Jeremy Hunt speech to the Royal Television Society, 14 September 2011

Jeremy Hunt speech to the Royal Television Society, 14 September 2011


>>JEREMY HUNT: Well good evening ladies and
gentlemen, it’s a great honour to be here. I think speaking at this time in the evening
is the worst possible slot because everyone would much rather be having a drink before
dinner and I’ve got a theory that the reason that Adam gave me this slot is that he was
worried that he was going to get another diatribe on local TV and he wanted to put some pressure
on me to keep my comments as brief as possible. Let me reassure you Adam, it does get a mention
but I’m going to speak more broadly than that this evening. It’s also lovely to have Bettany
Hughes in the front row and I know that you heard from her earlier this afternoon. When
I went on holiday last Christmas I took Bettany’s book on Socrates with me to read on the beach
along with the Ofcom report into the News Corp/BskyB merger and I can tell you Bettany
that your book was far, far more entertaining, even if the other reading was just marginally
more important for my career. But anyway, the theme of my comments this evening is boldness
and I’ve taken as the title for the speech Shakespeare’s phrase from Cymbeline: “boldness
be my friend”. And I have been reflecting in the last year on what boldness is all about
and in particular I’ve been thinking about when I was running my own business before
I went into politics, and how, in certain situations, the bold course of action is actually
the lowest risk course of action. There are some times when if you take the cautious route
you actually increase rather than decrease the chances of failure. And I particularly
thought about this a year ago when I had lunch in California with Jony Ive, the Apple Chief
Designer. And he made this very striking comment to me. He said: “My job is a lot easier because
I only have to think about seven products.” And if you think about Apple, one of the biggest
companies in the world – in fact this year, briefly, the biggest company in the world
– under huge pressure from its shareholders and investors to increase its revenues, increase
its profits, the pressure to diversify, to put on more product lines, to get those numbers
up must be absolutely immense. Instead of which, they took the bold decision to go in
totally the opposite direction. They, for example, stopped doing printers, which was
one of their lines. And they did that because they knew that if they reduced the number
of profits… the number of products that they did, they would increase the chances
of people like Jony Ive and his team of designers being able to give microscopic attention to
detail and to make sure that those products really were world-beaters. He gave me a good
example of this. He was talking about the early prototype of the iPhone and he said
they had this problem that on the iPhone, when you held it up to your ear to use it
as a receiver, your ear would sometimes activate the touchscreen and turn the phone off. And
this was a really big problem for the use of the phone and it took them six months to
work out how to deal with that and basically find a way of desensitising the touchscreen
when you hold it near to your ear. Now the question I ask is would he and his team have
been able to devote six months to that problem and to devote all that attention that they
did to that problem if, instead of seven products, he’d had 107 products to think about. And
so in that case the bold course of action was the right course of action and I think
has been at the heart of Apple’s success. And what I want to suggest today is that we
are at a moment in UK communications policy which equally calls for boldness.
And, so, I’ve been doing this job for just over a year. I have tried to practice what
I preach in a couple of areas. Let me just talk about one of them for Adam’s benefit,
which is local TV. When I… He can’t escape, you see! When I first came up with this idea
I don’t think people considered it bold so much as mad. And people said it’s not going
to be financially viable, people aren’t going to watch it, it’s been tried before and failed,
spectrum’s not available, most patronisingly of all, people – some people – said we
shouldn’t even want people to watch it, even if they did want to watch it. That was David
Mitchell. I think you’re going to be seeing him tomorrow so you might ask him about that.
But, you know, when in August I announced 65 potential locations for pioneer local TV
stations and the fact that next summer Ofcom are going to license the first 20, we had
the most extraordinary response. We had packed meetings. I’ve just been around the country
– we had standing room only in meetings that we had in Manchester and Newcastle, in London;
we had busy meetings in Birmingham, Belfast, Newport and Birmingham. And it’s… there’s
been a huge response and I think the reason is because the biggest concern people had
about local TV was the financial viability and thanks to some very detailed work by Ofcom
we have found a model that brings down the cost of running a local TV station to potentially
less than running a local newspaper. And as a result I am very confident that within the
next four years at least half the UK population will have access to a good quality local TV
service. So I think boldness paid off there. The other area that I’ve been really focusing
on in communications policy has been superfast broadband. Now when I came to office we had
one of the slowest broadband speeds in Europe. One of the first things my broadband officials
told me was that the amount of money that Labour had allocated for universal roll-out
of 2MB broadband was only half of what was needed. We were facing a Comprehensive Spending
Review in which we knew budgets were going to be cut. So quite a lot of challenges on
the table. But I announced within a month that I wanted Britain not just to have universal
broadband coverage by 2015 but the best superfast broadband in Europe by 2015. And again we
have had an incredible response. We’ve got projects now up and running in the Highlands
and Islands, Herefordshire, we’ve got Devon and Somerset, Norfolk, we’ve got North Yorkshire,
and today I can announce a couple more – Rutland and Suffolk. And all of those are going to
deliver not just universal access to 2MB but 90% access to superfast as defined by Ofcom
as more than 20MB. And so I think we’ve also made a major step forward. But today the boldness
I want to talk about is broader than that. I want for the first time to outline the three
radical areas that I want the new Communications Bill that this Government is committed to
introducing during this Parliament, the three radical elements that I want it to contain.
And I’m speaking without notes just in case I change my mind on any of these. Damn there’s
a camera! But I want to go through them. The very first is to take a series of very important
measures to turbo-charge the growth of our digital and creative industries. Now, Adam
mentioned how important I see these. This week Philipp Schindler, the European CEO of
Google, said that in this country they could generate 350,000 jobs. I would go further
than that. I think that the digital and creative industries present an opportunity for this
country that is greater than for any country in the world except America. And that is because
we are the second largest creator of digital content in the world and what that means is
that the internet acts as the opening of a new global trade route with virtually free
distribution to any corner of the world. This is an absolutely massive opportunity
for our small island, which can boast, as Adam said, the largest independent television
production sector in the world, the second largest music exporter in the world. We are
the only country in the world with four PSBs, including two that are publicly-owned. If
you look at top-grossing films worldwide, UK-originated story content is second only
to America. We also get the second largest number of Oscars as well as America. If you
look at e-commerce, we are per capita the largest spenders on e-commerce of any major
economy. The value of our e-commerce market is 60% that of the US despite having only
20% of the population. And then if you look at the concentration of technology clusters,
we are third in the world after Silicon Valley and actually Boston comes second. And finally
I do want to say that in what has been an annus horribilis in many ways for British
journalism, if phone hacking turns out to be as widespread in British journalism as
some people fear, we must also remember that it is British journalists who uncovered it
in an operation that some have compared to Watergate in its importance. So I think we
have a huge amount to be proud of and the question is how we capitalise on it. Now you
can start thinking, okay, this is a huge area – what are our principles? And, you know,
I could say as a businessman, I want to have a light touch regulation, regulatory certainty.
As a parent, I want security and safety online for my children. As a consumer I want choice
and fair prices. As a citizen I want proper protection for media plurality. The trouble
with all these principles is that they sometimes collide and the danger is that if you try
to square everything off you end up not being bold and not taking the radical steps that
are necessary. So let me just talk about where I do think we need to make radical progress.
The first is on this business of the broadband infrastructure. I am very proud of the progress
we are making to being the best superfast broadband network in Europe. But, candidly,
I have to tell you that that isn’t enough. If you look at our average broadband speeds
at the moment – about seven and a half MB – and consumer demand for that bandwidth
is growing by about 60% a year. On that basis we will need speeds of 1GB by 2020 and we
aren’t investing anything like enough at the moment to deliver that. And we have to be
really careful that we don’t fall into the same trap that we fell into with high-speed
rail, where we’re going to end up building our high-speed rail network 45 years after
the French built theirs and 62 years after the Japanese built theirs. I think the key
to stimulating investment in that network is competition. I don’t believe that competition
in the market is working as well as it should. I think it’s taking too long, for example,
to get PIA prices for other people wanting to use BT’s ducts and poles. I don’t think
we yet have a properly competitive market in retail fibre products and I will be talking
to Ofcom about any necessary steps to make this happen more quickly. I also want to start
a debate as to whether superfast broadband is enough. I’ve always thought that today’s
superfast broadband is tomorrow’s super-slow broadband and I think we need to look at whether
we should be looking at ultrafast broadband, not download speeds of 20MB but download speeds
of 100MB plus if we’re going to be truly competitive. So, important progress is necessary there.
But it isn’t just superfast broadband on our digital infrastructure. It’s also superfast
mobile. The demand for mobile data is now tripling every year. It’s likely to be 26
times what it is now by 2015. And that is a huge, huge change. And we have to assume
that when people are accessing the internet, that from now on they are going to be accessing
it on some sort of mobile device and we need to be competitive in that area because the
next big development in the internet is what people like Professor David Gann at Imperial
College call the “internet of things” and it’s the connectivity in ordinary, everyday
devices. The ability, for example, to book your parking meter before you drive into town
so that you don’t have to use emissions driving around looking for a parking spot. But that
will need connectivity in parking meters. That means little chips which have internet
connectivity. That means high-speed mobile connectivity. And we need, therefore, to proceed
much more quickly than it feels like we are at the moment with our 4G spectrum auction.
Sweden did theirs in 2009, Germany did theirs last year, Italy is doing theirs this week,
France is doing theirs later on this year. Do we really want to be the last country in
Europe that really… that does this very important auctioning of the spectrum? And
I say to the mobile operators: this is the time to put aside your desire to get marginal
competitive advantage and think about your common advantage in getting this auction off
the ground and the national advantage in getting this off the ground. And when we look at spectrum
I think we also need to look at how we can make it easier for smaller companies to access
spectrum, how we can improve spectrum trading and also how we can make sure that when…
I’ve lost my way there… how we can maximise the benefits of license-exempt spectrum so
that technologies like wifi and bluetooth are available for as many people as easily
as possible. So, important work on our superfast broadband infrastructure and our superfast
mobile infrastructure. I mentioned e-commerce. E-commerce is something where we are a leader
at the moment but again there are blockages that are stopping us exploit the full potential
that we have. And one of those is the fact that only 5% of EU consumers are currently
doing online shopping across borders – one in 20. Now for the UK if we can unblock the
single market in e-commerce it represents an extraordinary opportunity because as McKinsey
report, for every £1 in imports generated by e-commerce for the UK, we have £3 in exports.
So it’s a big advantage and there is a review going on of the E-commerce Directive and we
need to press for robust implementation of single market measures. I also think it isn’t
just e-commerce – it’s m-commerce. We need to ask ourselves why it is that countries
like Kenya have developed mobile phone payment systems like M-PESA and we are still lagging
behind. So when I talk to the mobile phone operators shortly I’m going to be asking them
about the 4G spectrum auction, I’m going to be asking them about mobile phone payment.
I’m also going to be asking them about something that might interest you, Adam, which is why
it’s taking us so long to get a competitive, cheap mobile TV service, which again they
have in countries all over South America and Japan but it seems to be taking a very, very
long time here. Finally, it wouldn’t be RTS if we weren’t talking about PSB and the future
of public service broadcasting so in my look at growth measures I want to do what I can
to help companies like ITV, our traditional PSBs, become more competitive. Let me say
this: I agree exactly with what Adam said – it’s extraordinarily popular, PSB, with
the public: 70% market share despite huge proliferation of channels. I am a big supporter
of PSB. I think the principles behind it, the principle of trying to make sure we have
plurality of news provision, the principle of trying to boost and encourage UK-originated
content, are as important in the digital age as they were in the analogue age. But I do
think we have to recognise that the deal for PSB has changed considerably from when it
was originally set up. The idea that in return for access to scarce spectrum, mobile phone
operators… er, PSBs would then have broadcasting obligations is changing. I think probably
now our biggest lever is access to a good position on the EPG. That may need to be reflected
in legislation. But we will need a lighter-touch model which, in particular, means that ministers
and regulators will have to move away from micromanaging programme outcomes. So, that
is my package of measures on growth and in particular I want to focus on our physical
infrastructure because I think that is likely to be the biggest hindrance to our digital
and creative industries going forward. If growth is essential for our economy, then
plurality of news provision and freedom of expression is essential for our democracy.
And this is something that, obviously, we have all been thinking about a great deal
this year. Let me just make some observations. Some people say: “Why do we need special laws
on media plurality when we already have competition law?” I believe we do because the media industry
is different. Not a difficult message to sell at RTS, but I think the media industry is
different because of the special influence that it has on our national culture, on our
identity and on the way that we view ourselves. So I think it is incredibly important that
we have a structure that makes sure that in a vibrant, open democracy such as we are proud
to have, no one person or organisation has undue control of our media. And the truth
is that as technology has changed, the laws on media plurality have not. Sometimes they’ve
been too heavy-handed, preventing companies from developing new business models and being
nimble. Sometimes they haven’t been heavy-handed enough, particularly in understanding the
importance of cross-media influence. But one thing I would draw your attention to is an
important point that actually Peter Bazalgette made in an article during the summer: one
of the reasons that we have such a proliferation of news choice in this country is because
of subsidy. We have subsidy of the BBC through the Licence Fee, subsidy of ITN through ITV
and Channel 4’s PSB obligations, subsidy of Sky News by Sky, subsidy of The Times by The
Sun, subsidy of The Independent and The Evening Standard by the Lebedevs. There is a lot of
subsidy in the system at the moment and some of that subsidy comes from outside investors.
And although it is incredibly important to make sure that no-one has undue influence
in our media, we should also remember that if we put off outside investors from investing
in the UK, we risk reducing and not increasing plurality. So having been through the News
Corp/BSkyB merger what are the, what are the things that I think we need to look at? Well
the first thing is we need to recognise that we are in a multimedia world in which successful
media operators will want to follow their customers from iPad to iPhone to internet
to TV and they’ll want to do it seamlessly and we mustn’t stop them doing it because
these are, this is the model for media companies in the future. But by the same merit, as we
make it easy for people to operate across platforms, we need to find a way of measuring
their influence across platforms and aggregating influence in a way that hasn’t happened before.
Now Ofcom made a start with the concept of measuring cross-media influence in their report
for the BSkyB bit. But I think we need to go further and develop a robust methodology
so I have written to Ofcom to ask them to think about this some more. In particular,
to look at questions, difficult questions, such as the extent to which you take into
account third party contracts, such as the contract Sky has with Independent Radio News;
The extent to which we include the BBC in this discussion; the issue about websites,
whether you include all websites, whether you include subscription websites, what you
do about free websites. When you’re thinking about something as complex as media plurality,
we need to think these things through very carefully and I’ve asked Ofcom to think about
this and to submit their report as evidence to the Leveson Review. And incidentally, none
of the things that I’m saying today are intended to pre-empt that review, nor indeed are they
intended to pre-empt my own department’s Green Paper. But I do think it’s important that
we don’t just put everything on hold until we wait for those and we start doing some
thinking ourselves as to the direction of travel that we need to go. A couple of other
things from the News Corp bid: at the moment it’s only possibly for a public interest intervention
when there is a corporate transaction. Now this is different to competition law where
the OFT can order an inquiry by the Competition Commission at any stage. If they think someone
has grown too big organically they can order a CC inquiry. That isn’t the case for media
plurality and I think there is an argument for extending the similar protection that
we have in competition law to media plurality law. I also think we need to look at whether
it’s appropriate for a politician to have the final say in a highly contentious decision
such as the one I nearly had to take in the News Corp/BSkyB decision. Now I am perfectly
aware that when it comes to dealings between politicians and media barons, the public are
not going to give politicians the benefit of the doubt. And when I was handling this
process I tried very hard to gain the confidence of the public by asking for independent reports
from Ofcom, which I didn’t have to do, and publishing those reports at every stage in
the process so that people could see that I was genuinely looking at independent advice.
But in competition law we removed the final decision on big mergers – such as whether
BAA has to sell off Gatwick – we removed that from politicians. And we did so because, you
know, we thought that those kinds of decisions are perhaps better taken by someone who is
out of the political fray. So I think it is a legitimate question to ask on media plurality,
if we think that for competition law, whether we should have the same approach on media
plurality law. But freedom of expression is not just about media plurality and one of
the things that we have to think very hard about is how we uphold journalistic standards
across the media industry. And in particular, I think we need to do some serious thinking
about the regulatory framework under which newspapers operate. I’m a supporter of independent,
industry-led regulation. I think it’s very important, as the Prime Minister said to the
Liaison Committee in the House of Commons, that in our response to phone hacking the
pendulum doesn’t swing too far in the other direction and we don’t forget the benefits
that we have had from our free press over very many years. But I think it is possible
to find a model that is both independent of politicians but also sufficiently independent
of editors and proprietors for the public to have confidence that it does really have
teeth and the ability to address and stop wrongdoing. And I would encourage the newspaper
industry to look at other models in other professions such as the medical profession
and the legal profession where they have been able to do this. So that’s the first point.
The second point is, if we are going to change the way the press are regulated, let’s try
and solve a problem that we would have had to face anyway going forward, as well as looking
back and addressing the issues around phone hacking. And that problem is the increasing
reality that newspaper proprietors are not just producing content for newspapers, they’re
producing content that is being consumed on many different platforms. It cannot be sensible
that at the moment newspaper operators find that their newsprint is regulated by the PCC,
their video-on-demand is regulated by ATVOD and any TV content they do is regulated by
Ofcom. If we want newspapers to develop truly cross-platform, forward-looking, multimedia
offerings in the future, then we need to start thinking about the possibility of a one-stop
regulator. So my challenge to the newspaper industry is this: if you can come up with
an industry-led model for press regulation that is sufficiently robust to have the confidence
of the public, then I will support that as being the one-stop regulator for all the content
that you produce so that it won’t, you won’t end up finding as you move towards IPTV that
you are being backdoor-regulated by Ofcom. Let me be clear that for traditional broadcast,
Ofcom regulation is here to stay. It has the confidence of the public and I think has shown
its worth over very many years. But for the newspaper industry I think it’s worth asking
whether there is a different model. But the onus is on you to come up with a model that
has the confidence of the public and is more robust than what we’ve had with the PCC. So
measures to promote growth in the physical, improvement in the physical digital infrastructure,
measures to protect freedom of expression and media plurality. The final area that I
want our Comms Act to be bold is the question of how we deal with offensive and unlawful
content. And here I make a distinction between offensive content and unlawful content. Offensive
content that is necessarily more subjective and is something about which your opinion
can change over time. But I note, as the father of a young child, that 74% of children access
the internet unaccompanied, 800,000 children have access to adult content online, including
14% of under-10s, and this is an issue of huge concern to parents. I believe the way
to address this is to put consumers firmly in the driving seat. I welcome the excellent
work that has been done by the Council for Child Internet Safety and the fact that the
ISPs have been working together to agree a joint draft protocol on parental controls.
But I think we may need to go further in the Comms Act and make it a requirement that all
ISPs get all their customers to make an active decision about the level of filtering and
the level of parental controls that they wish to have. So that, I think, would be the best
way to deal with the issue of offensive content. But when it comes to unlawful content, I think
we need to take a different tack. And I think here we’re talking about not just unlawful
content but unlawful distribution of content. And we need to nail right on the head this
idea that tackling this problem is somehow an attack on internet freedom. J. S. Mill’s
definition of freedom: he said we should be free to do anything we like as long as it
doesn’t impinge on the freedom of others. Well stealing someone else’s digital content
is impinging on their right to earn a living from their work and we need to recognise this
and a fundamental principle of the law is that it should be applied equally. That means
that it should apply to the virtual world as much as it applies to the physical world.
Of course we need to be realistic: we are not going to stamp out all crime in the virtual
world just as we’re not going to stamp out all crime in the physical world. But it must
be right to take action and it must be particularly right for the UK, as the second largest content
creator in the world, to take action to make sure that we take action to protect our content
industries. And all these things, the devil is in the detail. But I think we are working
towards a consensus in the industry as to the best solution. I think we should look
at an industry-led body that could come together and agree what the offending websites are.
I think we need a streamlined legal process so that the courts can make a quick decision.
I think we need a responsibility on search engines to cooperate in making it more difficult
for people to access sites that facilitate unlawful sharing of content. I think we need
equal responsibility on ISPs and also we need responsibility on banks and credit card companies
to do their bit in trying to make payment processes more difficult for people who are
involved in this. And there are lots of questions to answer: compliance with the E-commerce
Directive, indemnification, who’s going to pay at different stages. But we are making
very good progress and I hope that we can get a consensus on this before we come to
draft the wording for the new Comms Bill so that we can put into legislation anything
that needs to be put there. So those are my three areas: measures to turbo-charge growth
in our digital and creative industries and make sure we have the digital infrastructure
that we need; measures to protect plurality and freedom of expression online; measures
to protect consumers from offensive content but also protect businesses from the unlawful
distribution of IP. None of those are easy areas. I’m sorry it’s been a sort of slightly
across-the-waterfront speech this evening but I think we have to make progress in all
of those areas. We will never gain competitive advantage as a country by sitting on the sidelines.
It’s going to take determination, imagination and vision. Boldness be my friend. Thank you
very much. [applause]

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