposes for radio that require intervention in the market (either through the public or commercial sectors) and how these are best delivered;
- whether digital radio is likely to change this picture – recognising that digital radio is still at a very early stage of its development; and
- what the long-term strategic aims of regulation of the radio market should be.
We have structured this review into two main phases:
- Phase 1 addresses our immediate priorities as required by statute - consideration of localness in analogue commercial radio and a review of the development of digital radio. It goes on to begin the debate about the rationale for intervention in the market and asks whether a clear set of public purposes can be identified for radio. It suggests a strategic framework for regulation in radio and explains how commercial radio, community radio and restricted service licences (RSLs) fit into that overall strategy. It concludes by setting out our plans for further licensing of radio services, including the possibility of new medium wave licences;
- Phase 2, next year, will aim to reach conclusions on the proposals in phase 1, following consultation, and will try to answer some of the questions raised about the longer-term, particularly as regards the public purposes of radio and how they are best delivered.
Overall, the review aims to set out, for consultation, a regulatory framework which balances the needs for healthy competition, range and quality, valued services which meet public purposes and the provision of local services, and facilitates moves towards a digital future for radio.
In drawing up this review, we have already held informal discussions with many industry players, but the initial findings and proposals of this review are now presented for formal consultation.
Our key questions for this consultation are listed at the end of this report. We look forward to a healthy debate.