Small-scale Radio Multiplex and Community Digital Radio Order 2019

Motion to Approve

Moved by

That the draft Order laid before the House on 20 June be approved.

My Lords, the order that we are debating today will facilitate a new approach to open up broadcasting on terrestrial digital radio to more than 300 existing community stations and smaller commercial services. It will also offer an opportunity for new entrants who wish to launch new services.

There has been a marked change in listening habits over the past decade, with a significant shift towards consuming radio via various digital platforms. The latest RAJAR audience listening figures, published in May 2019, show that digital radio now accounts for 56.4% of all radio listening; 10 years ago, it was just 20.1%. This shift has significant implications for around 300 existing community stations and small commercial radio stations that are currently broadcasting to local audiences only on FM or AM. For most of these small stations, a move to digital by broadcasting on their existing local digital radio multiplex is not an option, because many local multiplexes have insufficient capacity available for carrying additional stations and the cost of carriage for an individual station is too high. Smaller stations recognise that they will increasingly be at a disadvantage in retaining their audience as digital becomes the default mode.

To address this issue, the Government supported the development of an innovative approach known as small-scale DAB. Small-scale DAB is digital radio. It uses advances in technology to provide a flexible and cheap approach to digital transmission which performs well in localised geographical areas. DCMS funded a programme of work by Ofcom to examine the feasibility of small-scale DAB technology. This included 10 successful technical trials in towns and cities across the country. However, the trials licences were issued under temporary licensing arrangements and we concluded that these arrangements would not be appropriate for the longer term.

The existing legislation is more than 20 years old and places a number of burdens on radio multiplex operators that are not necessary or appropriate for small-scale radio multiplex services. Importantly, the existing legislation does not allow Ofcom to reserve capacity for community radio stations or enforce restrictions on ownership; both are essential if smaller stations are to have a viable opportunity to broadcast on DAB. To enable the necessary legislative changes to be made, DCMS supported a Private Member’s Bill sponsored in your Lordships’ House by my noble friend Lady Bloomfield of Hinton Waldrist, which received cross-party support; I extend my thanks to her.

The Broadcasting (Radio Multiplex Services) Act 2017 amended the Communications Act 2003 to provide a power to modify, through secondary legislation, the rules for radio multiplex licensing set out in Part 2 of the Broadcasting Act 1996. In 2018, the Government consulted stakeholders about detailed proposals on new arrangements for licensing new small-scale radio multiplexes, and we received 87 mainly detailed responses, including from commercial and community radio operators. Overall, there was strong support for the proposals, but there were representations, including from the Community Media Association—the CMA—on whether we had got the balance right between protecting the legitimate interests of the community radio sector and allowing the commercial sector to be involved. We have reflected all these points in drawing up the order. The order secures important protections for community radio and small commercial stations which want to use these networks while ensuring that only minimum, necessary burdens are placed on new operators.

My Lords, I will make just a short intervention. I declare my interest as someone who has been involved in commercial radio since about 1972, first with the White Paper at the time and then, with the emergence of commercial radio, as an applicant for one of the first commercial radio licences, which I did not get. Subsequently, I have been very much involved in the hospital radio movement—and am to this day.

I very much welcome the general tenor of the order, and the nature of it has been very much to do with realising the importance of the community in radio broadcasting. I think all of us agree that radio, as opposed to TV and online services, is still absolutely indispensable to vast numbers of people all over the country—in particular in localities where they can have local information that they could not otherwise get quickly and immediately to their benefit.

My concern over many years has been that the original ideas behind what was then the Independent Broadcasting Authority, which granted the original licences to commercial stations, required in the criteria a considerable level of local input. Over the years, as I think my noble friend will acknowledge, the way in which our commercial broadcasting and radio have developed in this country has been more towards monopolistic situations, combining radio stations, wherever they may be located, in a way that has taken from them the importance of that local interest. Therefore, it has to some extent been up to the new community broadcasters, of which there are many now, mostly broadcasting in analogue on AM or FM frequencies, to provide local input.

So my question to my noble friend is this: in the event of creating and granting new licences, and taking into account the need for balance between non-profit-making and commercial interests, can we be absolutely sure that there will be a strict requirement in these particular licences that that local input will be maintained, even if the ultimate owner or proprietor is someone who is pursuing commercial interests not only with a particular licence or area, but in a wider setting around the country?

I would add that community radio is important, and in particular the acknowledgement of digital broadcasting. I am sure that my own hospital radio venture, which is currently operating on FM, will be looking with great interest at the chance of going on to the digital frequency. That would be important to many people who are providing that sort of service, not only within hospitals but for the general well-being of the community around those areas. I would like that reassurance from my noble friend. This is very exciting, very overdue and very important. I would like to know that we will ensure that we strictly impose local criteria on those who receive licences in future.

My Lords, we welcome this SI, but the noble Lord, Lord Kirkhope, gets to the nub of the matter, and perhaps some of our concerns. The Minister will recall that I asked an Oral Question about local independent radio. As we have heard, some of the national companies—Global, for example—have been buying up local commercial radio stations and syndicating the programmes made in London, with an opportunity to break out for local news and weather. This means that the opportunities for people to be engaged at a local level in the radio industry are lost because the programmes are made in London, for example. Community radio gives us that opportunity to allow the local voice to be heard and for local people to be involved in making those programmes, not just speaking into the microphone but in the production of programmes, which is equally important.

We want reassurance on the issue of the 30% in six different companies. There could be a benefit—I shall speak against myself for a moment—where those commercial operators would provide resources for the community radio stations to give them the opportunity to develop. We could also see an opportunity if a big news story broke in a very localised community and the local community radio was there; it could be picked up and used on the larger independent commercial radio station in the area, or nationally for that matter. I can see advantages. I suppose we have to watch this very carefully.

The Minister might have answered this, but could he clarify again whether the order states that a local commercial radio station broadcasting on small-scale DAB will receive an automatic renewal of its analogue licence? Otherwise, we welcome this legislation.

My Lords, we too welcome the broad approach of the legislation. In so doing, I echo the points already made. Some very difficult questions have been raised by some of the issues the Minister referred to in his opening speech and picked up by the noble Lords, Lord Kirkhope and Lord Storey, but the central one, which I think we all got a fair amount of correspondence about, is how we provide for and support the community activity we are looking for from the digital radio service or services, and ensure the commercial pressures from those larger-scale operators do not squeeze out that initiative. I do not think we will be able to bottom this out in the debate today, but the SI goes some way to do so. Indeed, about four pages’ worth of restrictions and limits are being placed on ownership and various types of constructions that can be made for companies operating in this area, which will try to achieve that balance. We will have to see how that works in practice, but the issue has been well raised.

I will make two points about the broader context. I remember asking the noble Baroness, Lady Bloomfield, when the Private Member’s Bill she supported went through the House what its implication might be for the broader context of digital radio in this country. We have been waiting for some time for some news about the digital switchover date. I am sure the Minister will have a note about that. Could we see whether this brings us a bit closer? Of the two criteria, I think that more than 50% of new cars being bought that had digital radios fitted as standard was reached three or four years ago, but we were also waiting for more than 50% of the listening public to be listening on digital services. I think the Minister said in his opening remarks that that is now well over 50%. The barriers to that appear to be disappearing, and if, as we are hearing, local radio is moving in swarms—even in Harrogate—to digital, why are we not hearing about the switchover date from the Government? Is this not the sort of “get up and go” we have been promised by the soon to become new Prime Minister, taking advantage of the new technology and driving it through for the greater benefit of Britain? I look forward to the Minister’s response.

My Lords, I am very grateful for all noble Lords’ comments. I detected a general approval of the order. It provides a benefit to the country, allowing stations specific to local areas and local communities to be set up, which may, to an extent, counter the effects mentioned by the noble Lord, Lord Storey.

Starting with my noble friend Lord Kirkhope, I completely agree that even in this age of Netflix and video-on-demand services, radio is still indispensable. I can provide reassurance to him and the noble Lord, Lord Storey, that the whole point of these requirements is to avoid a concentration of ownership, and that there will be a local interest. In every single small-scale radio multiplex, there will be a firm reservation for community radio. Even though we think that it is beneficial to have a mixed policy of commercial and community, there must always be a reservation for community, which will be a minimum of three. Ofcom has the power to vary that to an unlimited higher amount, depending on its assessment of demand. There are also specific concentration rules stating that no organisation can hold more than 20% of the multiplex licences. This will prevent a concentration.

The noble Lord, Lord Storey, also mentioned national operators. They will be able to hold only a 30% stake in any company, and they are limited to being involved in a maximum of six licences. There are 700 expressions of interest already; I think that is a meaningful limit. There is a strict overlapping rule, which will avoid a local monopoly, and there is also an adjacent area rule. This prevents small-scale radio multiplex licensees holding adjacent licences where the overlap is significant, and avoids operators trying to replicate local regional coverage by holding a collection of small-scale multiplexes.

Lastly in answer to my noble friend, when Ofcom considers a new small-scale multiplex licence, it will look favourably on an application which contains community radio within it. There will be a presumption in favour of community radio if it is combined with commercial radio to set up a multiplex. We set up the rules deliberately to prevent some of the problems that the noble Lord, Lord Storey, mentioned. In many cases, the community and local radio element will benefit from commercial radio as well, because it will be able to contribute to the investment required. Admittedly, the investment required is much less: one of the benefits of the new technology, and the reason there are so many expressions of interest, is that it makes the price of one transmitter, I think, £9,000, and £17,000 for two. It is much more affordable than it was. We have tried to promote competition and diversity of ownership and to address some of the concerns about concentration of ownership; that is why we have taken those steps.

The noble Lords, Lord Storey and Lord Stevenson, asked whether local commercial radio stations that have analogue services would benefit from automatic FM licence renewal in the same way as if they broadcasted on a relevant local DAB multiplex. I think Radiocentre has asked for this issue to be clarified. There is a problem here: I do not think that will happen, because it cannot be dealt with by the statutory powers under which the licensing framework for small-scale multiplexes is being made. The renewal of analogue licences for stations that take carriage on DAB is dealt with in Section 104A of the Broadcasting Act 1990, while the powers in Section 258A of the Communications Act 2003, under which this instrument is made, allow for modifications of the Broadcasting Act 1996 and the Communications Act 2003, but not the Broadcasting Act 1990. There are other technical reasons that I will not trouble your Lordships with now. The Government’s response to the radio deregulation consultation said that this was an area we needed to reform, and we will consider how best to change the legislation accordingly.

The noble Lord, Lord Stevenson, also asked about switchover. He is right to say that now that digital radio listening is currently at 56.4%, and the DAB network goes to 91% of homes, the criteria set by the Government in 2010 have been substantially met. The ex-Minister for Digital and the Creative Industries, in a speech at the industry’s radio festival conference in May, announced that there would be a review of radio and audio to consider the impact of changes in listening. We are, therefore, talking to radio industry stakeholders about the next steps for digital radio and intend to make a Statement about our plans in the next few weeks.

As the noble Lord, Lord Stevenson, mentioned, in the 2015 spending review we increased funding to the Community Radio Fund. We think that community radio will expand, and we will look at how best to support it as part of our spending review. As I mentioned, there were 700 expressions of interest; with help from the commercial sector I am sure that the spending review will take that into consideration. We will definitely look at that area.

I think I have covered most of the points raised. I am very grateful for the support of noble Lords.

Motion agreed.