Written evidence submitted by

Arqiva written evidence to the inquiry into The Future of Public Service Broadcasting

19 June 2020

Summary and key points

1. The Covid-19 crisis has reiterated the importance of Public Service Broadcasting (PSB) services that are easily available to all. It has brought into sharp focus the vital importance of ensuring that the needs of all viewers continue to be met. The audience figures for live linear TV during the Covid-19 crisis has also proven that, while there is increasing demand for Video (VoD) services, viewers still tune into linear PSB programming in their millions to watch the latest news, drama series, and live events.

2. Television in the UK is characterised by PSB content – largely operating on the Digital Terrestrial Television (DTT) platform – that is universally available, reliably delivered, and free-to-air. It is crucial that these features are retained, so that all viewers can continue to receive the benefits of the UK’s unique and much-loved PSB programming.

3. PSB continues to recognise the importance of serving everybody, which includes the old, less well-off, and rural as well as urban viewers. There can be an emphasis with chasing younger audiences with long term strategy and policy becoming only focused on this group. However, policy makers need to ensure that PSB activities and spend are balanced and they continue to fully serve the needs of all viewers – which is particularly important given the UK’s ageing population.

4. One of the strengths of PSB in the UK is the PSB ecosystem that supports it. While a well-funded BBC is vital to that, the other PSBs are also critical, as is the support that commercial services provide, particularly on DTT. Freeview, and more recently Freeview Play, shows that viewers value the ability to get PSB services, both broadcast and VoD in the same place. This is set against the backdrop of increasing VoD competition from global digital giants such as Amazon, and Disney. The long-term future of PSBs has to lie in them working more closely together on a level playing field against the international entrants. That will give UK TV viewers the best viewing experience with UK PSB content that is able to successfully compete with international content.

5. The key to ensuring the continued strength and success of PSB is to support the DTT platform that underpins it. DTT enables the PSBs to provide coverage to over

98 per cent of the UK population, ensuring that viewers can access reliable, high- quality PSB content free at the point of consumption, regardless of their geographic location, age or household income. Non-broadcast platforms cannot deliver this and effective regulatory mechanisms for securing PSB outcomes on those platforms have not yet been found.

6. Looking ahead, hybrid DTT-IP services are proving to be the most reliable, cost- effective and trusted form of delivering PSB objectives for the nation. Hybrid DTT-IP services provide viewers with choice in how they consume television services, underpinned by a regulatory framework that ensures PSB values, in a cost-effective way.

7. DTT is responding to this change in consumer habits through investment in YouView and Freeview Play, which offer consumers the choice of universal free-to-air content alongside VoD services. This hybrid DTT-IP approach gives UK viewers the best of both worlds whilst ensuring that no one is left behind, and the COVID-19 pandemic has proven that this hybrid platform, remains the nation’s preferred way to watch broadcasting content. There is no basis for a policy intervention that seeks to remove or weaken this platform in favour of an IP-only broadcast TV service that has both failed to gain material viewers and imposes additional costs on households.

Responses to questions

Regulation: Are the current regulations and obligations placed on PSBs, in return for benefits such as prominence and public funding, proportionate? What (if any regulation) should be introduced for SVoDs and other streaming services?

8. PSB regulation is one of its key strengths – it ensures that high quality television programming, tailored to a wide range of UK audiences, is available to viewers universally, reliably and free-to-air.

9. The obligations on the PSBs come with associated rights, granted by government and the regulator in three fundamental ways:

 The TV licence fee, which enables the BBC to provide high quality original and innovative content;

 Access to suitable and sufficient spectrum to enable PSB content to be transmitted to 98.5 per cent of all homes over the DTT platform, supported by non-PSB content to provide choice for viewers; and

 Guaranteeing prominence for PSB channels on linear Electronic Programme Guides (EPGs) to ensure that PSB content is easily discoverable.

10. These rights create substantial value for viewers, policymakers and broadcasters alike. Removing, or weakening, the regulatory obligations on the PSBs is likely to result in the gradual erosion or eventual removal of these associated rights, which would mean significantly poorer outcomes for all parties.

11. Rather than looking to weaken PSB regulation the Government should ask to assess, as part of their PSB review, how regulation could be applied to commercial VoD providers to address competitive imbalances between PSBs operating on terrestrial television, and VoD services. This approach would also ensure that UK viewers can be confident in the knowledge that VoD content is appropriately regulated, ensuring free and fair competition and protecting consumers with the same terms of conditions as PSBs.

12. To expand on the specific question of prominence, the prominence of PSBs is an essential feature of the existing regime. Prominence on EPGs remains a vitally important way to ensure that television viewers can easily find PSB content. However, on platforms like Freeview, it should not be the case the non-PSB services provided by the PSBs should automatically be given prominence over services that are not officially designated as PSB services.

13. DTT is an ecosystem that supports the PSBs via the commercial services on the platform. The ability to defray the costs of the platform across channels beyond the PSBs allows the PSBs to focus spending on programming, while still ensuring that their content is available to anyone with a TV and an aerial, at no additional cost. In addition, many channels, even if they are not formally designated PSBs, provide programmes that would meet any reasonable definition of PSB content e.g. PBS America, Forces TV or news channels such as Al Jazeera. If that ecosystem is to continue then, when it comes to DTT prominence, all non-PSB services will need to compete on a level playing field.

Representation: How would representation be protected if changes were made to the PSB model? How would the nations and regions be affected by changes to the PSB model? Is the ‘quota’ system the most efficient way to maintain and improve representation in broadcasting?

14. Representation of the nations and regions has been shown to be critical in the current Covid-19 crisis. More specifically, while making news and information available to people across the entire UK has been important it has been particularly relevant for the nations and regions. With differences in rules across the nations and different approaches to local responses (for example in relation to school openings) PSB programming has allowed people to get the information they need that is relevant for their local situations.

15. What this illustrates is the importance of both representation and universality. If the benefits of representation are to be realised then relevant programmes need to be available across the local areas, and across the UK, to all those that need it, free-to- air.

16. Therefore, when considering changes to the PSB model it is critical that PSB services continue to be available universally and free-to-air. At its simplest this means any changes should ensure that everyone in the UK can continue to receive the PSB services they get today, without having to pay more for those services than they pay today. Through the DTT platform, PSB services can reach 98.5 per cent of the UK population. DTT ensures that PSB services are available to people that either cannot receive, or cannot afford, video quality internet services. Over 19 million households in the UK already regularly use DTT services, and this figure continues to grow with the success of DTT services including Freeview Play.

17. However, representation is not just about geography and it is important to ensure that PSB content is targeted at all demographics. For example, it remains vitally important that children are able to consume content (such as CBeebies and CBBC) that is produced not only to entertain them but to educate them as well. This has been reinforced during the current crisis with the BBC reconfiguring it’s educational content to provide schoolwork as broadcasts, on demand, and online1.

18. At the other end of the spectrum, older demographics consume 349 minutes of TV every day – a figure that is broadly unchanged since 20102. According to research by Age UK, 49 per cent of over 65-year olds say that television or pets are their primary form of company. This demographic is particularly important to PSBs and, in return, PSBs provide an often-vital service to older viewers who rely on the news and entertainment that PSB provides. It is important that these older viewers can continue to access the television service they know and trust in an increasingly convoluted and broadband dependent VoD landscape.

Accessibility: How would changes to the PSB model affect the accessibility of services? How would a wholly internet-based service compare to the current PSB model?

19. Key characteristics of PSB services are that they are universal, reliable and free-to- air. When it comes to considering how changes to the PSB model would affect accessibility, in particular when considering the appropriateness of a wholly internet- based model, that needs to be benchmarked against those characteristics.

20. Internet services are far from universal. While good progress has been made in improving the availability of broadband services, take up of those services remains static. BARB’s most recent establishment survey3 shows that 12 per cent of households do not have broadband, and that proportion has changed very little in recent years. By contrast 95 per cent of households have a television, translating to potentially 1.8 million households that would lose television and PSB services if there was a wholly internet-based TV service.

1 https://www.bbc.co.uk/news/entertainment-arts-52149409 2 Figure 1.8 Media Nations Report 2019 https://www.ofcom.org.uk/__data/assets/pdf_file/0019/160714/media-nations-2019-uk-report.pdf 3 https://www.barb.co.uk/download/?file=/wp-content/uploads/2020/05/BARB-Establishment-Survey- Annual-Data-Report-Volume-1-TV-Network-and-Appendices-Apr-2019-to-Mar-2020.pdf

21. When it comes to reliability, the current crisis has highlighted challenges for the broadband networks in the UK in terms of whether they can cope with the level of demand for VoD. In response to the increased demand we have seen Netflix, YouTube and Disney+ agreeing to reduce the quality of the transmissions they put out4. In contrast, broadcast networks like DTT have continued to operate at their accustomed high level of performance despite the increased demand. Broadband providers need to focus their attention on improving their networks to meet the current, unmet, demand from consumers .e. for VoD.

22. However even assuming future improvements in coverage and reliability, there remains no workable model for providing multiple standard-, and high-, definition broadcast TV channels over broadband to 98.5% of the population for free. Terrestrial television is accessible to all at substantially lower cost than IP-only TV services, while PSB TV services accessed via the internet require the user to pay for line rental and a high-speed broadband connection in addition to the cost of a TV licence. The free to air nature of PSB provided on the DTT platform is therefore critically important in serving viewers in the lower income and lower age brackets who might otherwise find themselves increasingly excluded as more television services move online.

23. Given this, the most appropriate model for the foreseeable future is the hybrid DTT- IP model that we have today and that viewers have embraced. Whilst demand for VoD services is on the increase, this does not mean that viewers are seeking to replace DTT with linear IP-only TV. The hybrid model allows the PSBs to provide live, linear services, free-to air on broadcast platforms such as DTT and, also provide VoD and catch-up services through platforms like BBC iPlayer and Freeview Play. These linear and VoD services complement each other, but do not exclude those who cannot afford a broadband service. Viewers have shown through their viewing behaviour that this mix of technologies is their preferred method for consuming TV.

Impact: What value, if any, do PSBs bring to the UK in terms of economic (local and national), cultural and societal impact?

24. The societal and cultural impact of PSBs has been brought into sharp focus over the last few months. At a time when it is not possible for communities to meet face to face, Public Service Programming has been the glue that has continued to bring people together. The 27 million viewers that watched the Prime Minister’s Covid-19 speech to the nation on Monday 23 March5 demonstrates the power of broadcasting to unite the country. While some additional people will have watched it online or on catch up, the vast majority watched it as a broadcast service, and in doing so solidified the position of traditional broadcast as the public’s preferred way of

4 https://mlexmarketinsight.com/insights-center/editors-picks/area-of-expertise/data-privacy-and- security/netflix-youtube-cut-bandwidth-use-in-europe-with-covid-19-crisis-asia-us-stand-firm 5 https://www.bbc.co.uk/news/entertainment-arts-52018502

consuming news content. It was therefore vital that they were able to watch that news reliably, and without needing to pay for a broadband subscription.

25. Across the board, Linear TV viewing has increased by 21 per cent since lockdown measures began6. PSB and DTT have been particularly important for those vulnerable groups that have needed to take care to stay at home in this period, including older groups who are both particularly susceptible to Covid-19, and the heaviest users of DTT. These demographics also have the least access to alternative services, such as content accessed via broadband. Public Service Broadcasting has been, and remains, critical to these groups not just as a means to stay abreast of the latest news and advice, but also as a way to stay entertained when they are unable to leave their homes.

26. In the context of cultural and societal impact, while much is made of the decline in TV viewing among younger demographics, the analysis tends to gloss over how much live, linear (i.e. traditional) television young people still watch. Ofcom continues to report high levels of linear and broadcast-originated TV viewing among younger viewers. Figures from Ofcom’s latest Media Nations Report show that of the 4 hours 34 minutes of total daily audio-visual viewing time by 16-34 year olds, 42 per cent is spent viewing broadcast content with the rest split between Subscription VoD, as well as YouTube, games consoles, DVDs etc. With an average of 83 minutes of viewing a day, live linear television continues to be the single most popular way that 16-34 year olds consume audio-visual content7.

Looking ahead: What should a PSB look like in a digital age? What services should they provide, and to whom? In what way, and to whom, should they be accountable? Is the term ‘public service broadcasting’ still relevant and, if not, what is a suitable alternative?

27. It is clear that viewers value choice and a hybrid approach. They want a strong broadcasting base combined with a wide choice of VoD and catch-up services (both PSB and paid). In this debate it is very easy to conflate IP-only broadcast TV with catch-up services (e.g. BBC iPlayer) and Video on Demand (e.g. Netflix). Viewers have shown that they value catch up and VoD, rather than having much interest in IP-only broadcast services.

28. Viewers have had the ability to access live, linear TV online for many years, but are choosing not to use it in significant numbers. For live linear TV they prefer the universal, reliable and free-to air nature of traditional broadcasting platforms. They are watching increasing amounts of VoD but are still tuning into terrestrial television in their millions to watch the latest drama, documentary or sporting event provided by PSBs. In today’s hybrid world, VoD and live linear broadcasting are complements, not substitutes, for the consumption of PSB services.

6 Source: Thinkbox 7 Figure 1.5 Media Nations Report 2019 https://www.ofcom.org.uk/__data/assets/pdf_file/0019/160714/media-nations-2019-uk-report.pdf

29. In the recent past viewers essentially faced a stark choice between a free DTT service and a high-cost satellite or cable service. viewers have a wider range of options. In addition to PSB VoD services they also can choose to pay a little more to get additional content from one or more subscription VoD providers. DTT increasingly provides the PSB and free-to-air base for those viewers who wish to supplement their viewing with VoD services.

30. It is inevitable that in an inquiry such as this there will be representations suggesting that traditional broadcast services, and DTT in particular, should be switched off in favour of an IP-only world. This argument is often justified in terms of the benefits to consumers. While there are undoubtedly benefits to be derived from the internet, it is the job of broadband providers to make a compelling positive case to consumers to convince them to pay to take up those services. Consumers should be allowed to make the decision to take up broadband based on the benefits they would gain. They should not face a Government intervention that would take away or reduce their PSB services and require them to pay a monthly broadband subscription if they want their TV back.

31. The COVID-19 pandemic has confirmed that the hybrid DTT platform, remains the nation’s preferred way to watch PSB content. There is no basis for a policy intervention that seeks to remove or weaken this platform in favour of an IP-only broadcast TV service that has both failed to gain material viewers and imposes additional costs on households.

About Arqiva

Arqiva is a communications infrastructure and media services company, operating at the of the communications industry. Arqiva provides much of the infrastructure behind television, radio, mobile and other wireless communications in the UK and we are at the forefront of network solutions and services in an increasingly digital world. Arqiva operates 1,154 transmission sites for TV broadcasting, providing coverage to 98.5 per cent of the population for terrestrial broadcasting in the UK. Arqiva is a founder member and shareholder of Digital UK, DRUK, Freeview and YouView. Freeview is the largest TV platform in the UK delivering over 100 digital TV channels, including 15 HD channels, and 24 radio stations free to almost 19 million UK homes. Arqiva owns and operates the networks for all the Freeview multiplex licence holders and is the licence holder for four of the DTT multiplexes. In addition to providing analogue radio coverage Arqiva supports DAB radio. We are a shareholder and operator for both commercial national DAB radio multiplexes and the service provider for the BBC national DAB radio multiplex. We also work with commercial radio groups, such as Bauer Media and Global Radio. Through our wholly owned subsidiaries, Now Digital Ltd and Now Digital (Southern) Ltd, and our joint ventures Now Digital (East Midlands) and South West Digital Radio, Arqiva

operates 23 local DAB digital radio multiplexes. These multiplexes cover several regions of the UK, predominantly in the Midlands, South West and the south of England. Our major customers include the BBC, Bauer Media, Global Radio, Wireless, ITV, , Five, BSkyB, UKTV, Sony, AMC, Ideal World, and QVC. Arqiva is owned by a consortium of infrastructure investors and is headquartered in Hampshire, with major UK offices in London, Buckinghamshire and Yorkshire.