Submissions
March 2007
EQUITY RESPONSE TO OFCOM'S DIGITAL DIVIDEND REVIEW
INTRODUCTION
1. Equity is a trade union representing 37,000 performers and creative personnel who work across the whole spectrum of entertainment in the UK, including visual broadcasts, sound recordings, film and live performance. These Equity members work principally in drama, comedy or entertainment roles.
2. We welcome Ofcom's consultation on the digital dividend review (DDR) and recognise the exciting possibilities and the potential uses of the released spectrum, which will become available as a result of digital switchover (DSO) in television broadcasting between 2008 and 2012. In particular, we acknowledge the potential opportunities for performers and the use of their work, as a result of new services in local television; more programmes being presented in high-definition; and an expansion of mobile broadcasting.
3. However, the success of new and existing media will depend on the provision of high-quality content. This content can only be produced to modern standards with technology that also relies upon the availability of spectrum, including radio microphones, in ear devices and other short-range wireless devices.
4. Therefore this response is concerned principally with the unintended consequences of the current proposals to auction off packages of spectrum, which do not make adequate allowances for the needs of Programme Making and Special Events (PMSE).
BACKGROUND
5. Equity members are the end-users of wireless technology that depends upon the availability of the unused spectrum, which interleaves between current analogue TV broadcasts. This "white space" enables Equity members and others to use radio microphones, in ear devices and other short-range wireless devices that are so essential to modern entertainment.
6. These systems are integral to the production of all manner of recorded and live entertainment - including communication within TV studios, outside broadcasts, theatre productions, live music and film production. All these PMSE uses depend upon equipment that utilises the interleaved spectrum.
7. The importance of wireless devices to these forms of entertainment cannot be overstated. The production of live and recorded entertainment simply could not happen without access to the spectrum upon which these devices depend. Moreover, it provides Equity members with the tools to carry out their work in these areas and produce entertainment which is so popular with the British public and makes the UK a world centre for cultural activities and events.
8. Ofcom has acknowledged the importance of these uses in its consultation document, but we remain concerned that the current proposals do not make sufficient allowances for this full range of uses to continue without disruption. In particular, Equity shares the views expressed by other stakeholders in the entertainment industry - that future access to interleaved spectrum must be available, affordable and continuous.
9. If access to spectrum does not meet these requirements for the PMSE sector, it is important to understand that there would be significant cultural and economic consequences. The creative industries as a whole have been one of the biggest drivers of economic growth, with DCMS estimating that they are growing twice as fast as the rest of the economy since 1997 and represent 8% of gross value added (GVA). The theatre industry alone creates an estimated economic impact of £2.6bn for the UK economy; the music industry contributes £6bn to the economy and employs 130,000 people; while the total turnover of the film, TV, commercials and corporate video sectors has been measured at £19.7 billion.
10. Therefore measures that inadvertently undermine the ability of these industries to operate will have a severe economic impact for key sectors of the UK economy and employment, which the Government is keen to support. In addition to these "hard" economic difficulties, the inability to sustain modern production standards will have negative impact in a more intangible sense - as Britain 's cultural industries would go from being a world leader, to being unable to provide the standard of entertainment that citizens and consumers have come to expect.
OFCOM'S APPROACH
11. In this consultation Ofcom is keen to stress that its primary duty, as defined by Section 3 of the Communications Act 2003, is to further the interests of citizens and consumers in these matters. While Equity does not doubt the intention of Ofcom in seeking to meet its statutory obligations within the DDR process, we believe that the unintended consequences of the proposals relating to the use of spectrum may actually be detrimental to the interests of citizens and consumers.
12. Equity's concerns stem from the proposal to end the current licensing arrangements through the Joint Frequency Management Group (JFMG) and to package and release the interleaved spectrum into the market through an auction process.
13. Ofcom has demonstrated that it understands that there are a broad range of PMSE uses and, through this consultation, will have been provided with numerous examples and additional information from the entertainment industry and beyond. Moreover, it acknowledges that "PMSE stakeholders have strongly communicated their view to Ofcom that they would prefer to retain access to the UHF spectrum on the current basis" (para 4.48).
14. While Ofcom is to be commended for acknowledging the views of PMSE stakeholders (and for its subsequent engagement with the entertainment industry and users of other PMSE services), it is disappointing that much of its research with the consultation document omits consumer views on these services (para 4.107).
15. Further engagement with consumers and citizens on the value of entertainment and services facilitated by the use of the interleaved spectrum, would have provided valuable information for the consideration of strategic options and could have helped to inform some of the proposals. In particular, it may have helped Ofcom to develop proposals that better meet consumer needs and demands and mitigate the impact of purely market-led proposals for PMSE use.
KEY PROPOSALS
16. Ofcom's market-led approach is exemplified by proposals to auction the digital interleaved spectrum. Our understanding is that this process would lead to a number of packages of spectrum being made available that would be suitable for professional PMSE users. There would then be limited obligations on the new owner to make this spectrum available for PMSE use at least until 2012, but the entertainment industry would receive no assurances beyond that date. As a result it would need to develop a bid for spectrum at the initial auction, or most likely lease it from a new owner along with a range of other commercial users.
17. Unfortunately, Ofcom has not sought to offer a solution to the key issues of affordability, accessibility and continuity for professional PMSE users. However it does state "these packages might be suitable for acquisition by an organisation interested in taking on a role as commercial band manager", or alternatively "it would be possible for existing users to work together to support such a bid, or to make a bid themselves" (para 6.104). These approaches are addressed in the section below.
18. According to the consultation document the timing of the proposed auction could be in the second half of 2008, when the contract with JFMG is due to come to an end. However, the nature of the packages available and when they could be exploited by the successful bidder still seem to be unclear. It would appear that the digital interleaved spectrum is to be made available on a regional basis, mirroring the geographical process of digital switchover during the four year period between 2008 and 2012. Equity believes that the regional disparity caused by PMSE users migrating out of the analogue spectrum in this way, provides an argument for protecting PMSE use by reserving a sufficient number of channels.
19. The approach for professional PMSE users is in contrast to the proposal to deregulate the use of Channel 69 for community users to effectively make this licence exempt.
EQUITY'S POSITON - KEY OBJECTIONS
20. As noted above Equity's approach to these matters is informed by our role in representing our members, who are the end-users and practitioners, who play a key role in the provision of all forms of entertainment. The priority for our members will be the need for affordability, accessibility and continuity of technology that supports the entertainment industry. It would appear that Ofcom's current proposals fail to meet these concerns.
21. An open auction process will most likely lead to a large commercial organisation acquiring the spectrum and seeking to maximise its return on this investment by leasing it out for the highest price that the market will bear. Applying this purely commercial approach to spectrum management is likely to lead to a market failure and could facilitate a breakdown in the ability of PMSE users to operate, due to limits on affordability and access. This is the fundamental problem with Ofcom's proposals.
22. Ofcom's apparent suggestion that existing users could put together a bid themselves fails to recognise that there are a myriad of fragmented users of this valuable resource. PMSE users have made it clear that there is no single sustainable industry which uses the spectrum in this way. There is no single "PMSE sector" as such, rather a huge and diverse range of industries, businesses and communities that utilise equipment that depends on radio spectrum. Moreover, many of these users will require spectrum on an ad-hoc basis, on individual time-limited projects that do not require consistent access.
23. Even if such a hypothetical bid could be formulated and was successful, there would be no additional benefit for PMSE users. The radio spectrum is a resource to which they already have access on a planned and relatively low cost basis through the JFMG. A successful bid would involve significantly increased cost and would not provide the entertainment industry with any extra services or support the provision more or better productions.
24. Conversely, an acceptance of the auction process and a failed bid from PMSE interests would lead to exactly the sorts of difficulties referred to earlier, which would result from access to interleaved spectrum not being available, affordable and continuous.
25. In order to achieve these needs it is important that spectrum is properly managed and used responsibly. Therefore Equity is also concerned that Ofcom is proposing a free-for-all in the use of Channel 69 by making this licence exempt. We understand that this channel is utilised currently by theatres as well as the community users referred to in the consultation document. Without clarity and certainty of use, this will vastly increase problems of interference between devices, particularly in areas where spectrum use is most intense, such as London's West End.
CONCLUSION
26. The process of DSO is well established and Equity understands the need for Ofcom to ensure that citizens and consumers benefit from the associated digital dividend. However, we believe that the best way to ensure that these benefits are felt as widely as possible, is to ensure that the incredibly broad range of entertainment and events that depend on access to interleaved spectrum are acknowledged in the new system, by managing a regulating access to the spectrum.
27. Therefore Equity would support a proposal to reserve specific channels of radio spectrum for PMSE use, prior to any proposed auction process. This spectrum would still need to be licensed and managed in order to minimise disruption to this important sector. This preferred approach would therefore require the establishment of a band manager for this designated spectrum, to ensure that access was affordable, accessible and continuous and would meet the needs of PMSE users.
28. The above approach would offer the highest level of certainty for the entertainment industry and for Equity members, as well as citizens and consumers. However, an alternative (but less preferable) approach would be for Ofcom to impose protection for PMSE users through strict conditions in the licence acquired at auction.
29. This would need to go well beyond the current plans to provide protection and assurances to 2012. It would involve prescriptive rules on access to spectrum for PMSE use, with any associated costs capped at an appropriate level, regulated (but not managed) by Ofcom. These conditions could then be implemented by the band manager on behalf of the successful bidder to ensure proper licensing and efficient use of spectrum for PMSE.
30. Equity looks forward to further discussion with Ofcom on this issue and will continue to work with other stakeholders in the entertainment industry to ensure that modern production standards can be maintained.
16 March 2007
For further information contact:
Matthew Payton
Research and Parliamentary Officer
Equity
Guild House
Upper St Martin's Lane
London WC2H 9EG
020 7670 0260
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