Copyright etc where broadcast retransmitted by cable

Digital Economy Bill – in a Public Bill Committee at 11:00 am on 25th October 2016.

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Photo of Nigel Adams Nigel Adams Conservative, Selby and Ainsty 11:00 am, 25th October 2016

I beg to move amendment 63, in clause 28, page 27, line 31, leave out subsections (3) to (5).

This amendment, together with Amendment 64, are probing amendments to identify a timeframe for the repeal of section 73 of the Copyright, Design and Patents Act 1988 as it is not clear when the repeal will come into force. The amendments would mean that repeal of section 73 of the CPDA would come into force as soon as the Bill receives Royal Assent.

With this it will be convenient to discuss the following: amendment 189, in clause 28, page 27, line 36, at end insert—

‘(6) The Secretary of State shall—

(a) produce a report on the implication of the repeal of section 73 of the Copyright, Designs and Patent Act 1988, and

(b) undertake a comprehensive consultation on the future of television content distribution and public service broadcasters.”

Amendment 64, in clause 82, page 80, line 2, at end insert—

“(a) section 28;”

This amendment, together with Amendment 63, are probing amendments to identify a timeframe for the repeal of section 73 of the Copyright, Design and Patents Act 1988 as it is not clear when the repeal will come into force. The amendments would mean that repeal of section 73 of the CPDA would come into force as soon as the Bill receives Royal Assent.

Amendment 94, in clause 82, page 80, line 14, at end insert—

“(h) section 28.”

This amendment would mean that repeal of section 73 of the Copyright Designs and Patents Act of 1988 would come into force two months after the Royal Assent of the Bill.

Photo of Nigel Adams Nigel Adams Conservative, Selby and Ainsty

These are probing amendments to clauses 82 and 28 in order to establish a timeframe for enacting the provisions in clause 28, which repeals section 73 of the Copyright, Designs and Patents Act 1988. I warmly welcome those provisions, but from the clause as it stands, it is not quite clear when we can expect this important measure to come into force. The amendments would mean, instead, that repeal of section 73 of the 1988 Act would come into force as soon as Royal Assent is granted. That would involve consequential amendments to clause 28 to delete subsections (3) to (5), as Royal Assent would remove the need for them. Otherwise, in the Bill as drafted and as stipulated in clause 82, clause 28 would come into force on whatever day the Secretary of State appoints in regulations made by statutory instrument, which could mean further delay.

As I pointed out on Second Reading, online service providers such as TVCatchup use section 73 to make money from public service broadcaster channels by re-transmitting their content while selling their own advertising around it. That undermines the public service broadcasters’ own online streaming services and on-demand catch-up services, affecting the audience, advertising and sponsorship revenue of commercial PSBs. Furthermore, none of that money is being paid to the public service broadcasters, the underlying talents and the rights holders, and none is flowing back into original UK content production.

I have an important film studio in my constituency, so I take this issue very seriously. We want to see more great productions, such as “Victoria”, which was filmed largely at Church Fenton in my patch. The UK television sector is at the heart of the UK creative industries. It is a vibrant and dynamic sector, providing outstanding world-class content that is the envy of the world. Such programmes are also hugely popular internationally, and the UK is the second-largest exporter of TV in the world as a result. It is therefore vital that we do all we can to help protect investment in the programmes that viewers around the world love. For those reasons, it is important that the provisions in clause 28 to repeal section 73 of the 1988 Act are enacted as soon as possible.

The PSBs first wrote to the Intellectual Property Office asking for a repeal of section 73 eight years ago; since then they have spent a lot of time and money in litigation. Meanwhile, TVCatchup has made millions on the back of the PSB content. The only reliable way to stop that exploitation and ensure that people who make and own the programmes that viewers love gain a return on their investment is to repeal section 73. The public service broadcasters have been in litigation with TVCatchup for many years, and until section 73 is repealed those parasitic websites will be able to profit from the PSB content without any of the payment going back to the public service broadcasters.

Section 73 also allows cable platforms to profit from PSBs that invest in content, which means that the PSBs are effectively subsidising global cable giants. It prevents the commercial PSBs from negotiating with cable platforms for their PSB channels. In a normal situation, they would be able to negotiate freely, as they do for their digital channels such as ITV2 and E4, but section 73 currently prevents that.

Cable platforms make money out of PSB content while still benefiting from a regulatory regime designed for a different era, under which no payments go back to the PSB or any other holders of rights to the content.

Photo of Chris Matheson Chris Matheson Labour, City of Chester

The hon. Gentleman talks about a different era. Does he think that it was right to introduce section 73 at the time, because it allowed cable platforms to develop, but that things have moved on quite a bit since then?

Photo of Nigel Adams Nigel Adams Conservative, Selby and Ainsty

The hon. Gentleman is yet again spot on. It clearly is of its time. The idea was to try to help a nascent cable industry, and the legislation has done that; we have a healthy TV industry across all broadcast platforms, including cable and satellite. That legislation has done its job.

On pay TV platforms, such as Virgin and Sky, up to 50% of some of our most valuable content, such as drama, is viewed via subscription personal video recorder, from which the pay TV platforms derive substantial benefit. That undermines the commercial PSBs’ ability to secure a return from advertising, because much of their advertising is skipped, and materially reduces as critical opportunities to generate secondary revenue—for instance, from on-demand services or box sets—because libraries of valuable drama content can be built up for free on the PVR. I therefore urge the Government to ensure that repeal of section 73 is delivered at the earliest opportunity. That would mean that those who wish to re-transmit or otherwise use PSB services in the future will have to negotiate to do so, which seems only fair. They should be able to negotiate within the must-offer regime in the Communications Act 2003. That would enable those who create the content to make a return on their investment and continue to make the programmes that viewers love, which are the envy of the world.

There has been extensive consultation on the issue so there is no need for further delay. I will therefore be very grateful if my right hon. Friend the Minister can provide more detail on the timeframe for the repeal of section 73 of the 1988 Act, as included in clause 28.

Photo of Kevin Brennan Kevin Brennan Shadow Minister (Culture, Media and Sport) (Arts and Heritage)

I rise to speak to our amendments 189 and 94. I note the well-informed and cogent points made by the hon. Member for Selby and Ainsty, and I understand why the Government want to repeal section 73 of the Copyright, Designs and Patents Act 1988, as he laid out. Clearly apps such as TVCatchup cannot be allowed to profit from public service broadcasting content without making any sort of contribution to its creation, either by paying for it or in some other way; without agreeing some kind of licence for its use; and without abiding by public service broadcasting standards for its distribution. It is entirely logical to repeal the section and we support the intention to prevent TVCatchup from doing what it does, but the Government need to explain the knock-on effects on the market.

Photo of Calum Kerr Calum Kerr Shadow SNP Westminster Group Leader (Environment and Rural Affairs), Shadow SNP Westminster Group Leader (Digital)

The SNP also supports and welcomes the repeal of the section 73 of the 1988 Act. I agree with supporting original drama, but I wonder about how Virgin in particular is affected, because Virgin is also rolling out broadband and helping the Government in their other targets. Perhaps the Minister can assure us that that has been considered and that pricing will not prohibit meeting other Government objectives.

Photo of Kevin Brennan Kevin Brennan Shadow Minister (Culture, Media and Sport) (Arts and Heritage)

I am sure the Minister has heard what the hon. Gentleman said and will want to address it in his response. The hon. Gentleman is quite right to point out that Virgin in particular will be affected.

The Government’s reform is well meaning, but they need to explain how it will not put further pressure on the public service broadcasting compact. They need to answer questions about their long-term plans for television distribution and how this part of the Bill affects that. Public service broadcasters exist for a reason, as an intervention in the market and as part of public policy. We need to ensure that they do not accidentally drift out of existence or into insignificance, and we need to know the Government’s intentions.

In their response to the consultation on the repeal of section 73, the Government said that they do not expect or want to see charges from public service broadcasters to cable operators for their main channel content. If that is so, I ask the Minister in a genuine spirit of inquiry whether there is an argument for the Government to make it clear in legislation that they do not want to see such charges, because at least some of the public service broadcasters do not share that view. None of us believes that a dispute between a major public service broadcaster such as ITV and a major TV platform such as Virgin is in the viewer’s interest.

The amendments are intended to explore whether the Government are sure that they are not risking those viewers ultimately having to pay more than they should for what should be a free public service broadcast. What is the Government’s view on the risk that those viewers could lose that service, at least for a period of time, if a major dispute of that kind arose as a result of the repeal?

Even if the Government can establish that the cashless trade of carriage for content between cable operators and public service broadcasters will continue, other questions still need to be answered. Following the tabling of the amendment, we noticed that the Government have taken our advice on board and launched a 24-page technical consultation, which came out yesterday, on possible transitional arrangements for the repeal of section 73. That consultation acknowledges the possible effects of the repeal on performers’ rights and the potential need for a rights mechanism, which reinforces the point made earlier by my hon. Friend the Member for Sheffield, Heeley in her extremely able contributions: that the Bill was simply not ready for discussion when it was introduced. This sort of thing really should have been done before the Bill came to Committee.

When all that is taken together with all the other reports that my hon. Friend listed in her contributions and the Government amendments that have been published alongside the Bill, one gets the clear impression that the Minister is making it up as he goes along. It is a bit like that Wallace and Gromit film, “The Wrong Trousers”, when Wallace and Gromit are on the rail track and Gromit has to lay the track as they are proceeding, rather than the track already being laid before embarking on the journey. That is the problem with the Bill: the track has not been properly laid and the Bill has been introduced far too quickly, no doubt for some obscure business management reasons buried within the Whips Office. It is unfair of me to mention that because the hon. Member for Beverley and Holderness cannot respond, but there is undoubtedly some reason of that kind behind why the Bill has been introduced when it is not oven ready.

Given that the Government seem to be taking inspiration directly from our amendments by publishing the technical report, and knowing how closely they follow our advice, I will take this opportunity to give them a few more pointers on topics to consider through the consultation process that we called for in our amendments. There are currently four different distribution mechanisms for television: there is digital terrestrial television, which is used by Freeview, TalkTalk and BT, via YouView; there is cable, which has already been mentioned, in particular around Virgin Media; there is satellite, which is used by Sky and Freesat; and, as we discussed earlier, there is now IPTV, which can be, and is, used legitimately by BT for its own channels.

Each of those four distribution mechanisms operates under a different legislative and regulatory regime with a different basis of carriage of must-carry public service broadcast channels. At the moment, public service broadcast is paid for digital terrestrial television distribution on one basis, and satellite distribution on another, but not for cable or IPTV distribution. Looking back, it is easy to see how that distinction arose. Earlier Governments sought to try to support a variety of platform levels to enable technological innovation—multi-channel TV was only possible in the 1980s via satellite; it had not been previously possible—or to create competition, or both.

Not so long ago, when I was growing up—this will be within the memory of many of us on the Committee—people would ask, “What’s on the other side?” when watching television. My wife is from the United States of America, and when I first said that to her, she said, “What do you mean, ‘What’s on the other side?’ Do you mean on the other side of the television?” She had no understanding of the concept because they had multi-channel platforms much earlier in the United States than we did in this country.

The world has changed radically but those different regulatory regimes exist, which is why our amendment asks the Government to investigate, produce a report on the implications of the repeal and undertake a comprehensive consultation on the future of television content distribution and public service broadcasters. Does the Minister think that there is any danger that in doing this, although it is something to be supported, the Government are just tinkering around the edges, as they have done recently with the technical platform services or TPS regime, which applies only to Sky?

Although the previous Government recognised the problem, rather than having a formal review and update of the regulation, they merely applied some pressure, which, short of legislation, did result in a slightly better deal for public service broadcasters, but the problem is that the terms of that type of deal remain opaque, so it is impossible for us to judge whether it is truly fairer for public service broadcasters. Does the Minister believe that this approach is equitable compared with distribution arrangements on the other platforms? Should that be subject to the report that we are asking the Government to consider producing?

The Secretary of State has had in this area not just powers, but duties. Since the Communications Act 2003, she has been required

“from time to time to review…the terms on which” must-carry PSB services

“must be broadcast or otherwise transmitted.”

Those duties do not appear to have been exercised properly recently. The TPS regime has not been reviewed by either Ofcom or the Government in a decade. Why not, especially as it was obvious a few years ago that that regime was no longer fit for purpose? When considering section 73 of the 1988 Act, why have the Government ignored the question of PSB distribution arrangements over all distribution platforms? The Bill was a good opportunity to consider all these issues in the round, rather than trying to treat section 73 as an isolated issue, so I hope that the Minister will be able to explain his thinking on that to the Committee.

All this is occurring in the context of viewers changing their habits. They are watching more online and more on catch-up. Those are growing trends, so distribution over the internet—both live, via multicast IPTV, and on catch-up, via unicast—is growing. In its 2015 review, Ofcom framed that as a “threat” to public service broadcasters. It is certainly a change and certainly a challenge to the Government and to regulators to consider how they can best support and enable that shift, to be a success both for public service broadcasters and for platforms.

These days, watching television is like the old Martini advert that many of us remember: “Any time, any place, anywhere, there’s a wonderful dream you can share”. That is exactly the way people are now consuming television: any time, any place, anywhere. That is the present, not the future. How do we ensure that viewers can watch the public service broadcast content that they want to, when they want to and how they want to? How can we ensure that public service broadcasters continue to have reach and prominence, which enables them to fulfil their obligations and appropriately reflect their funding? What opportunities are there to draw more people online, perhaps for the first time, to find the high-quality television content available via public service broadcasters?

Online viewing is not a problem; it is how viewers are choosing to watch, and that will continue to be the case. What is a problem is if there is no strategic thought by the Government on these issues at this time of enormous technological and behavioural change. The particular issues in relation to distribution raised by the repeal of section 73 connect to wider and now pressing questions about the public service broadcast compact. Thirty years ago, the terms underpinning the public service broadcasters were clear: they were reserved access to valuable spectrum and prominence on that spectrum. That created valuable and well-funded monopolies, either from advertising revenue or from the licence fee. However, the Committee knows that we have to consider that every aspect of that regime is undergoing rapid change, and the repeal of section 73 allows us to think about that and to consider the possibility that the Government need to do the strategic—

The Chair adjourned the Committee without Question put (Standing Order No. 88).

Adjourned till this day at Two o’clock.