[cma-l] DCMS Media keynote speech available now

[CMA-L]

[Please note that the Secretary of State thanks Jaqui's contribution
in paragraph 2 of the speech]

Jeremy Hunt MP and Secretary of State for Culture, Olympics, Media and Sport
8 June 2010
The Hospital Club, London

Thank you for coming today. And thanks too to Will and The Hospital
Club for hosting this event, and for all the great work they are doing
to celebrate, support and nurture some of our most exciting creative
talent.

Thank you to the people who played a great role to implement media
policy, Jaqui Devereux, Roger Parry, Claire Enders and also to
the team at DCMS for their professionalism in coping with the change
of government.

I wanted to set out this government’s plans for the media sector in my
first month as culture secretary and my priorities in different areas.
Paternity leave very nearly made that impossible, so I am most
grateful to my wife for having our baby two weeks early to ensure I
didn’t miss the deadline.

I consider my responsibility for media policy to be one of the most
sacred I have. This is because the way our media operates – indeed its
very existence as a voice wholly independent of government – is
totally fundamental to our existence as a free society.

Karl Popper rightly thought that the key to both freedom and progress
is the existence of open debate between plural and diverse voices. He
would no doubt have agreed with Thomas Paine who said that “those who
expect to reap the blessings of freedom, must, like men, undergo the
fatigue of supporting it”.

If we are to promote the plurality of voices that all of us agree
matters so much, I want to argue today that our regulatory structure
has been left long out of date by changes in technology. We need a
radical rethink – and in the process perhaps be prepared for some of
the fatigue Thomas Paine was talking about.

A strong media landscape

But my starting point is actually a positive and not a negative one.

We have an extraordinarily strong and diverse media landscape in this
country, combined with a remarkable wealth of talent in our creative
industries.

For decades, our broadcasting sector has benefited from a
well-established public service tradition, backed by an essential
commitment from politicians on all sides to the principles of
editorial and operational independence.

By mixing broadcasters with public service traditions with hungry and
innovative private sector players – public funding mechanisms
alongside commercial financing models – a broadcasting landscape of
real quality and maturity has emerged.

Partly driven by this, the growth of the creative industries has far
outstripped that of the wider economy – averaging around 5% per year
in the ten years to 2007 – while employment in these industries has
continued to increase by an impressive 1.5% during the downturn.

Indeed, key areas of the sector have held up very strongly despite the
recession.

Like film, where UK box office takings reached a record-breaking £944
million last year, and UK films grossed $2 billion at the box office
worldwide;

Or independent TV production, which remains a bigger industry in the
UK than anywhere in Europe or the Americas;

Or the video games industry, which now generates around £2 billion in
global sales;

Or the music industry, where the international success of artists such
as Lily Allen and Florence Welch meant that 1 in 10 albums sold in
North America last year were by British acts.

And there is one thing that binds nearly all of these together,
something of quite simply extraordinary significance for Britain’s
economic future:

Nearly all of these industries involve the creation of digital content.

Why does this matter? Just as the Silk Road and Pax Britannica opened
up trade in physical property, so the internet opens up trade in
digital property.

So for the country that is probably the second best in the world at
creating that digital property, this is a remarkable opportunity.

Missed opportunity

If we grasp it. And I am afraid it is an “if” and not a “when.”

Because in many ways we seem to have stood still while other countries
with far less to gain march ahead and steal our lunch.

A combination of recession and rapid technological advance has brought
what should be great British industries to their knees – whether
commercial TV, national newspapers or local commercial radio and
newspapers.

In an age of localism we have virtually no local TV stations in our
major cities, and Channel M in Manchester – one of the very few – has
recently been forced to shed most of its employees.

We are now ranked 33rd in the world when it comes to broadband speed,
with an average that is nearly 5 times slower than South Korea’s.

Some of our biggest creative companies – including the world’s largest
advertising agency WPP – have chosen to relocate abroad.

We’re in danger of allowing ourselves to be once again defined by the
old truism – that we provide the creativity and the rest of the world
makes the money.

Rather than accepting this as inevitable, we ask why it was we
developed such creative strengths in the first place.

The answer is because at critical moments we have faced up to
technological change and not run away from it.

In broadcasting, for example, it wasn’t by reducing choice it was by
increasing it. We licensed ITV in 1955, Channel 4 in 1982, Five in
1997 and unleashed the cable and satellite revolution in the 1990s.

We provided choice and innovation. And a well-funded BBC safeguarded
quality and high standards.

As I have mentioned our national broadcaster, let me just say this:

The BBC is a great national institution; quite rightly the envy of the world.

Of course there are things we want it to do differently and better,
but we recognise that core to its success has been its independence
from political control. Nothing that this government does will
compromise either the independence of the BBC or the quality of its
output.

But core to the success of British broadcasting overall has been not
just a strong BBC, but also strong competition to the BBC. We need to
make sure that continues as well.

Enough theory and principles.

Let me now focus on two specific areas where I want to take immediate
action to improve the competitiveness and health of our media
landscape.

Rapid roll-out of superfast broadband

First of all broadband.

Wherever I go in the country, businesses tell me that access to fast,
reliable broadband is increasingly essential to their competitive
success.

Other countries are already moving ahead with rolling out next
generation, superfast broadband based on fibre optics rather than
copper.

The USA, France, Germany and Australia have all announced
comprehensive national initiatives with ambitious headline targets.

Singapore wants universal access to superfast broadband by 2012, by
which time Korea plans to have provided one million homes with 1
gigabit per second connections – a speed which can download a two hour
film in just 12 seconds.

But in this country, the legacy was – in the same timescale – a
commitment to a paltry 2 Mbps universal connection. Necessary, of
course, but pitifully unambitious compared to a Korean goal 500 times
faster.

It is a scandal that nearly 3 million households in this country still
cannot access 2 Mbps broadband speeds, and less than 1% of the country
is able to access the internet using modern fibre optic technology –
compared to an OECD average of around 10%.

Some people ask why we need these speeds when the iPlayer can manage
on less than one Mbps.

They are missing the point.

Superfast broadband is not simply about doing the same things faster.
It’s about doing totally new things – creating a platform on which a
whole generation of new businesses can thrive.

The Federation of Small Businesses has estimated that a superfast
network could add £18 billion to GDP and create 60,000 jobs. NESTA
thinks it could be ten times that – 600,000 new jobs.

We may not know the precise number but no one is any doubt about the
economic impact. A country that is so good at creating digital content
has an enormous amount to gain from developing the infrastructure over
which it can be distributed, bought and sold.

But it isn’t only about business. Next generation broadband will open
up new opportunities to improve public services such as education and
healthcare.

The biggest driver of high speed broadband in Korea, where I was in
January, is children getting help with their homework. Telemedicine is
next – and already patients undergo heart surgery on the remote island
of Guam supervised remotely by surgeons in Hawaii.

Of course there are significant costs involved, and wherever possible
the market should lead the way, which is why we warmly welcome BT’s
announcement to invest a further £1 billion in upgrading its network
to reach two-thirds of the population is very welcome.

Virgin Media’s extension of superfast broadband – including its trials
of a 200Mbps service in Coventry – is another positive step.

But I have always recognised that there has to be a role for
government as well as the market.

Both in driving up demand for broadband by putting as many services as
possible online.

And also – an objective I share with Caroline Spelman and her
department – government must ensure we do not open up a new digital
divide between the urban areas most attractive to infrastructure
providers and rural communities where superfast broadband may never be
viable.

So today I am announcing a first series of actions that will lead to
the UK having a broadband infrastructure that meets the needs of all
its citizens and businesses, and that will stand comparison with
anywhere in the world.

First of all, as mentioned, the government supports the commitment to
ensure a universal service level of 2Mbps as the very minimum that
should be available. We will use a proportion of the underspend on
digital switchover to fund this.

Promoting a digitally-enabled Britain is one of the core purposes of
the BBC, and this will bring services like the iPlayer within the
reach of many more people.

Here I would also like to pay tribute to the excellent work that
Martha Lane Fox has done as the UK’s Digital Inclusion Champion and
through the Race Online campaign.

Ed Vaizey and I are looking forward to working with her to extend the
benefits of internet access to the 12.5 million people who are
currently not benefitting from the digital revolution.

Secondly, I am announcing 3 market testing projects that will bring
superfast broadband to rural and hard-to-reach areas.

These are projects that will not only benefit those living in these
areas, but that will provide us with vital information about how we
can best target government intervention and make next generation
broadband viable in even the most challenging areas.

Broadband Delivery UK – the organisation which will be the delivery
vehicle for these policies and accountable to me – will hold an
industry event on 15th July to provide further details, and to
describe how the procurement of these testing projects will be
achieved.

Access to infrastructure

But thirdly I also want to address the biggest cost involved in
rolling out new fibre optic networks: digging up the roads.

Cut these costs and, straight away, investing in superfast broadband
becomes a substantially more attractive proposition.

That’s why I want companies to be able to take advantage of the
infrastructure that already exists – the ducts and poles of telecoms
companies, the sewers and other utility networks.

We said in our Coalition Agreement that we will require BT and other
infrastructure providers to allow the use of their assets to deliver
superfast broadband.

So I wholeheartedly welcome Ofcom’s proposals to open up access to
BT’s ducts and telegraph poles to promote further investment – and the
positive and constructive attitude BT has shown to this development.

But I would like to go further. If legislation is necessary to require
other infrastructure providers to open up their assets as well, then –
as announced in the Queen’s speech – I am ready to bring it to the
House as soon as parliamentary time can be found.

I know there have been some interesting pilots, whether by Geo in
London, Fibrecity in Bournemouth and Dundee, or Virgin in Berkshire.

I want to hear from you what you have learnt from these and what the
government can do to further stimulate private sector investment in
next generation networks.

So we will be publishing a paper setting out our latest thinking on
this at our industry event on 15th July.

On the basis of this, I will be inviting businesses interested in
investing in superfast broadband to tell us how infrastructure sharing
would impact on their plans. And we will then ask infrastructure
owners to tell me how we can best work together to make this happen.

Our goal is simple: within this parliament we want Britain to have the
best superfast broadband network in Europe.

A new vision for local media

The second priority area for action that I want to focus on today is
local media.

As many people here will know, I have long believed that the lack of
high quality local TV is one of the biggest gaps in British
broadcasting.

Why? Because, ironically, in an age of globalism people feel the need
for stronger not weaker connections to the communities in which they
live.

And this government is committed to strengthening those ties by giving
local communities far greater control over their own destinies.

That is why Eric Pickles’ department has opened up all items of local
government expenditure over £500 to full transparency.

And why we support more elected mayors and elected police commissioners.

But for this to happen we need strong local media to nurture a sense
of local identity and hold locally-elected politicians to account.

It happens elsewhere.

New York has 6 local TV stations – compared to London which has not one.

Birmingham Alabama, an example some of you may have heard me use
before, has 8 local TV stations – despite being a quarter the size of
our Birmingham that, again, doesn’t even have one.

Paris, Lyon and Marseilles have local TV. Why not Glasgow, Sheffield
and Bristol?

Unfortunately even as politicians have paid lip service to localism,
our broadcasting ecology has pursued the polar opposite model - with a
large proportion of news beamed shamelessly from the centre.
Making the vision a reality

The six million dollar question, of course, is not about the
desirability of local TV but its viability.

The local advertising market in the UK is quite different from that in
the US, and this probably represents the greatest single challenge for
making local TV work on a sustainable basis.

At the same time, technology has massively lowered the costs of
broadcasting. It is now possible to set up a news studio for as little
as £250,000.

And consumer research has shown consistently high levels of public
support for local news stories.

So how do we intend to progress this ambition?

Firstly, by recognising that plans for Independently Funded News
Consortia were misguided.

They had the positive benefit of stimulating new and imaginative
thinking amongst local media companies for which I am grateful – and I
want to carry on talking to those who submitted bids about your ideas.

But, fundamentally, they were about subsidising the existing regional
news system in a way that would have blocked the emergence of new and
vibrant local media models fit for the digital age.

They risked turning a whole generation of media companies into subsidy
junkies, focusing all their efforts not on attracting viewers but on
persuading ministers and regulators to give them more cash.

That’s why I am today announcing that the savings from the  IFNC
pilots will be used instead to support the market testing plans for
the roll-out of superfast broadband mentioned earlier.

Secondly, I can announce that I will be accepting Ofcom’s
recommendations on reforming local cross-media ownership rules –
meaning that those rules will be significantly relaxed to allow local
newspapers to own local commercial radio stations and set up local TV
stations as well as benefit from greater economies of scale.

But in addition I have asked Ofcom to go further and look whether we
should remove all cross-media ownership rules at a local level.

Consumers are hopping freely from platform to platform. Media
companies need to be able to follow their customers – and a sensible
regulatory environment would allow them to do just that whilst
ensuring concerns about local monopolies were sensibly addressed.

I will therefore update these rules and bring secondary legislation to
the House to enact these changes this summer.

Thirdly, I want to ensure that, as government, we are doing everything
we can to make new local media models viable in this country.

Local broadcasting can be supported by a number of potential sources
of revenue – whether advertising, sponsorship, product placement, the
sub-letting of spare capacity or carriage fees.

But I want to settle once and for all what needs to change to make
local broadcasting economically viable in the UK.

So today I am announcing that I have asked Nicholas Shott, Head of UK
Investment Banking at Lazard, to look at the potential for
commercially viable local television stations within the local media
landscape right across the nations and regions of the UK.

And I have asked Nick to look at how a modernised, updated regulatory
environment could help nurture a new generation of hungry, ambitious
and profitable local media companies.

Based on his findings, I will be publishing a full, local media action
plan in the autumn.

Conclusion

I began by saying that I have great faith and confidence in the
strength of our digital and creative industries.

We are at a technological turning point of huge significance.

And because we are used to producing products of global quality and
global appeal, the opportunity for us is greater than for many others.
Not just to strengthen economic capital, but social and political
capital as well.

Shakespeare said: “There is a tide in the affairs of men. Which, taken
at the flood, leads on to fortune.”

I want us to grasp that fortune and not be overwhelmed by the flood.

http://www.culture.gov.uk/news/ministers_speeches/7132.aspx

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