Proceedings of the Standing Senate Committee on
Transport and Communications
Issue 19 - Evidence - May 10, 2005
OTTAWA, Tuesday, May 10, 2005
The Standing Senate Committee on Transport and Communications met this day at 9:37 a.m. to examine the current role of Canadian media industries; emerging trends and developments in these industries; the media's role, rights and responsibilities in Canadian society; and current and appropriate future policies relating thereto.
Senator Joan Fraser (Chairman) in the chair.
[English]
The Chairman: Honourable senators, we continue our hearing today on the state of Canadian news media, on the appropriate role of public policy in helping to ensure that they remain healthy, independent and diverse, in light of tremendous changes that have occurred in recent years, notably, globalization, technological change and convergence.
[Translation]
We all fully recognize that we cannot examine the situation in Canada without being aware of what happens in other countries. We are very pleased to welcome this morning Dr. Damian Tambini, by way of video-conference.
[English]
Dr. Tambini is head of the Comparative Media Law and Policy program at the Centre for Socio-Legal Studies at the University of Oxford, and he is in Oxford now. It is mid-afternoon in Oxford. Good afternoon, Dr. Tambini.
He was appointed as head of the program in 2002 and he is co-author of a number of works dealing with telecommunications policy and democratic communications. He will be able to explain to us, among other things, how the British system of public policy works in these areas. We are extremely grateful to him for agreeing to join us this morning.
Dr. Tambini, we look forward to an introductory statement from you of perhaps 10 minutes or so. We will then ask you some questions, if we may. The floor is yours.
Mr. Damian Tambini, Head, Programme in Comparative Media Law and Policy, Centre for Socio-Legal Studies, University of Oxford, as an individual: Thank you very much. It is a great pleasure to be addressing you here today, and I am very grateful for the invitation to do so.
Just to add to your introduction about me, my research unit does comparative work. We are very interested in the kinds of questions you are posing today, such as, how different countries around the world are responding to convergence, and I have to declare an interest here. I have been working with some Canadian colleagues, notably Professor Mark Raboy at McGill University, who is trying to develop an international consortium to develop research responding to these kinds of questions. It is a pleasure to be doing this with you this morning.
I will speak about four things — broadcasting regulation, particularly the Communications Act and the setting up of Ofcom; the BBC charter that is currently being discussed; the Press Complaints Commission, PCC, and self- regulation of the press; and I will make some comments about new media and Internet self-regulation.
It is worth at the outset just noting where we are in the U.K. in terms of the policy cycle. In terms of broadcasting, in 2003 we put in force the Communications Act, which replaces, in some respects, the Broadcasting Act of 1996 as well as implements four major directives of the European Commission on electronic communications that were published in 2002. About half of that legislation is simply implementing the European framework.
We are in the middle of a debate about the BBC charter. The government has published a green paper outlining its proposals for BBC governance and regulation. In relation to the Press Complaints Commission, the usual dance of standoff between public figures including politicians and the press continues.
The Department for Culture, Media and Sport issued a critical report, particularly on privacy, last year, and there have been some critical judgments and judicial reviews of the Press Complaints Commission's decisions over the last couple of years, particularly in relation to privacy, dealing with implications of the Human Rights Act, which incorporates European human rights legislation into U.K. law.
Finally, in relation to new media and the Internet, a European Commission-led framework for self-regulation is still really the main focus of public policy debate in relation to the Internet, but there are some question marks that I will mention later, particularly in relation to things like television over the Internet.
I will start with an outline of the framework for broadcasting regulation — and I am talking about commercial broadcasters. Under the Communications Act, they are licensed by Ofcom. Ofcom, as is usually the case, attaches conditions to those licences, including what kinds of programs are delivered at what time. For example, there are still obligations on broadcasters to deliver high-quality news in peak time, and licences include obligations to conform to Ofcom program codes, including issues to do with harm, offence, taste and decency, accuracy and impartiality.
These remain largely unchanged from the older codes, which were applied by the regulators before the Communications Act in 2003 merged existing communications regulators. There is a process of review going on so that program codes, those codes that specify standards for broadcasting services, will be debated and discussed further.
The broadcasting regime as a whole can be understoodas a series of tiers. Those broadcasters such as the BBC and Channel 4, which receive direct and indirect subsidy, have the highest level of content obligations. On the other hand, what we call tier 3 broadcasters, those that receive no subsidy and are only available on cable and satellite, have much lower restrictions. However, all broadcasters do have obligations to observe the Ofcom code on due impartiality in matters of political and industrial controversy.
The extent to which these codes are uniformly applied and can be applied was recently tested when there was a complaint made by a viewer about FOX News, which is available on satellite platforms. That complaint was not upheld and there has been a debate about whether it is possible to apply uniform standards of impartiality to all broadcasters across all platforms, including those that are only available to a minority of viewers. That is the tier system for content standards in broadcasting.
The European Parliament directive, Television without Frontiers, also makes some baseline obligations for satellite broadcasters, some of which are uplinked from outside the U.K., for example, in France, so there is a slightly different regime there. There is a general trend in the new legislation to move away from a command and control structure in regard to content, apart from this issue of impartiality, and towards a more negotiated regime in relation to the broadcaster, so that the broadcasters, rather than having everything specified in their licence, give statements of program policy within the context of a general public service broadcasting remit. I can say more about that in the questions if you want. However, there is a general shift away from specifying in intricate detail everything in the licences.
I will deal with the ownership issues, which I know you are interested in, later on.
On the BBC, you will be aware that the charter of the BBC, which is the main regulatory instrument for the BBC, will be renewed next year and is currently being reviewed by the government in a context of some controversy given the Hutton Inquiry and the widespread criticism of the existing structure of regulation of the BBC. The basic criticism of BBC governance has been that the governors, which have existed unchanged since 1929 in their structure, basically combine managerial and regulatory responsibilities. This has been seen as inappropriate. A committee was established by the Department for Culture, Media and Sport to examine this issue, and its recommendation of external regulation for the BBC was not supported by the government. They have gone for the option of an external self-regulatory body for the BBC, so moving the BBC governors outside of the building, outside of Broadcasting House, giving them more powers and more resources, as well as separating out their internal managerial responsibilities from their regulatory responsibilities.
I will turn to press now. Here, there is an almost entirely self-regulatory regime. The Press Complaints Commission, since its last major review, the Calcutt review of 1992-93, has been basically tightening up its code. There have been standoffs with the government and with public figures, but the basic model of an entirely industry financed-and- operated regulator that has a slight majority of lay members on the board has been changing in an evolutionary manner rather than radically over the last 10 years.
The standard defence of self-regulation is the one that the PCC uses to describe itself — that is, that self-regulation is advantageous because it is flexible, it is legitimate with the editors and the owners of the press, and it is quick and free. Those three qualities of self-regulation, however, can be turned on their head because the PCC is increasingly criticized for being too flexible and not demanding standards of compliance with press interests. It is criticized because it does not have enough public legitimacy, and there are question marks about standards, sometimes of due process, within the Press Complaints Commission. An example would be the lack of transparency about when the Press Complaints Commission initiates complaints rather than responds to them. Hence, a self-regulatory framework for the press that has, as I mentioned, been somewhat criticized in recent years.
I will now speak a little about ownership. The regime was changed after a quite intense public debate during the Communications Act debates — however, nowhere near as intense as the debate in the U.S. during the same period dealing with changes in the FCC regulations for cable. The new regime stops short of simply leaving ownership questions to competition law. The current framework, which I can take you through in detail if you want, combines the Office of Fair Trading with the communications regulator, Ofcom. If the Secretary of State for Culture, Media and Sports issues an intervention notice, then Ofcom has an obligation to report to the Secretary of State and the Office of Fair Trade, the competition regulator, and then there are some detailed procedures to apply called a public interest test.
The public interest test is a specific test designed to apply to media merges that takes into account the need for accurate presentation of news, the need for free expression of opinion and the need for plurality of views. This is a new test. It has not been applied yet. There has been no intervention notice issued by the Secretary of State.
Just briefly, because I should like to respond to questions rather than continue too long with this monologue, the big picture in which these issues are being debated in the U.K. obviously takes into consideration the emergence of new media and intellect content, as well as the emergence of regional markets, reflecting the increasing weight of European regulation in this sector.
Currently, in very brief summary, regulation has changed quite dramatically in the form of the setting up of the new communications regulator, Ofcom, as a converged regulator for telecommunications, broadcasting and other electronic media, but we remain with quite detailed sector-specific standards. The broadcasting regime is very different from the press regime.
In terms of the Internet, there is a self-regulatory framework that applies very different standards, as you would expect, to Internet content for harmful and illegal content. In particular, for illegal content, the European Electronic Commerce Directive sets out a procedure for what they call notice and take down — which is when Internet service providers receive notice that something is illegal, and it might be illegal because it is a copyright infringement, because it is child pornography, or perhaps because it is defamatory. As soon as the service provider has notice that that content is illegal, there is an obligation to take it down. I can speak more about that procedure if you are interested. It has arguably has had very little impact in terms of news on the Internet.
There is, finally, a very broad and profound debate going on right now in the U.K. about news. Part of this has to do with the emergence of what you might call the Blogosphere, and the sense that existing media players need to respond to questions about journalistic standards in new media as they become more influential.
It has been a bigger debate about the Hutton inquiry and the role of the BBC story and the events leading to the death of Dr. Kelly last year.
Finally, there is a book I would commend to you published last year by Financial Times journalist John Lloyd, entitled What the Media are Doing to Our Politics. This book has received responses from the upper echelons of the BBC and many public figures and really, in my view, puts on the agenda some of the very broad challenges that I think news faces in the U.K.
The Chairman: You certainly have covered an enormous amount of ground in a very short time.
Senator Tkachuk: We are very interested in ownership issues. In the newspaper business in Britain, is there a lot of discussion about cross-ownership? Are newspapers allowed to own television stations and vice versa?
Mr. Tambini: There is a discussion about that. In the build-up to the communications bill a few years ago, the argument was made that, in the era of convergence, how do we view our existing cross-media ownership restrictions? Previously, we had a complex methodology, which I cannot repeat to you, which I think basically meant that, if you owned 20 per cent of a relevant market for newspapers, you could not, without specific permission from the Secretary of State, own 20 per cent of the relevant market of a broadcaster.
Now, as part of this public interest test framework that I described to you, if there is a merger of special public interest, which is defined as a merger over a certain threshold size that involves media companies, then the Secretary of State can refer that merger to Ofcom, and Ofcom will present a report on whether that merger actually does serve the public interest.
Therefore, the Secretary of State will receive a report from Ofcom. The Office of Fair Trading will advise on whether competition is likely to suffer as a result of that merger. However, the role of Ofcom is to look at the proposed merger, look at the two concerns that are coming together, and make a judgment on some quite subjective issues regarding whether this is likely to result in a reduction of the plurality of views or the plurality of owners — in fact, in the case of broadcasting and cross-media tests — serving the audience, and whether there would be a reduction of plurality of persons with control of media enterprises serving regional markets within the U.K.
Therefore, there is now quite a subjective public interest test that is applied in the case of cross-media mergers.
Senator Tkachuk: In the newspaper business, our impression here is that it is very competitive. Is it?
Mr. Tambini: Yes, it is very competitive on the national level, but not as much on the local and regional level.
Senator Tkachuk: Explain. What do you mean by that? For example, in Liverpool, how many newspapers would you have, one or more, or how does that work?
Mr. Tambini: It is a long time since I was in Liverpool.
Senator Tkachuk: What about Oxford?
Mr. Tambini: There are two local newspapers and two commercial FM radio stations that are Oxford stations. Obviously, other radio stations are available.
Senator Tkachuk: On a national level, because your country is so different from ours, obviously, it is so small and concentrated, geographically, whereas we are quite spread apart, it was interesting to note that on a local level you have some of the same problems we have vis-à-vis not enough competition at the local level.
When you talked about the Blogosphere, I got the impression that there was some discussion about regulating it because they are out of hand, or maybe they do not fit the public view of what journalism should be.
Mr. Tambini: I do not think anyone is seriously talking about regulating Internet content, particularly not for impartiality or for journalistic standards. It is interesting to note that the Press Complaints Commission will apply its code where newspapers are carrying on their sites material that is not published on the paper version of the paper. Hence, some Internet news content does come under other regulatory regimes. The same applies to BBC, for example.
However, with regard to grassroots blogs and so forth, no one is really speaking about the regulating those people directly.
What is worth thinking about and what has been debated to a certain extent is the overall regulatory ecology that applies to provision of news content in general. If you can imagine that more and more people are getting material from a diversity of sources, in that context that may be good for plurality, and that is something we can potentially measure. However, if less of that material is coming from sources that actually do conform to any kind of code, whether that is the code for accuracy of the Press Complaints Commission or any of the broadcasting standards codes, then it might affect the way we think about public broadcasting. We might say that public broadcasting becomes more important, rather than less important, in that sphere. This is quite a complex debate. However, I would clarify that no one is speaking about regulating blogs here.
The Chairman: Is the public interest test a formal public document? It is not something they make up on the fly; correct?
Mr. Tambini: On the face of the bill, the Communications Act, 2003, the test is mentioned and described briefly, and then there is guidance that has been published by Ofcom. That guidance is available on their website describing the procedure and the criteria that are used.
The Chairman: The Press Complaints Commission is what we would call a press council, just for clarifying purposes.
Senator Phalen: I should like to ask questions in respect to press councils. In some research that I have done, I have found a chart of European press councils dated 2003. On the chart, there are 24 countries listed. Of those countries, Britain has by far the largest budget. It has a budget of $2,300,000. The closest to that is Sweden, which has a budget of $600,000, and then Germany, which has a budget of $450,000.
My first question is this: Can you tell us how your press councils are funded?
Mr. Tambini: The press council is funded 100 per cent through a body called the Press Standards Board of Finance, which effectively channels contributions that are determined by the board itself from existing newspapers. Depending on the size of the concern, they make a contribution to the Press Standards Board of Finance.
The Press Standards Board of Finance then makes budgetary decisions with regard to the spending of the Press Complaints Commission. This has been subject to some questions at various times about whether the financial relationship between the press industry itself — because the editors and owners sit on the board of finance — and the council give sufficient independence to the council.
Senator Phalen: On the same chart, I notice that the Press Complaints Commission is comprised of 16 members. Seven come from owners and editors and nine from the public. How are the individuals from the public appointed?
Mr. Tambini: For the first time, with the last lay member who was appointed, a new procedure was put in place. I know that, for the first time, they actually advertised for candidates, but they are appointed by the other members of the council. I would have to check whether it is them or the board of finance, or whether there is any involvement of the board of finance. It is either just the council or the council and the board of finance.
Senator Phalen: One of the complaints we have heard in Canada about press councils is that, given their funding comes from newspapers themselves, their ability to sanction these newspapers is limited. My research showed that in one year, the British press received 2,601 complaints — I am reading from the same chart in 2003 — and upheld less than 3 per cent of these complaints, which does not compare with Sweden, which upheld 25 per cent, or the Netherlands, which upheld 28 per cent of the complaints.
Can you explain the low number of complaints being upheld? Is there a reason for that?
Mr. Tambini: The answer the Press Complaints Commission themselves would give is that they tend to try to resolve these complaints out of court, as it were. They tend to mediate between complainants and editors, perhaps publish apologies, but tend to avoid taking complaints to the council if these can be mediated beforehand. I would agree with you that that is a very low level of upholding complaints. It may also have to do with the code itself.
Senator Phalen: Can you tell me if there is any perceived relationship to the number of complaints that are upheld and the makeup of the press councils?
Mr. Tambini: Part of the problem is the code itself and the fact that the code committee, the people that designed the code, is made up of owners and editors and does not have any lay members on that committee. It may be that complainants think they have a complaint in regard to the Press Complaints Commission code, but the code itself has a high bar to find against the newspaper in comparison with other press complaints commissions.
Senator Phalen: Moving on from that, in Canada, 96 per cent of private broadcasters are members of a self- regulating council known as the Canadian Broadcast Standards Council. The Canadian Radio-television and Telecommunications Commission — the CRTC — the agency that regulates broadcasting licences, has expressed publicly its satisfaction with how the Broadcast Standards Council handles complaints, but we should also note that interested parties can always bring their complaints to the CRTC.
Are private broadcasters in the U.K. regulated by a similar council? Do you have a government department similar to the CRTC, where the public can bring their complaints if unsatisfied with the broadcast council? My third question is this: How is your broadcast council funded, and what are your views as to its effectiveness?
Mr. Tambini: We do not have an industry-wide, self-regulatory complaints body for broadcasters. If you are a complainant, you would go initially to the broadcaster itself and/or to Ofcom, which is the statutory body that issues licences to broadcasters, the Office of Communications. We do not have that level of self-regulation that you are discussing.
In my introduction, I mentioned some of the standard problems with self-regulation. I would imagine that you come up against similar challenges if you are looking at broadcasting regulations, in that there are advantages in terms of its closeness to the industry, its flexibility and its ability to respond to changing technological circumstances. However, you do have problems of legitimacy and due process. Where companies have tight budgetary limitations and are focused on the bottom line, they may not give sufficient resources to a self-regulatory organization, unless they were obligated to do so.
I would be interested to learn more, and I can say more about the issue of self-regulation in general, but we do not have an equivalent body in the U.K.
Senator Johnson: Can you comment on an article from last August in the Washington Post that reported that Reuters had decided to close 20 editorial jobs in the U.S. and Europe and move these operations to Banglador, India, in an effort to cut costs? What, in your view, are the implications of this move, and is this hiring of less expensive labour in these developing countries likely to become an industry trend in the future?
Mr. Tambini: I am not drawing on any broadcasting policy expertise when I say that say offshoring of this nature in knowledge-based industries is a general trend and it seems set to continue as long as there are differentials in labour costs. It is as likely to continue in this sector as in any other sector.
Senator Johnson: There was an article in the Financial Post here, but out of Britain, to the effect that the newspaper sector was becoming more crowded and that the distinction between publications is dissolving. What is your comment vis-à-vis the British news industry having to deal with the continuing erosion of sales in a marketplace that looks increasingly crowded in the middle and that editors are worried that the new rivalries that are driven by business pressures are leading to alienation of readers? I believe the editor of the Guardian said that there is a possibility of a real bust-up in the middle of the market.
How will this play out in Britain in terms of the future of publications? We have similar problems in Canada.
Mr. Tambini: All dailies and weekly newspapers have in the last five years experienced decline in circulation figures. One newspaper that has slightly bucked the trend has been The Independent, which moved to a new format and, some people would argue, a tabloid format and a tabloid feel to the newspaper, in terms of its news values and sensationalism. Perhaps that has resulted over some periods to increase its circulation.
This is related to new sources of news, the rise of 24-hour news broadcasting and the Internet. I do think there are problems for these individual publications, particularly those that have not managed to develop the online strategy, for example, that The Guardian has developed. However, whether or not there are public policy questions arising from this in the context of the development of other sources of news, such as the Internet, I guess is a question for you.
Senator Johnson: You are right. It is a question for us.
There is a lot of trending that happens in Britain and Europe that, as the global society becomes smaller, is reflected in all continents everywhere in the world. I wonder, especially, in terms of younger people, if you are having the same issues in England as we are with them just using the Internet, not reading newspapers, to the point where two publishers here have now put out newspapers directed towards young people between 18 and 30-something. That is part of what we are studying as well, when it comes to youth and the information, and the fact of the concentration of the Internet and the information. The infomania that is out there is creating a lower readership amongst this population.
Do you have any comments on that?
Mr. Tambini: The difficulty of reaching 18-to-30 year old viewers, readers and listeners has been an issue in public policy debate about broadcasting over the last five years, certainly. I know the broadcasters have all innovated in terms of their formats. For example, the new youth-focused BBC channels that are available on digital platforms are broadcasting shorter bulletins with a different feel.
However, it seems that this group is also of particular interest to advertisers, and they are increasingly difficult to reach, not only with news, but with all conventional programming in broadcasting. However, I think it is particularly with news.
Senator Johnson: How is it with television? In our country, the majority of people still get their news, even with the Internet, from television. That is what our latest polling shows. Is it the same with the BBC, would you say, with respect to the young and general population information?
Mr. Tambini: I do not have figures at hand, but a couple of years ago 70 per cent of people said their primary source of news was still television. I think those figures are changing; the number of people that now say the Internet is their main source of news is increasing. It is still, I do not think, above 10 per cent, but the trend is clear.
Senator Chaput: In your presentation, sir, you talked about self-regulation in respect of the new media and the Internet. I think I heard you say that it was not a question of regulating Internet content — if I heard you right. In respect of the Internet, if there is a debate currently on self-regulation, what are the major points of that debate? What do the people who participate in the debate talk about? What is their approach?
Mr. Tambini: The first 10 years of the Internet, we did have periods of moral panic in the media about certain developments to do with harmful content and children, for example. Some of that panic was justified, but not all. The first settlement for the Internet was a cautious one, based on the idea that this sector is incredibly industrially competitive and that we would regret it if we regulated it restrictively. Therefore, a self-regulatory framework was pursued.
As regards news, this is less relevant, because this is really only dealing with what you would call illegal and harmful content. However, the basic framework is that Internet service providers develop their own codes It is true to say that, in the European countries where they did not develop their own codes of conduct, they were encouraged to do so by the national governments and by the European Commission.
Those codes contain rules about the responsibility of Internet service providers, not detailed rules about what it is okay to post on a website, but procedures and rules for illegal and harmful content. Alongside the codes of conduct and the Internet service providers, you also have hotlines for reporting illegal content, cooperation with law enforcement, et cetera.
There is a debate about the next generation of broadband content and this blurring of boundaries between the Internet and television, which, if it is not a short-term development, may well be a medium- to long-term development. There are questions there about whether content standards that are applied on broadcast platforms now and to broadcasting channels now will survive in that environment or whether the existing framework for public broadcasting has really been fundamentally undermined.
Senator Chaput: I have another question with regard to the media sectors. Do you have in your country any media sector that stands out from media sectors elsewhere — as an example, levels of concentration or foreign ownership? Do you have anything that stands out?
Mr. Tambini: The other thing we did in the Communications Act, 2003, was to remove the restriction preventing foreign nationals from owning broadcast licences and major newspapers. Some countries have these restrictions on foreign ownership and some do not. In Europe, we tend to have restrictions onnon-European ownership, and these were removed in the last major legislation.
Whether there is a media sector that is more foreign owned or more concentrated, there is probably more foreign ownership in newspapers, but I would not choose any particular sector as one that has high levels either of concentration or of foreign ownership.
The Chairman: It seems to me that one of the distinguishing characteristics of the British market would be all those national newspapers. I do not know how many you have, a dozen? Would it be something like that?
Mr. Tambini: That is very true, if you compare it to other European countries or North American countries, where you tend to have either effective regional monopolies or fewer national and more regional newspapers. That is definitely a feature.
The Chairman: Is there much cross-ownership in Britain, or is it still more a hypothetical issue?
Mr. Tambini: Between broadcasting and the press?
The Chairman: Yes.
Mr. Tambini: Very little. Scottish Media Group has press interests and broadcasting interests. There have been questions about whether Guardian Media Group is interested in investing in certain broadcasters.
I am not an economist or an expert in the recent developments in the business, but I would say that it is likely there is a trend, simply because there are more broadcasters on niche services, smaller satellite channels. Currently, 60 per cent of the population have at least 24 channels. That has been a very rapid change in the U.K., because we have launched a digital terrestrial platform, in addition to cable and satellite, which were developing quite slowly. We are now more than half digital, and all these new channels need a lot of content, and there are a lot more smaller broadcasting companies involved in producing that content.
The Chairman: You said the new regime had done away with foreign ownership rules — not, one assumes, for the BBC. Is it for all broadcasters, or is it just for these new third tier broadcasters that there are no foreign ownership rules?
Mr. Tambini: Obviously, not for the BBC or for Channel 4, either, which is publicly owned, but the other broadcasters, yes.
The Chairman: All of them?
Mr. Tambini: Theoretically, an American citizen, no names mentioned, could buy Channel 3 or Channel 5, the big commercial licensees.
The Chairman: In relation to the Blogosphere, I am trying to figure out the sequence of events. There was a European Electronic Commerce Directive and, maybe as a result of that or simultaneously, the service providers got together to draw up codes. You said in your presentation that, if a service provider receives notice that there is illegal content, the service provider is obliged by these codes to take it down. Who gives them notice? Does it have to be notice with judicial standing? How does that work?
Mr. Tambini: I should like to step right out of this notion of a Blogosphere. I used that term to refer to grassroots provision of news.
In relation to the E-commerce directive, that is a separate debate. The E-commerce directive is concerned with establishing a limited liability regime for ISPs, effectively. It is clear that they are just a carrier of the content. They do not actually have any role as a publisher; they do not have any liability for the content itself. Within it, the ISP has a responsibility only from the moment it is notified. It could be notified by anybody. I could come across a site that I think infringes my copyright, and then I could make a complaint to the ISP. This is where some of the problems may enter the equation.
Let me give you the following illustration. Some of mystudents were looking at this regime and decided to conduct an experiment, a mystery shopper test, to see if this notice-and-take-down regime was actually being applied in a way that has high enough standards. They put up a spoof website that contained chapters from John Stuart Mill's On Liberty. In fact, it was chapter 2, which dealt with freedom of the press and freedom of expression. They decided to host it on a number of ISP websites — literally, it was a fan site for John Stuart Mill enthusiasts. The ISPs received a number of complaints from the John Stuart Mill Heritage Foundation, which I think had been set up by another student. As a result of this, we found that a number of the ISPs simply took down material without actually reviewing whether the complaint was real, whether it was bogus.
This is an interesting game, and I think it is quite a funny story. This is not the end of free expression as we know it, but it does illustrate that this is a self-regulatory mechanism, which arguably results in it being quite easy to take somebody else's site down. If there was a blog you did not like, you could complain against it and the ISP probably would not even look at it before they took it down.
Hence, there are potential problems here with the notice-and-take-down regime. There is a real shakedown going on in Europe with the ISPs, particularly in very competitive markets, because of the rise in broadband service providers. The players in the sector will not give sufficient resources to self-regulation and to running a notice-and-take-down regime if this involves expensive lawyers reviewing hundreds of complaints. They will just take the site down, ask questions later.
There is some evidence that copyright holders might be using this regime to close down sites that allegedly infringe copyright. I do not think it is a huge problem right now, but it could become one and it shows a system that is subject to potential abuses.
The Chairman: That is fascinating. I have one more question before I go back to Senator Tkachuk.
People who have complaints about broadcasters can go to Ofcom. Does Ofcom have a separate complaints division? How does it work?
Mr. Tambini: Within Ofcom, there is a division dealing with complaints — however, it is not a part of Ofcom that I have worked with. Nevertheless, that should be one of the easiest things to find out about, because they are geared to receiving complaints.
Senator Tkachuk: I want to do a little bit of follow-up on a number of points you have already raised. One is on foreign ownership. When you say that the restrictions have been lifted, if a person from the United States or from Germany wanted to buy a newspaper in Britain does that mean that the person would have to get permission to allow for that negotiated business deal to go through, or does anyone care if it goes through? What would happen in the case of someone wishing to make a bid for a television network or a radio station? Do they have to go through a process or is it just accepted?
Mr. Tambini: It depends on the nature of the enterprise being bought. If it is a media company whose turnover exceeds U.K. 70 million pounds per year, then specific permission will have to be sought from the Office of Fair Trading.
Senator Tkachuk: Just for clarification, when you say media, do you mean electronic media or newspapers, or do you mean both?
Mr. Tambini: I mean both.
Senator Tkachuk: When someone is making application for a specialty channel that would be broadcast on cable, say a news channel, how difficult is it to get permission to start one? Is it difficult to start one?
Mr. Tambini: There are relatively simple procedures where you have to notify Ofcom. You would have to register a company, but it is relatively easy. You do not have to jump through too many hoops.
Senator Tkachuk: Do you have to meet any financial or programming rules, or do you just say, I want to start a news channel, and permission is granted and away you go?
Mr. Tambini: You would receive a licence, and as a condition of that licence you do have to observe the Ofcom program code, which is very detailed. Therefore, the actual procedure for permitting you to set up that service I think is relatively simple, but the rules are very specific, and if you are in breach of that code, your licence will be removed.
Senator Tkachuk: Is part of that code the question of differences of views? Do the bureaucrats look at it as a whole — that is, we have five news channels out there, all with different views, and therefore we are meeting our public policy obligation — or do you look at each channel individually and say it must have all these different views?
Mr. Tambini: Each channel.
Senator Tkachuk: What about a channel like Al-Jazeera, which, in my way of thinking would not meet the test?
Mr. Tambini: I think there have been complaints, but they have not been upheld.
Senator Tkachuk: There is a lot of latitude, I take it?
Mr. Tambini: An equivalent channel, this is going backto 1999, was Med TV, a minority focused, minority language, foreign broadcaster available on satellite platforms, did have its licence revoked, but I think it was for incitement. I do not think that any complaints have been made about Al-Jazeera with respect to incitement.
On the question of impartiality, we do not do what the French do, which is to be much more specific about measuring the number of seconds that a given spokesman is given in a news bulletin. We do not quite go that far. There is a lot of judgment involved in applying these codes and these tests.
Senator Tkachuk: Because you are an academic, I want to ask a philosophical question to start a little discussion. We have had a lot of discussion here about the Internet, bloggers, and good taste and all of those things. Our concern is about the health of newspapers, which is really a concern of mine, but not really a concern of mine.
Were not the first newspapers in Britain the same as in North America? Were they not sort of all like bloggers? They were broadsheets that had a political view that they were trying to drive forward. The Globe and Mail here was started by a guy named Brown who was considered a radical in those days. He was pushing a public policy objective that was firm, strong and powerful. The bloggers out there that were really small newspapers that had political agendas have all become sort of respectable now, and we all want to make sure they are viable, but really, that is the way they started. Perhaps that is the way it should be vis-à-vis the Internet — we should not really worry about whether newspapers are healthy or not, because it is just competition. This is all just competition; it is all change and we hate it.
Mr. Tambini: I am inclined to agree with you. I do not hear many people out there saying that we should be worried about the great new plurality of expression that is enabled by the Internet and bloggers. I do not hear too many people arguing that they should be regulated.
I do think we need to think about how the civic and democratic role of the media is continued. We had a standard reason to intervene in broadcasting, and in the U.K. there is a consensus that we made quite a good job of ensuring that, in a situation where we had limited channels with mass audiences, those channels were regulated to ensure that they represented the interests and tastes of the whole audience and the different groups within it, and also that they did not favour one political interest or agenda over another.
In a situation where we might, let me put the stress on ``might,'' be moving to a situation where there is no scarcity of spectrum available for broadcasters, and we have many more channels through which audiovisual material can be transmitted, I agree, we could move some way towards a kind of a free press model, even for broadcasters, but we do not actually know how the market is going to behave over the next 10 to 20 years. We do not know whether audiences will want to stay with mass services or whether they will move out to minority interest blog-type news sources, maybe from other countries. We have to keep a very good eye on what they provide.
I also think we have been well served by having the possibility of public interest and public debate about things that the market would not provide. For example, the market might not provide certain levels of broadcasting externalities around accuracy, quality of news, things that viewers will not themselves choose unless it is provided for them. There are a number of ways in which things could go wrong over the next 10 to 20 years. We could be in a situation in which there are fewer trusted sources or where the budgets that currently support great newsgathering operations such as the BBC are fragmented and nothing is there to replace them.
I have plenty of time for a philosophical debate about these things, but I would hesitate before actually saying that there is anyone who is threatening to regulate the blogs. I do not know if that is a debate in Canada; however, it is certainly not a debate here. On the contrary, people have been very wary about getting involved in regulating Internet content. The current suggestion by the European Commission that they are interested in including Internet Protocol television within the new regulatory framework, I think, will be resisted in the U.K.
The Chairman: I should, to fill you in, tell that you most of our discussion in this committee has not so much involved regulation of the Internet as some of the concerns that you just mentioned. If the old traditional media fragment and disappear, who will be giving us the news? Where are those newsgathering resources going to be?
I wonder if I could come back to ask you a little bit more about Ofcom. What is it? Is it a department of government? Does afree-standing commission run it? Who gets to choose who runs it? How does it work?
Mr. Tambini: Ofcom has a combination of funding sources. Some of it is payment by the stakeholders themselves, the licensees, who pay administrative charges. Some of it effectively is through payments for use of spectrums, so the airwaves, electromagnetic spectrum charges, some of which stay with Ofcom and some of which go to the treasury and the government.
The board of Ofcom is appointed by the Prime Minister, but there are a number of safeguards of independence for Ofcom. The board is appointed for a fixed term. They have a pretty clear remit under the Communications Act. They have more than 200 duties on the face of the legislation. There has been a controversy about a particular government adviser who was working closely with the Prime Minister who is now on the board of Ofcom. We always have these questions about the balance between accountability on the one hand and independence on the other, because a lot of the channels of accountability do depend on Ofcom reporting to the government and to Parliament.
There are a number of boards within Ofcom. One deals mainly with content issues — broadcasting, radio and television. This board reports to the main board. The point of bringing together the legacy regulators — which dealt separately with radio; there were two regulators for television; and there was a separate spectrum licensing authority. The idea of bringing those together has been to permit these different bodies to work more closely together.
Within Ofcom, there is a kind of a column structure with different hierarchies dealing with spectrum issues, with broadcasting issues and the telecommunications issues, but the idea is that they will work more closely together over time.
The Chairman: What is Ofcom's relationship with the BBC? How does it work?
Mr. Tambini: Ofcom deals with certain kinds of complaints about the BBC, for example, privacy, intrusions on privacy by journalists, intrusion into grief, fairness, and certain taste and decency complaints. We just had a judgment yesterday on a very high-profile taste and decency complaint about the BBC. Ofcom deals with certain kinds of complaints. It will not deal with delicate issues of impartiality, which are contained within the BBC program code, which is applied by the governors. News standards and other aspects of standards are dealt with by the BBC governors, and as I mentioned, they are being moved outside Broadcasting House under the new governance arrangement, and they have been given more powers to investigate complaints against the BBC.
The Chairman: Does Ofcom license BBC services?
Mr. Tambini: Yes.
The Chairman: It does, so to that extent the BBC comes under the Ofcom regulatory regime?
Mr. Tambini: Yes. In terms of competition and for technical issues relating to standards and coverage obligations, relating to the use of spectrum, BBC is accountable to Ofcom.
Senator Johnson: The CEO of Ofcom, I believe last month, called for more coherent regulatory structure for the BBC when speaking to the House of Lords. What has come of that? Has that been changed now, or will it be, and what was he talking about exactly?
Mr. Tambini: As I mentioned, because complaints about the BBC from the Prime Minister's office last year about a particular story on Radio 4's Today program — because those complaints were not dealt with in a very clear and transparent way, we did have a major crisis in terms of the relationship between the government and the BBC last year. You will have perhaps read about the Hutton Inquiry.
The Chairman: Yes.
Mr. Tambini: It resulted in the resignation of the director general and the chair of the governors.
Following that, there was a wide public debate about problems of combining managerial and regulatory responsibility with one board. There was a consensus shared by the chair of Ofcom that it was not sensible to combine those roles.
The Department of Culture, Media and Sport committee that was set up to report on BBC governance recommended external regulation of the BBC, partly by Ofcom, partly by an external regulator, specifically for the BBC. The government itself has now published its recommendations. They are supporting the BBC's own view that they can beef up the BBC governors and move them outside the building and give them more financial independence and more powers to investigate.
Effectively, where traditionally we have had BBC governors that work quite closely with the management of the BBC, but also have a duty to deal with complaints, they will now not deal with management; there will be a separate management board within the BBC. They will deal mainly with governance and complaints about the BBC. The name will be changed to the BBC Trust. They also have a series of other duties relating to what is now called the public value of BBC services — proposals for new services, for example.
Senator Johnson: The BBC board of governors is gone, and there will be a trust now; correct?
Mr. Tambini: It was reported recently that the governors have been abolished. My personal view is that they are the same people, they have just been moved out of the building and given more powers, and their name has been to the BBC Trust. The chair remains the same.
The Chairman: I will come back to the business of what happens when there is a merger, because you said that both Ofcom and the Office of Fair Trading would have a role. Ofcom would look at pure competition, am I right about that, so far? No, I am not. Tell me all about it.
Mr. Tambini: Under the Competition Act, the competition authorities are the Office of Fair Trading and the Competition Commission. If there is a merger that meets the test to be a matter of special public interest, because its turnover is over a certain threshold or it results in control exceeding 25 per cent of a given market, then the Secretary of State can issue a notification that it is being referred for a public interest test. Ofcom will then have a duty to report and will prepare a report according to the criteria that are detailed in their guidelines. It is slightly different for press and broadcasting, and for cross-media. The criteria broadly mean that they have to have regard for protecting accuracy, the availability of accurate and quality reporting, the maintenance of a plurality of owners, not a plurality of views. Broadly, the guidance also talks about freedom of expression as a value. Ofcom will prepare a report that will then go back to the Secretary of State. There are various possibilities. Either the merger will have a negative impact on competition or it will have a negative impact on plurality, or both, and the Secretary of State will make the final decision about whether that merger can take place.
All the reports to the Secretary of State will be in the public domain.
The Chairman: Very interesting. When you talked about 25 per cent of the market, what did you mean by market? Is that audience, is that footprint, or is that advertising market? What is that?
Mr. Tambini: Let me read you the wording, if I can find it, from Ofcom's own guidance.
Yes, if the merger would result in the creation or enhancement of at least a 25 per cent share of supplier goods or services of any description in the U.K., or in a substantial part of the U.K., that is the share of supply test. Therefore, that is more focused on competition in general.
The Chairman: Would news be considered a service that was being supplied, do you think?
Mr. Tambini: Yes.
The Chairman: This has been absolutely fascinating. We have kept you a little longer than we said we would. We are very grateful to you. If we have follow-up questions, may we email them to you?
Mr. Tambini: Certainly.
The Chairman: It has been a most interesting session. Thank you very much, Mr. Tambini.
Mr. Tambini: I have enjoyed it.
The Chairman: Senators, our next public meeting is tomorrow evening at 6:15 p.m. in this room. The witness will be Mr. Edward Greenspoon, the editor of The Globe and Mail.
The committee adjourned.