[comtv-l] Local TV’s letter to Jeremy Hunt MP

Sat Oct 22 18:18:41 BST 2011

Rt Hon Jeremy Hunt MP
Secretary of State for Culture, Olympics, Media & Sport
Department for Culture, Media and Sport (DCMS)
2-4 Cockspur Street
London SW1Y 5DH

19 October 2011

Dear Jeremy

PLEASE SAY NO TO MUXCO!

Background

This letter is supported by over 40 signatories representing
prospective bidders for new local TV licences, specialist engineering
providers and other interested stakeholders. We are aware of many
others who agree with the sentiments expressed in the letter but have
decided not to sign at the current time.

We support the broad thrust of your local TV policy but we believe you
have been poorly advised on technical options and urge you to think
again on the proposal to compel all operators to use a transmission
company over which they have no control (“Muxco”).

An engineering supplier should be the servant of local TV operators.
Under the current proposal, local TV operators will be denied the
right to contract with a transmission supplier of their own choosing.
Instead, operators may be required to enter into an onerous
negotiation with a monopoly supplier to obtain the levels of coverage
they are seeking. We do not see any rational justification for such a
highly-damaging proposal.

Why no Muxco

We do not believe any of the arguments put forward for Muxco stand up
to rational scrutiny.

It is argued it may be difficult for some local TV operators to
procure their own transmission system designs and quotes.

Arqiva gave binding undertakings to the Competition Commission (when
it acquired NGW) to provide reference offers upon demand. We assume
Ofcom will insist these references offers are published prior to the
licensing of local TV – with or without Muxco. It is therefore clear
there is already a Muxco-type company offering regulated transmission
services to anyone that wants it. We are surprised this was not
explained in the recent consultation document.

It is argued Muxco will have greater negotiating power and secure
lower costs than individual local TV operators.

Arqiva’s prices for access to its masts and broadcast transmission
services are regulated because the Competition Commission recognises
there is a lack of competition on a UK-wide scale i.e. Arqiva is not
expected to review its rates in a commercial negotiation.

The notion that a state-imposed monopoly supplier will be more
cost-efficient and deliver better service than suppliers competing in
a free market is not an argument we believe is based on any genuine
understanding of this market.

The imposition of Muxco risks shutting-out many small engineering
firms (of the type which already service small-scale radio stations)
preventing them from entering the market to compete with Arqiva to
provide equipment and support on a site-by-site basis. Local TV
operators (directly or indirectly) risk being saddled with much higher
costs than would be the case if there were a free and open market in
the supply of transmission services.

It is argued Arqiva is the only company which owns transmission sites
suitable for local TV and so local operators should not try to
identify alternative suppliers.

Access to Arqiva sites is straightforward as this company is
regulated. Any party is free to place its own equipment at Arqiva
sites with no obligation to use Arqiva-sourced equipment. However,
there are dozens of areas left off the list of potential local TV
locations for no good reason other than existing Arqiva sites are
often not suitable for local multiplexes.

There is nothing to prevent the placement of DTT antennas on new masts
(in line with the direction of receiving aerials) subject to
compliance with some basic requirements. We know of cases where the
antennas which allow the widest local DTT coverage do not fit on
Arqiva masts and more suitable alternatives have been identified by
local TV stakeholders.

It is argued it may be challenging for local TV operators to sell any
‘spare’ capacity on local multiplexes to shopping channels and the
like.

Numerous stand-alone digital channels (and also the analogue local TV
RSLs) engage agencies to sell their ‘spare’ hours to shopping channels
or other third party networks. This process is simple – and all
revenue after costs goes direct to operators. We are perplexed why
DCMS would wish to deny the exploitation of incremental multiplex
capacity as a modest source of income to boost the sustainability of
local TV – allowing greater investment in local production, quality
service provision and job creation.

It is argued Muxco will reduce costs for local TV operators by
offering rents below market rates (albeit only on one videostream).

This argument appears extraordinary given that the government is
proposing to gift Muxco the entire spectrum intended to support local
TV and allow its equipment costs to be paid for by the BBC. As DCMS
itself notes, the ongoing costs of operating a local multiplex are
modest. If a local TV operator wishes to deliver maximum impacts for
local advertisers by offering incremental services (e.g. additional
channels or ‘red button’ services) then it will be forced to negotiate
with a monopoly gatekeeper free to deny local operators access at
affordable rates. This seems absurd.

It is assumed Ofcom can be trusted to regulate Muxco effectively.

The ITC promised to regulate national DTT multiplexes and the Radio
Authority promised to regulate DAB multiplexes. We anticipate
application promises made by Muxco will be of little value once the
licence is awarded. We expect Muxco to behave largely as it pleases.
Ofcom may feel unable to ever revoke Muxco’s licence since this would
risk taking all local TV off air. Muxco can threaten licence surrender
at any time. We suspect Muxco (and its suppliers) will have Ofcom and
local TV operators over a barrel.

It is argued Muxco’s interests will be aligned with the interests of
local TV operators.

At the moment, the Government is proposing to undermine the success of
local TV by compelling all local DTT multiplexes to adopt a new
transmission mode which is not in the D-Book (the standard all
Freeview receivers in the UK are required to conform to). We believe
this is diametrically against the interests of local TV operators –
compelling local channels to reduce their signal strength purely to
allow Muxco to make more money. We regard this proposal as
illustrative of how policy is already being skewered by the interests
of Muxco.

We urge caution when reviewing Arqiva-procured coverage maps based on
all viewers having perfect installations. Some viewers never change
their aerial – some may use a coat hanger as an aerial in the kitchen
or bedroom. That is why we believe the D-Book authors’ made the only
sensible decision to adopt a QPSK coding rate which allows the maximum
signal strength (albeit less capacity to sell to shopping channels).

If you decide to proceed with Muxco, a local TV operator will not be
free to win a licence one week and go on air a few weeks later. Local
TV operators will be at the mercy of a monopoly supplier – they will
have no direct control over when they launch or where they cover. We
expect more rural areas to be particularly poorly served by Muxco.

We could go into more detail but we hope this letter demonstrates that
the case for Muxco is built on sand, lacking evidence or analysis. Far
from removing a barrier to entry Muxco is merely creating an obstacle
to success. It cannot be right to gift public assets to a company
which is taking no risk and offering no benefit. We are deeply
concerned local TV policy is being disproportionately influenced by
the interests of Big Business rather than Big Society.

The alternative to Muxco

We believe local TV operators should be awarded combined content and
transmission licences on a ‘use it or lose it basis in line with
existing local and community radio practice in the UK. The benefits
are obvious:

* much lower costs – as a result of free market competition for
transmission contracts;
* much better coverage – particularly in the many ‘fringe’ areas Muxco
is unlikely to be interested in reaching;
* opportunities for local operators to deliver innovative services to
meet viewer demand such as 24-hour news and information via the ‘red
button’;
* the ability for Ofcom to use the full value of the spectrum to
enforce local content commitments rather than allowing this value to
be used to enhance the profits of a spectrum gatekeeper;
* the opportunity to licence more than one DTT multiplex where there
is credible demand for additional services e.g. ethnic/community
services.

We believe the main benefit of GI spectrum is that it is able to:

* offer local TV operators a good deal of flexibility to choose where to cover;
* liberate operators from the high fees associated with using large
suppliers and burden of dealing with third party multiplex operators;
and
* provide some capacity for additional services to enable operators to
maximise viability (the amount of capacity may vary from one area to
the next reflecting the transmission configurations adopted).

We are concerned all of these advantages are at risk in the current
Framework proposals.

We also believe it to be a waste of licence fee payers’ money to gift
£25m to Muxco rather than use it to meet the real start-up needs of
local TV operators and community programme-makers.

Please can we suggest a meeting to enable us to explain why we see
Muxco as an unwarranted government intervention that risks permanent
damage to the local TV sector?

We believe it is you (not Ofcom) who will be criticised if local TV
operators fail to deliver high quality services on a sustainable
basis. We simply cannot understand why you would want to adopt a
policy – offering no benefit – which is unprecedented overseas and
poses such a grave threat to the success of local TV.

Yours sincerely

Martin Campbell

Former Ofcom Chief Adviser, Radio

And all of the organisations set out below:

Trade groups, charities and campaigners

   1. Martin Campbell Chair, Broadcast Journalism Training Council (BJTC)
   2. Jaqui Devereux, Community Media Association (CMA)
   3. Steve Harris, Colleges and Universities for Local Television (CULT)
   4. Steve Webber, IMOL – Independent Multiplex Operator Licensees
   5. Daniel Cass, United for Local Television

Local TV operators and prospective operators / partners

   1. Rick Waghorn, Addiply
   2. Lia Nici, Channel Seven Television (North Lincolnshire)
   3. Alan Cummings, Channel 9 TV (Derry, Coleraine, Limavady)
   4. Philip Reevell, City Broadcasting (Manchester)
   5. Steve Buckley/Richard Motley, Community Television Network (Sheffield)
   6. Geoff Wheatley, Compass Media Group
   7. Paul Gallagher, Gallagher Productions
   8. Philip Radley-Smith, i2i Media
   9. Fred Perkins, Information TV
  10. Maria Sellors, KCOM Group
  11. Richard Laurence, Leeds Channel
  12. Kuldeep Shekhawat, MATV (Midlands Asian Television)
  13. David Morris-Jones, Newsnet UK (Cardiff)
  14. Richard Jones, Saddleworth News
  15. Rob Speranza, South Yorkshire Filmmakers Network
  16. Marilyn Hyndman, NvTv, Northern Visions (Belfast)
  17. Peter Williams MBE, Peter Williams Television
  18. Gavin McLauchlan, Twofour Digital
  19. Nic Millington, Rural Media Company
  20. Chris Gosling, Serious Leisure
  21. Carl Wolf, Science City York
  22. Professor Mike Holcombe, Sheffield City Region Local Enterprise
Partnership
  23. Daniel Cass, SIX TV (Oxford, Southampton, Fawley, Reading)
  24. Phil Shepherd, Somerset Film
  25. Mike Southgate, Mike Southgate Consulting
  26. Ian Lodwick, SO Productions
  27. Chris Haydon, Southwark TV / Community TV Trust
  28. Fiona Ryder, Stream Exchange
  29. Ben Tagg, TV York and TV Norwich
  30. Tony Daniels, University of Lincoln
  31. Rosie Hayes, YNUKtv

Transmission service providers

   1. John Bibby, Bitstream Broadcast
   2. Steve Maskrey, RTI Broadcast
   3. Mike Rea, Taylor Bros Oldham
   4. Ian Hickling, Transplan UK

Sales agent / teleshopping specialists

   1. Dominic Matterson, Media15

Red button / interactive service providers

   1. Keith Bedford, EBS New Media

cc:  Rt Hon David Cameron MP
      John Whittingdale MP
      Lord Inglewood
      Ed Richards, Ofcom
      Chris Patten, BBC Trust
      Alexander Italianer, European Commission

Source: http://www.broadbandtvnews.com/2011/10/21/local-tvs-letter-to-jeremy-hunt-mp/

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