Westminster Media Forum Keynote Seminar: Participation Broadcasting

Sir Alistair Graham: Keynote perspectives on how future regulation will seek to define participation media

Sir Alistair Graham: Keynote perspectives on how future regulation will seek to define participation media

Ladies and Gentlemen, it is a great pleasure for me to give this address today. The timing of this event could not have come at a more critical time given events of the last few months in Participation TV. I am particularly grateful to Westminster Media Forum for organising this event. I should say that ICSTIS is the UK independent regulator for premium rate services. For those of you who did not know that, you would be forgiven for not being able to deduce that from our rather quaint and unpronounceable name! So one of my first jobs a year ago when I took over the chair of ICSTIS was to agree that our name will change. This has been linked with a wider organisational change programme designed to ensure that we are more proactive and more engaged with key stakeholders. I have made clear that I am keen to “design in compliance” so that the sorts of problems we have seen over the last months can be put behind us. We managed it with the related but separate Quiz TV Services but we must not underestimate the challenge. Change programmes of this nature cannot happen quickly, but change is happening at ICSTIS and you should expect to see further announcements about our re-brand in the autumn.

Turning to the substance of this discussion, the main points I will make over the next few minutes are:

• The media has always been about “participation”. Technological limitations usually meant it was one way – from producer to citizen. Technology now affords better and richer two-way transactional dialogue and that will not go away. We can’t just switch it off and hope for a more certain past where to talk of the media in reality meant a few daily newspapers and handful of radio and TV stations largely with Public Service remits. “Two-way participation” is but one of the wider changes changing the landscape of what we mean by the “media”.
• People have always been and remain at heart social beings – they have always wanted to “engage” with their others so for me the “hype” around “user generated content” and “social networking” is just that. It is merely an extension of what each generation has wanted to do. This generation is no different in that sense. Electronic communities are now overlaying real world ones as any of you in the audience with some “Linden dollars” earned in the Second Life website will know!

Clearly there have been problems recently with the means of delivery of “participation” in TV and radio when combined with a telephone and billing interface called “premium rate”. It need not be this way. Premium rate is not “broke” and nor is it inherently wrong but something went wrong and I will offer my perspective on this.

Finally, I will argue that as participation media grows across all platforms the challenges this raises for regulators and industry will be more complex. Command and control regulation by a single regulator will not be enough. Regulators with differing responsibilities will need to find better ways to cooperate across boundaries. And we will need to have a better dialogue of understanding and engagement with industry providers whilst still delivering their remits within the context of best regulatory practice and standards.

If one was to observe the British media over the last few months you could be forgiven for believing that “participation” was a new phenomenon. But if we step back for a moment and a take a longer look, we can see that broadcasters, since the advent of time, have been all about this thing we call “participation”. The biggest example of this comes from national events where only some can usually attend and witness it first-hand. In such circumstances radio and TV becomes a substitute for direct participation. In my life time I recognise that my own engagement and participation in moments of shared national experience have been brought to me by TV and radio. I still can vividly recall the appeal by Imre Nagy, the Hungarian Prime Minister, made across BBC Radio on 4 November 1956 for the UK and West to come to his aid in what we now know was the failed Hungarian Uprising. More recently many of you in the room will remember what TV you were in front of when you first saw the horrors of 9/11. Our feelings about that particular tragedy were shaped by the media as indeed are many “events” and cultural experiences that we share.

So what has changed? Well technology is now making it more possible, for the mass audience, and not just geeks with the latest gizmo, to engage with those events, to bring their views to bear and even shape the outcome of events. The recent decision on who would play Joseph in the West End production of “Joseph and his amazing technicoloured dream coat” was determined by TV viewers. Part of their enjoyment in watching that programme was a sense that they and others could directly influence the decision. And if that “democratises content production” is that such a bad thing? And if we talk about democracy then that raises other issues about how far citizens can use the new forms of two-way media participation as a means to build better government and democratic institutions where trust in politicians is higher than today. Standards in Public Life are a matter close to me as many of you will know. And my opportunity to debate standards through a documentary I am presently making for Channel 4 about how Gordon Brown might restore trust in government is another example of how the media can be used to engage debate and wider “participation”.

What has also changed and is still changing are the general business models for the media. Many of these models were mostly advertising funded dependent. In a world of “mass audience and viewing” across a small number of media outlets that was sustainable. It is less likely to be so in a digital age where we move from a broad-cast to a narrow- cast world. Media companies will need other revenue streams to complement their drive to continue to be creative and provide high quality content. I will not speculate how this will play out – there are better qualified people in the room than me who can discuss this - BUT it does seem to me that if there is an appetite for people to pay relatively small sums for the pleasure of “participating” in content construction then this can only be a win/win for all concerned. But at the point they transact and make a payment the relationship surely changes. The viewer or listener now becomes a “consumer” and with that comes consumer protection issues which go wider than TV or radio.

This takes me to my point about viewers and listeners, or as they are described in the Communications Act, “citizens and consumers”. That distinction remains vital andwhen acting in either capacity people can and will want to “participate”. My wider point is that citizens and consumers have always wanted to interact with others in a “community of interests”. And in a globalised world the creation of “communities” is a powerful antidote for the creation of a sense of self within a localised shared culture, based on shared beliefs, understandings, values, language and a sense of a nation’s shared history. So, for this reason far-sighted politicians are embracing these new opportunities being created by technological advances to deepen the engagement with citizens. Again, at one level I see nothing new here. People have always had a desire for this. My own organisation ICSTIS was the creation of BT in the mid 1980s and one of the drivers for that was the misuse by children of chat lines. Whatever your view of their desire to do that, when they could they moved onto the Internet where the phenomenon of the “chat room” has taken on global proportions which continue to this day. So user generated content is not a new idea but if one was to believe the hype over the last year or so, one would think it was. That takes me to “blogging”. Now I may have missed the point but how new a phenomenon is this? Is blogging not much more than the opportunity for people to share their personal thoughts, content and often their diary with others in this electronic age? Is Samuel Pepys not therefore the true heir to blogging? This is not to knock the massive growth in blogging, but rather to take the longer view of what we see here in terms of societal developments. My point being that participation is part of the “human DNA”.

Let me now come closer to home and say some things about premium rate and its usage in broadcast. Again, this is not a recent development. Premium rate, as a simple and easy mechanism to leverage a phone bill to charge a micro-payment for some form of content, has been around for over 20 years. In fact PRS, like many great things, was invented in the UK and has now been exported around the world with success and some notable failures. The notable failures are often compounded by a lack of effective regulation. In the last year alone it is therefore interesting to note that officials from the Governments of China, Japan and Croatia have all visited ICSTIS in order to better understand how we regulate the UK market, still just about the largest in the world.

Premium rate is now ubiquitous in the UK. Going into any newsagent and pick a magazine from the shelf at random and you will reference to it - I guarantee. All broadcasters have used premium rate for years. The reason for this is its simplicity. Whilst the world and the Internet still grapple for easy to use micro-billing devices which have a mass appeal, the phone companies quietly utilise their phone bills to charge for added value content. And generally this has worked well but this very ubiquity has meant that from time to time premium rate has been targeted by those wanting to run scams and make fast money. Many of the loopholes that allowed this in the UK have been closed and our complaints seem to be on a downward trajectory. Long may it remain that way. The issues in broadcast are different and here the issues and public debate relating to the concerns that have arisen have a different focus on which I will say more later.

So it is no surprise that broadcasters wanting to build event participation have turned to premium rate as the device as choice, especially as it has the added advantage that it can be monetised so supplementing broadcaster income in a world where advertising revenues are under pressure. This is but one reason why we must expect an increase take up of such means to participate over time regardless of the recent set-backs. Another is that broadcasters will have greater capabilities to segment their audiences to provide niche content and not all of this can be sustained through advertising revenues.

And it is no surprise that viewers and listeners have enjoyed taking part using their telephone. It is easy to do, nearly everyone has access to a telephone and generally the cost is low enough to not make a dent into the phone bill and cause “bill shock” problems. We estimate that revenues to radio and TV broadcasters from premium rate calls generated some £250m annually. And then we also had, quite separate from this, although the media often blurred things, what we have called “Call TV Quiz Services”. These are dedicated channels which run quizzes and the means to participate – and funding – is through premium rate calls alone. There is no advertising in the traditional sense. I don’t plan to say anything in particular about Call TV Quiz Services today. Those of you have been or interested in this particular genre will be familiar our revised Statement of Expectations in which we set out new rules to improve the transparency of these services, especially in connection with the degree of chance involved in getting through to the studio. We believe this Statement of Expectations went a long way to deal with the concerns raised by consumers and by the Culture Select Committee who held their own Inquiry earlier this year. These services, at their peak in 2006, were estimates to generate some £120m annually. Again, this shows the appetite there is for consumer engagement with broadcast output. However, the fact that a powerful group of MPs decided to hold an Inquiry into these services should remind us that TV is a central cultural institution in the UK and if the output from this is seen in anyway to compromise users then we can be sure that there will be political and public interest.

And so it was of no surprise that once allegations emerged earlier this year that some programmes and channels had used premium rate in a way that may not have been to the highest standards that there would be close and intense media and political interest and scrutiny as to what had been going on and what action would be taken to address the alleged problems. And you should note that I use the word “alleged” here as many – but not quite all - of the concerns raised through those issues are still being investigated either by us or Ofcom. Until we adjudicate on the great bulk of the cases in question it would not be right for me to make any comment or to suggest that the allegations are substantiated. Indeed, some allegations made in the media have not been substantiated and unless they are we have no intention of investigating claims that seem to have been made without any foundation.

As soon as these allegations first emerged we called a TV Summit for a large number of industry providers in the value chain to discuss the emerging problems and agree some short and medium term actions. That was on the 8th March and with the co-operation of Ofcom and industry we made progress that day in agreeing steps designed to restore trust and confidence for users of these services. And steps have been taken including by many commercial entities in the value chain, sometimes at considerable expense. We very much welcome this.

We must not forget that Ofcom are the statutory regulator for broadcasting and have statutory responsibility to set Codes of Practice for broadcast standards which references premium rate. So it was of no surprise – and indeed we welcomed - the announcement of their Inquiry later in March into the issues raised by these allegations in order to consider what structural issues led to the apparent failings of compliance that seemed to be becoming evident at that time. Tim Suter may saw about this later this morning. I will say however that some have asked me how we relate to Ofcom on these issues and have questioned whether we have too many regulators here cutting across each other engaged in some form of “turf war”. Let me address that and let me be clear. Our relations with Ofcom, with Tim, with his staff and with his colleagues on the telecoms side of Ofcom have never been better. Of course this means that both organisations have to share information and engage in policy discussions that take account of each others strategic needs, priorities and concerns. So far we seem to have done this in an effective way and we will continue to improve. In terms of having multiple regulators, again I don’t see this as a problem for consumers or industry as long a both bodies provide what I might call “harmonised clarity” as to what is required, who does what and how each body will interact with the other in order to minimise the risk of “double jeopardy” scenarios. And of course, when it comes to services that may involve gambling, we also need to consider the Gambling Act 2005 and the creation of the Gambling Commission who assumes many of their powers from 1st September this year. This is the modern world and in such a converging world which is dealing with complexities of technology, jurisdiction and regulation it will be the case that multiple regulators will exist in a defined space. All businesses, not just the media, face this today and the issue must be how to best manage it from both sides rather than go into “denial”.

So turning to the recent events, the questions arise as to why it happened. How can it be that so many services appeared to have so many basic failings which dented consumer trust? This question is central to the Ofcom Inquiry which I mentioned earlier. It would be quite wrong of us to try and second guess the work that the Chair of that Inquiry, Richard Ayre, undertook in a comparatively short space of time. Like you, I will look forward to seeing the analysis that follows from this as I am sure it will provide helpful insights in to the problem and so point the way for all parties to address the issues at a structural level so that a re-occurrence can be prevented. It is in that context that I offer some thoughts. I would identify three issues as being particularly critical. This may not be exhaustive but I suspect some of these points will have been made to Richard Ayre as he took evidence through his Inquiry:

The value chain for the delivery of premium rate services used in TV and radio is spread across a range of companies with different priorities, different business and technical languages as well as different cultures and priorities. In such a complex value chain it became possible for all parties to lose sight of the critical need to ensure and retain viewer and listener trust and each party could have felt that the other was taking responsibility. The absence of clearly agreed and specific written contracts could compound this;

Cost and revenue pressures in premium rate have been squeezed. In that environment less emphasis might be placed on compliance costs and ways may be found to even reduce them;

The focus may have been on making “good television and radio” rather than on ensuring that the premium rate service that formed part of it was delivered correctly. If the gallery need the vote counted in a few seconds so a winner can be announced live, it may not be surprising if corners get cut and not all votes get counted, possibly due to technical constraints.

These issues –and there may be others - are systemic. To simply claim that the recent issues are merely the result of human error or “cock-up” is to miss the point. This error needs to be considered in the context in which the operation is provided. If one considers the reputation risks and brand damage that can be caused if things go wrong then any systemic failings will need to be properly addressed by industry if they are to move on. Front page headline such as The Daily Mirror on 9th March 2007 which said: “TV IN CRISIS“destroys brands and trust.

And so this brings me to our recent consultation and the broader question of how future regulation will seek to define participation media.

Turning to our own consultation where we set out proposals to introduce prior permission for premium rate when used on TV and in radio, our consultation closed on 12th June. We had a considerable range of responses and those which were not marked as confidential appear on our website. You will see that for the most part respondents accepted the case for taking some further regulatory action and most thought that introducing prior permission had merit. The consultation also went wider in its deliberations and attempted to unpack the issue of regulatory responsibility recognising that broadcasters and production companies – usually defined as “Information Providers” in our Code - can be integral to the provision of the content and the problems where they arise. On questions about this issue there was a more mixed response about how far our current purchase over the “service provider” could or should extend in a way that we could mandate for the purposes of enforcement. We also made clear that any responses and consideration by us would be in any event contingent on the outcome of the Ofcom Inquiry and that we would take no decisions until Ofcom make the outcomes of that known and we have all had time to reflect on what it says and possibly recommends. And at the same time we and Ofcom are investigating a number of cases and they will also afford us the further opportunity to learn from them about both the nature of the problems and how any systemic failures in those cases arose, if indeed they did.

This brings me to the nature of defining and regulating future participation media. Firstly if participation involves a payment being made by a viewer or listener in return for their chance to participate then that changes the nature of the relationship that pre-existed. And the change brings into play new considerations around consumer protection and the rights of the consumer to ensure they get a “fair deal”. This is separate from their rights to have and enjoy a broadcast experience free from harm, offence and or which intrudes on their privacy or other rights. I doubt enough thought has been given on this point by broadcasters who instead have taken the service in the round and considered “participation” as an add-on to the existing proposition. Whilst it is my point is that it is also materially different from a regulatory perspective. I said earlier that we are living in a converging world. Technologies are changing the way consumers and citizens engage with and pay for services. At the same time those services can increasingly be delivered from remote destinations and jurisdictions that do not recognise the law of the land in which the consumer is based. This complicates the role for regulators. Certainly, my own organisation increasingly finds itself co-operatively engaging with other regulators such as Ofcom, the ASA, the Gambling Commission, and the Information Commissioner in order to be an effective regulator of a payment mechanism that knows few technological or national boundaries. This will intensify. So will our need to engage lawmakers in both UK and the EU earlier in the process of the process for framing legislation. But industry and consumers need some certainties. Consumers need to know where to go with a problem. They need to properly advised about who will be dealing with the issue and the consumer pathway needs to be clearly marked out and communicated back to them especially where multiple regulators are involved. Similarly broadcasters and others want certainty about what rules they need to adhere to and what the consequences could be if there is a failing of compliance. They need to know who they may need to answer to for that failing and what the range of potential consequences are. This strikes me as perfectly reasonable requests. It also strikes me that if we as regulators want to live up to best regulatory standards and principles then we should deliver on these. The Better Regulation Commission says that there are five principles of regulation: Transparency, Accountability, Proportionality, Consistency and Targeted. The consumer and industry needs I just outlined are no more than a call for these principles in action between regulators.

Beyond this I would also observe that whether acting in unison or collectively, care must be taken to ensure that the totality of the regulatory burden is proportionate to the problems that arise. Regulation should also, where possible, target the problem and be designed so that it minimises the risk of repeated failings from occurring.

And if regulators in this, and indeed any other area, are to do this with success then they needs to co-operatively engage with key stakeholders whilst recognising that they must be the holder of the ring between different competing interests who should be allowed to compete in a manner that best reflects a properly functioning market recognising that one purpose of regulation may be to correct a failing that the market does not have due to the dominance or significant market power of one or more players.

And so, if I look forward say a year and consider what action was taken to consumer restore trust in a measurable way with premium rate on TV and radio I would see, as a minimum:

• Industry having taken the time to consider the need to have new systems, process and procedure, supported through verifiable and objective audit procedures to ensure that the consumer proposition delivers what they expect. This has started to happen;
• There will be greater clarity between the relevant regulators who have interests in this area and there will be tangible examples visible to all of how we and the other regulators have worked together in a number of ways to jointly aid the development on consumer trust in a product that need not be broke and fundamentally has the potential for wide consumer appeal.

I hope these reflections, comments and insights have been of help to what is an important discussion we are having today and if there is time for questions either now or later then I will be happy to oblige in trying to answer them.

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