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Report of the Independent Review of BBC Online 1

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Report of the Independent Review of BBC Online 1 Contents 1 Foreword 3 1.1 Terms of reference, summary of process and timing of the review 3 1.2 Overview of structure of report 4 1.3 Notes on the review 5 1.4 Acknowledgements 7 SECTION I: RECOMMENDATIONS 2 Recommendations 8 2.1 Remit and strategic objectives 9 2.2 Operational performance and delivery 12 2.3 Market impact 14 2.4 Governance and accountability 15 SECTION II: PAST PERFORMANCE OF BBC ONLINE 3 Performance Against Terms of 1998 Approval 17 3.1 Brief history of BBC Online 18 3.2 Performance against approvals: Part I,“To act as an essential resource offering wide ranging, unique content” 19 3.3 Performance against approvals: Part II, “To use the internet to forge a new relationship with licence fee payers and strengthen accountability” 25 3.4 Performance against approvals: Part III, “To provide a home for licence fee payers on the internet and act as a trusted guide to the new media environment” 27 4 Performance within the Wider Internet Market Context 30 4.1 Purposes and remit 30 4.2 Corporate strategy 32 4.3 Operational delivery 34 4.4 Performance assessment 37 4.5 Governance and accountability 39 5 BBC Online’s Economic Market Impact 41 5.1 Defining a market impact assessment 41 5.2 The market context of BBC Online 44 5.3 BBC Online could have several kinds of market impact 47 5.4 Evidence of past market impact of BBC Online 51 5.5 Risk of future adverse effects on competition 55 5.6 Conclusions on the potential market impact of BBC Online 58 2 Report of the Independent Review of BBC Online SECTION III: FUTURE OF BBC ONLINE 6 Future Internet Market Evolution 59 6.1 Future trends in technology 59 6.2 Future trends in demand 60 6.3 Future trends in supply 62 7 Potential Economic Market Impact 64 7.1 Implications of a strict market impact test for BBC Online 64 7.2 Requirements of a full market impact analysis 64 7.3 A precautionary approach to investment 65 7.4 Market impact considerations for BBC Online 66 8 Purposes of BBC Online 68 8.1 The BBC’s stated public purposes 68 8.2 The core purposes and objectives of BBC Online 69 8.3 The purposes of BBC Online 70 8.4 BBC Online’s service objectives 70 8.5 BBC Online’s stated service criteria 73 8.6 Proposed criteria for BBC Online services 73 8.7 Setting the purposes of BBC Online in the wider regulatory context 74 9 Strategic Priorities for BBC Online 75 9.1 Online content services 75 9.2 Broadcast content services 78 9.3 Online applications 79 9.4 New technology platforms 80 10 Governance: Towards the Next Charter 81 10.1 Definition of relevant activities 81 10.2 Regulation of BBC Online 82 10.3 Governance of BBC Online 83 10.4 Conclusion 85 11 Appendices1 87 11.1 BBC Online 1998 application and approval 88 11.2 Glossary of terms 101 11.3 Public submissions to the review 11.4 Spectrum’s assessment of BBC Online’s use of technology 11.5 Spectrum’s assessment of future UK internet market trends 11.6 Audience research report 1 Appendix 11.3 is available on the DCMS website only (www.culture.gov.uk). Appedices 11.4, 11.5 and 11.6 are available on the DCMS website or by request on CD. Report of the Independent Review of BBC Online 3 1 Foreword 1.1 Terms of reference, summary of the process and timing of the review The Secretary of State for Culture, Media and Sport is responsible under the BBC’s Charter and Agreement for approving new service proposals made by the Corporation. In February 2000, the then Secretary of State announced that where such approvals were given, the operation of the services would in due course be subject to independent review. The independent review of BBC Online is the second of such reviews2 and its broad terms of reference, set out by the Secretary of State in April 2003, required an independent reviewer to: • Consider whether, in providing its online service known as BBC Online, the BBC is acting in accordance with the facts and assurances on the basis of which approval to proceed with the service was given; • Produce an assessment of the market impact of BBC Online; • Consider, in the context of the approaching review of the BBC’s Charter, what the role of BBC Online should be within the BBC’s overall service • Have regard, in reaching conclusions, to: • the BBC’s own report on the performance of BBC Online and to any subsequent evidence provided by the Corporation; • views submitted by other organisations and individuals in response to the BBC’s report or in response to the invitation to comment issued by the reviewer; and • any additional evidence which the reviewer considers it appropriate to commission; • Submit a report to the Secretary of State, in publishable form, by Spring 2004, setting out the conclusions of the review and, if appropriate, making any recommendations that the reviewer considers necessary to ensure that BBC Online is operated in accordance with the terms of the original approval In August 20033 the Secretary of State appointed me as the independent reviewer of the BBC’s online services. In October of the same year, I appointed a team of advisers to support me with media, technical and economics expertise. Europe Economics were appointed as economic advisers to the review, to analyse evidence submitted by the BBC and others on issues of market impact. Spectrum Strategy Consultants were selected to provide advice on the BBC’s use of new technologies within BBC Online, the likely development of the online market in the UK and performance measures for the service4. 2 The first of such reviews was Richard Lambert’s Review of BBC’s New 24, which reported in December 2002. 3 Philip Graf’s appointment was announced by the Secretary of State, Tessa Jowell, at the Guardian Edinburgh Television Festival, 23 August 2003 4 Appointments were made after a competitive tendering process compliant with DCMS procurement guidelines 4 Report of the Independent Review of BBC Online The BBC’s own review of its online services was published on 23 August, together with a market impact assessment, commissioned by the BBC and carried out by KPMG. On that date, I invited the public to send me their views on BBC Online. By the time the consultation closed at the end of October 2003, we had received over 1400 responses from the general public, in addition to nearly twenty submissions from commercial and public sector stakeholders. I have published the public responses as an annex to this review5 except where I have been asked not to by the respondent. I also commissioned audience research to explore, in more detail, the public’s expectations of and views on BBC Online. Between November 2003 and March 2004 I held a series of meetings with the BBC and other key stakeholders. These meetings included informal discussions with web producers working on BBC’s local ‘Where I Live’ sites, an interview with the BBC’s then Director General, discussions with representatives of public service stakeholders, such as NHS Direct and commercial players such as the British Internet Publishers Alliance6. The meetings provided further evidence on BBC Online’s priorities, performance and plans for the future, and explored emerging themes and concerns. I have based my conclusions and recommendations firmly on the evidence gathered during the review. Although I have been supported throughout the process by the review team, those conclusions and recommendations are mine alone. 1.2 Overview of structure of report The report is structured as follows: SECTION I: RECOMMENDATIONS Chapter 2: Recommendations In this chapter I state my conclusions and key findings from the review. SECTION II: PAST PERFORMANCE OF BBC ONLINE Chapter 3: Assessment against approvals We assess BBC Online’s performance against the conditions of Approval as agreed in 1998. The analysis is based primarily on evidence from the BBC and members of the public. Chapter 4: BBC Online’s Past Performance in a wider context We explore wider issues – i.e. those that could not effectively be captured within a strict assessment of the service against the original approvals – which surround the service’s performance to date. We draw here on evidence from commercial and public sector stakeholders, as well as views from members of the public. 5 Available on the DCMS website (www.culture.gsi.gov.uk) 6 The British Internet Publishers’ Alliance (BIPA) was formed in December 1998. BIPA represents the interests of a wide range of internet publish- ers. Current members: Associated New Media, Commercial Radio Companies Association, EMAP, Guardian Unlimited, Independent Digital, News International Plc, Sky Interactive and the Telegraph Group Ltd Report of the Independent Review of BBC Online 5 Chapter 5: Market Impact of BBC Online We consider a key aspect of BBC Online’s past performance over the last five years, namely its economic impact on wider UK markets. We discuss definitions of market impact and assess BBC Online’s past market impact based on evidence provided by KPMG and other stakeholders. SECTION III: FUTURE OF BBC ONLINE Chapter 6: Future environment and new technologies We identify future trends in technology supply and demand, and their likely implications for BBC online services. Chapter 7: Future Market Impact We discuss possible methods by which BBC Online’s market impact may be assessed in the future.
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