JOINT COMMITTEE ON COMMUNICATIONS, MARINE AND NATURAL RESOURCES debate -
Wednesday, 10 Jan 2007

Definition of Television and Collection of Licence Fee.

Chairman

I will start the proceedings which are being webcast by stating the draft ministerial broadcasting legislative proposals we are considering deal with the changed environment that Ireland is facing and how we should regulate broadcasting for the commercial and community sectors, together with the public service broadcaster. Ireland has EU obligations which we must take on board as we seek to introduce a single regulatory regime that will in an open-handed way regulate and promote the development of the broadcasting industry. This task is made all the more urgent as emerging convergent technologies change the face of what we understand as broadcasting. It would amaze my father's generation to see how on a mobile phone unconnected to wires one can not alone talk or text, but also take digital pictures and video and transmit them to another person.

Such changes inform members in considering our first theme, the issues of the television licence and the contract for and the collection of the licence fee. In that regard, the committee has agreed to discuss first the technology used and then the licence fee. I ask Mr. Kenneth Haggman, a technology expert from Domindone who has observations to make on this matter, to explain to the committee exactly what this will mean in terms of what is classified as a television set and whether one needs a television licence. Mr. Haggman is joined by Mr. Ronan Coy who is more than welcome. I also welcome Mr. David McMunn from TV3 and Mr. Cathal Goan, the director general of RTE.

Mr. Kenneth Haggman

I thank the joint committee for inviting me. As I stated in my submission, the definition of "television set"per se is more or less outdated. Historically, it has been seen as a box in the corner of one’s living room; one sits there and switches on preselected channels which someone has decided that one should watch. Emerging technologies suggest something completely different, involving multicasting from any sort of device over probably what is called IP today, with extreme band widths and network speeds. There is nothing to prohibit the use of a mobile phone to watch streaming video of high quality. There are no limits in that in the future we might not even use a screen per se but produce an image out of thin air.

As for licences, we should have some form of State-funded television because of the quality issues connected to it, but it should not be called a television licence fee. No matter how it is funded, there should be some form of Government controlled broadcasting but the current definition of "television" is very shady. Devices in the future will produce digital video or still images in a manner we can hardly imagine now and I do not see any limits.

Chairman

The iPhone was launched yesterday. Will Mr. Coy define a "television set"? Is it still the box in the corner that we had in the 1970s which showed nothing other than the national broadcaster's channel or is it capable of other functions? What other technologies will emerge in the next decade?

Mr. Ronan Coy

Television as we see it today where a television is licensed on the basis of a residence or a location will not be the television we will see tomorrow. In the future, there will be ubiquitous on demand access to television. Currently, it is up to the supplier and the receiver who says "this is all I can have at the moment". In future, it will be similar to going to Xtravision to rent a DVD. One will be able to watch whatever one wants when one wants such as yesterday's episode of "Coronation Street". It will be television on demand and mobile technologies will feed into that such as PDAs, the iPhone, tablet PCs, the BlackBerry and the new devices of tomorrow, which will enable people to watch the programmes they want immediately. Technologies will merge. Television is generally viewed in the context of broadcasting and that is defined in the proposed Bill but multicasting and unicasting are also relevant. Multicasting involves a number of people signing up for a service they only receive when they want it. Broadcasting means that it is sent out to everyone and everyone who tunes in to the channel receives the content. Unicasting involves an individual watching what he or she wants when he or she wants.

One of the problems is the definition of "television" is too broad in that everything must be licensed, including mobile telephones and the traditional television set. Internet television stations are starting up providing video on demand, video logs and blogs and so on. Somebody can make a documentary in his or her home and videocast his or her own television station. Many people are tuning in and Internet only stations in the US have upwards of 60,000 viewers. We can see movement in this direction.

Chairman

I thank Mr. Coy for that outline, which will given members an idea of the emerging technologies and what the future holds for us.

I welcome Mr. Conor Hayes of RTE.

Mr. Conor Hayes

I apologise for the delay.

Chairman

Deputy O'Malley, do you have a question?

Deputy F. O’Malley

I do. I am sorry I did not hear the beginning of Mr. Coy's contribution. I have what I hope is a temporary hearing difficulty.

I presume a licence has two purposes. One is to regulate and the other is to raise revenue. It appears that licensing is increasingly difficult.

Mr. Coy

I agree with the Deputy. Radios were licensed in the early days but when they became mobile, in cars for example, they could no longer be licensed. When radios became ubiquitous and a radio signal could be received anywhere they could no longer be regulated.

Deputy F. O’Malley

This will be the case with television. How can the licence be a revenue generating system if payment cannot be collected?

Mr. Coy

Enforcement of the regulations will be impossible. One cannot stop people in the street and ask them if they have a mobile phone. The Bill's definition of a television set includes any apparatus capable of receiving a signal. Most mobile phones are capable of receiving a signal, even if one is not being broadcast at present.

Deputy F. O’Malley

Is Mr. Coy suggesting that it will be impossible to impose a licence?

Mr. Coy

It will be impossible to impose a licence unless the definition of a television set is changed. The Bill defines the term "broadcast" and defines the term "television set", to an extent, but the word "television" is not defined. What is television? The literal meaning of the word "television" is to look at something far away. That would include video casting, video downloading, video logging and all the new technologies, which are not accounted for.

Deputy F. O’Malley

Those would be included in the legislation, would they not? Our own common definition is constrained by what we perceive as a television. As Mr. Coy says, a television is something which can be visually cast at one.

Mr. Coy

Television is something which can be visually cast but the scope of the definition needs to be refined and limited to what we see as a standard television. Otherwise, the definition will apply to everything, in which case licensing cannot be regulated.

Deputy F. O’Malley

Everything Mr. Coy mentioned in his contribution, such as broadcasting, multicasting and unicasting, is already available. YouTube, for example, allows one to load one's own programme.

Mr. Coy

YouTube is the beginning of a new revolution. In five years, rather than downloading a video made by someone else, we will be able to download full feature programmes. Rather than tuning in a television set we will have a remote control device for our computer system and will be able to tune into whatever we want to see whenever we want to see it. We will be in the fast food world of television. If we want something fast and want it now we will be able to click on it and there it will be.

Deputy F. O’Malley

Is it not anachronistic for the Department to impose a television licence? Have we gone beyond licensing? Given that the Government is always interested in revenue, is there an alternative suggestion as to how we might raise the revenue if licensing is no longer possible?

Mr. Hayes

RTE accepts that there has been a very significant amount of technological development. I am old enough to be cynical about the pace of the introduction of any of those developments.

Many valid points have been made regarding definitions. A more pragmatic view might be that there must be some interface device for people to receive a signal. We do not see why the current methodology cannot continue for the foreseeable future, provided it is defined in terms of households. At present, each household buys a television licence and there is no restriction on the number or form of the appliances in that household. So long as the householder has a television licence the issue has been overcome. With the greatest of respect to technologists, we could immerse ourselves in the issue of trying to define many of the technological developments not yet known and the practical implementation of which is some way off. Some of the devices mentioned would require a level of broadband application here that we are not likely to have in the next few years. Ultimately, we will have convergence when we witness these developments. However, to be practical, we can overcome the current difficulty by focusing on the reception of services in a household.

Deputy Eamon Ryan

I am not sure I would agree. I watch "PrimeTime" on the Internet more often than on television and find the Internet more flexible because I can watch the programme time and again. Recently, I read something about what Brian O'Driscoll had done during the game with Ulster and was able to go and watch it on YouTube. Increasingly I ask myself why I need a television set when I can see anything I want to see on the web thanks to RTE's web service. Mr. Hayes's view of how quickly these new technologies are coming on stream may be correct, but I now watch as much on the Internet as I do on a television screen.

Mr. Hayes seems to imply that we should license on a household basis. Is that what he is suggesting? We cannot tell whether a personal laptop in the home is being used to view RTE's programmes on the Internet. Is Mr. Hayes suggesting that rather than having a licensing system which checks whether there is a television in the house, it would be better to have a licence for a household? Does RTE have a view on whether rather than having an expensive collection procedure, the cost should be met from Exchequer funding, whereby each household would pay through the general taxation system, rather than through the current licensing system under which the licence fee is expensive to collect, particularly in the light of developing technologies as a consequence of which we cannot tell whether a mobile phone or laptop is being used to receive broadcasts? Does RTE have a view on this? Is it suggesting we should move towards a more general licence fee collection system on a per household basis?

Mr. Hayes

I do not dispute the introduction of various devices as I am a fan and user of many of the technologies mentioned. However, I do not think there is widespread penetration. Linear television sets will be the primary access device for many for some time to come. I am also of the opinion that the use of digital television services is probably one of the best ways to promote broadband access among poorer people, but that is a separate issue.

RTE takes the pragmatic view that, contrary to popular myth, there is no technology which can confirm whether people have a television set in their house. We have lived with this uncertainty for 40 years and it causes certain difficulties. We believe that if we make a reasonable attempt to define the access device and levy on a per house basis, as is done but perhaps with a different approach to the collection process, there is no real reason to change the system.

Deputy Eamon Ryan

What approach does Mr. Hayes suggest?

Mr. Hayes

We believe the process of collection has many built-in inefficiencies and could do with improvement. The evasion rate in Ireland is roughly 15%, double the rate in the United Kingdom. We see no reason we cannot address this issue over time. There will always be some uncertainty in that respect. The points made about devices are fine. The level of uncertainty has grown as technology has improved and the number of devices has increased. Other than breaking down a person's door and going in to his or her house, there has never been a means of saying that a given person must buy a licence because he or she has a television set that is operating.

Deputy Eamon Ryan

I would be interested to hear the views of Mr. McMunn from TV3 about the possible extension of licensing to the use of computers and other mobile broadcasting devices, like those referred to by Mr. Coy. Does TV3 have a position on that and on the current licensing arrangements?

Mr. David McMunn

I will approach the Deputy's question from a policy viewpoint, as distinct from a technology viewpoint. The current definition has been in place for many years. A great deal of money is collected under the existing system. It is interesting to examine the various things that have happened throughout Europe. The French Prime Minister, Dominique de Villepin, prevented the introduction of a similar measure when he decided it would have a chilling effect on the development of smaller high-tech industries. The technology sector requires many highpowered computers to be used. Such computers would be caught under the proposed definition, which would raise an issue. The French Administration has taken the view that the imposition of a tax of this nature on technology would have implications for the development of the technology sector in general.

The Chairman made it clear at the start of the meeting that this matter needs to be considered in the EU context. The current EU law which was set out in its broadcasting communication of 2001, makes it clear that the amount of money accruing from licence fees or state aid generally cannot exceed the net cost of the public service mission of the public service broadcaster. The Bill under discussion does not make a link between the public service mission and the fees derived from the licence fee. The proposed sections 116, 117 and 118 basically restate the 1960 Act. There are other issues in that regard, but I will concentrate specifically on this point. If the proposed definition is introduced, there will be a massive increase in the licence fee but no concomitant increase in the obligations imposed on RTE, TG4 or any other public service broadcaster. That would lead to additional problems at EU level. TV3 considers that the current definition yields a sufficient level of funds, particularly if RTE's accounts are to be believed. We do not think a change should be made until a more substantial investigation has been undertaken.

Chairman

I will call Deputy Durkan and Senator Finucane after Deputy Broughan has asked a number of questions.

Deputy Broughan

While this discussion on the proposed Bill is an interesting exercise, there is not even a remote prospect that it will be passed as it currently stands. The key point of a further and smaller broadcasting Bill that will be passed, relates to digital broadcasting. Do the various witnesses think the proposed Part VI of the Bill being discussed by the committee would have been included in this legislation if the digital broadcasting Bill had formed part of this legislation? Do they agree that the section in question is completely anachronistic in the context of what will happen in the digital broadcasting area?

On the television licence, the parts of the UK that have set a date for the switch-off of analogue services are apparently much further down the road than Ireland. If RTE proceeds in the general way that has been outlined by Mr. Hayes, will it not create a two-tier society, in effect? Does RTE's approach not directly hinder the State's aim of bringing broadband and high-tech services to every household and business? Is it to hinder the State's goal to ensure the old method of financing public service broadcasting can continue? The last speaker referred to the additional cost to business of a failure to adopt a more modern system of financing public service broadcasting. Has RTE given any thought, as the BBC has, to the ways in which public service broadcasting can be financed in the digital era given the licence system cannot be sustained in the context of new technology?

Mr. Hayes

I argue for pragmatism. According to the CSO, 99% of households have a television, which means 99% of households are obliged to have a television licence. One is not talking about a great expansion.

Deputy Broughan

If one is sitting in a Wi-Fi hotspot watching "Prime Time" or a news programme online, will it be gratis?

Mr. Hayes

Our position on domestic licences is that if 99% of all households have a television, 99% of households are obliged to have a television licence. There should not be a significant surge in licence revenue as a result of any of the proposals under discussion, especially given our position that there should be only one licence per household. That means a household can contain a television, broadband, a PDA, mobile telephone or any other device. We know that currently everybody has a device per household, which means any changes will not be great.

A second part of our policy for five years, which we sought as part of the original licence review in 2002, has been that there should be a different approach to commercial premises. We continue to take that view. It is not equitable that Citywest, which might have 1,500 televisions, should pay exactly the same licence fee as an individual in a three-bedroom house in Tallaght. There should be a form of commercial licence fee where a business uses the services it receives to make money. One does not have to adopt a punitive approach. There are many ways to make a differentiation between domestic and non-domestic use. Wi-Fi hotspots could be picked up in that way. Vodafone and O2 do not provide television content as a public service, they do it to make money and there is no reason they should not pay an appropriate amount for the content they receive. It seems logical to me.

Deputy Broughan

The great gap in the proposed Bill is the failure to address digital technology.

Mr. McMunn

The DTT Bill was published just before Christmas and it contains issues which will fall to be addressed. It is strange the Bill has come forward separately from a broadcasting Bill. One wonders why there was a need to rush the DTT Bill given the need to be absolutely certain in the digital age that provisions will be fit for purpose for a longer term. I am not certain sufficient time will be available to achieve this objective if the Bill is rushed through in one month.

Deputy Durkan

As regards the concept of television on demand and the possibility of abolishing licensing on the grounds that it proves impossible to administer the system, how will television broadcasting be controlled or funded in future? The ordinary domestic television set is a receiver rather than transmitter of messages. However, when it is upgraded in a certain manner in conjunction with a computer it becomes a transmitter. At what point will the State or other control body intervene to take some form of control over the material transmitted or received? Should public broadcasting be funded in future by a combination of a licence fee and advertising or should the licence be abolished, as Mr. Coy intimated? Does he have some other funding mechanism in mind?

Mr. Coy

Various options are available. RTE would argue that as 99% of the population has a television set, funding should be based on a domestic type licence fee. My issue with this approach is that it is punitive. Frequently, it is the lower classes or underclass who cannot pay the licence fee and they are persecuted or prosecuted for this reason. This is not necessarily the best approach as other possibilities are available. For example, one pays VRT when one buys a car. If the definition of a television set is narrowed to what we regard as the traditional television set, a small amount of a surplus could be paid at source, with the remainder taken from central funding. If 99% of the population watches, uses and interacts with television, it is ubiquitous. For this reason, rather than reducing the 42% top rate of tax by 1%, taxation revenues should be used to fund the television licence for State-funded television.

Chairman

Mr. Coy is suggesting a different model of funding.

Mr. Coy

Yes.

Senator Finucane

The cost of the television licence is €159 per annum. Last summer, television licence inspectors caused a national furore when they entered holiday home sites across the country. Like many other politicians, I received representations from people who deeply resented this action. Although they spend perhaps only two months of the year in their holiday homes, they are forced to pay for a second licence. According to broadcasting legislation, the television licence inspectors were within their rights to take this action. Surely, however, a fairer method is available for dealing with those who have holiday homes in which they stay for perhaps two or three months of the year. Is it fair to charge such persons the full cost of the television licence? Would it not be preferable to impose a composite charge for holiday home sites which takes into account the number of people within the site and the number of mobile homes? Would such an approach not be fairer and avoid causing resentment towards the operation of the television licence system?

Mr. Hayes

When I joined RTE I asked whether a television licence was required for a holiday home. We obtained the opinion of a senior counsel and the matter was subsequently pursued because the opinion was that a licence was necessary. It should be understood that the collection contract is decided by the Minister who appoints An Post to collect the television licence fee. The decisions are made in that quarter and while we can have views and comment on the issue, we do not make the decisions on it. Our view was that in general those who could afford holiday homes could afford the €155 fee.

It should also be borne in mind that 25% of licences are paid by the Department of Social and Family Affairs. It is not true to say convictions are only focused against poorer people. By definition, if 25% of licences are paid by the Department of Social and Family Affairs, it begs other questions. If one tries to split a licence, for example, one ends up with a lot of administrative costs, which makes it very difficult to do.

What originally sparked my interest in this matter was that I saw a television in the boot of my brother's car when he was going to his holiday home. When I asked him what he was doing he told me that if he kept his television in his holiday home he would have to pay another licence fee. I did not think he was correct and this sparked the whole investigation. Up to 2003 that is not how it was interpreted because people did not understand that was the law. We are seeking to have the law as it stands applied. It is also fine if somebody wants to change the law and do it differently.

Senator Finucane

Despite the fact these televisions may only be used for two months in the year, is Mr. Hayes of the opinion that a second television licence fee should be charged because these people can afford mobile homes?

Mr. Hayes

It is not so much a case of imposing the charge because one can afford it. However, one must take a balanced view. Committee members, as legislators,must make those kinds of decisions as to whether they consider there is equity in how taxes or charges of other kinds are collected. Holiday home owners have to pay bin collection charges, rates, Eircom bills, etc., so why should they not pay a television licence? There is a degree of-----

Senator Finucane

I think it is unfair. In most cases people bring their home television back and forth to their holiday home.

Senator Kenneally

We are running into a difficult area in the future in terms of the licensing regime. It will probably be impossible to license devices in the future. Many examples have already been given of why this will be the case. Are any of the witnesses aware of what has occurred in other jurisdictions which have already faced some of these problems? We are most familiar with the UK which has a licensing system that is broadly similar to ours. I am not as familiar with the situation in other countries which are also facing the same problems.

Mr. McMunn

Generally in Europe something akin to the licence fee as we know it is used in most jurisdictions. However, increasingly, there are arguments as to whether that is appropriate for exactly the same reasons as we are discussing. Central funding is becoming more frequently used. Rather than having discussions over whether RTE should get money depending on whether somebody is able to afford a holiday home, it is becoming more the case under EU law that licence funding should be linked to the broadcaster's public service mission. The focus is on what RTE or any other public service broadcaster does in terms of public service. Many countries are looking at what their public service broadcasters do in terms of public service broadcasting that requires funding and the question then is whether to do this by a licence fee, central funding or a combination of those methods.

Chairman

I am conscious of time. We have not yet touched on the question of the licence and how it is collected. Will Mr. Hayes give his opinion on what would be in the best interests of transparency and accountability? Would it be preferable to put the contract for the collection of licence fees out to tender? Does Mr. Hayes have ideas or views on whether the ministerial appointment of an agent is in breach of EU procurement laws and rules as they stand?

Mr. Hayes

I am not a lawyer, so I will not give a legal opinion. In regard to the collection contract, we have argued for many years that it would be in the best interests of everybody if the licence contract was put out to tender. That is not an anti-An Post position, it is simply ventilating the position. The contract has applied for a long time and all sorts or rules and regulations have been introduced in the meantime. The very idea of ventilating and examining the collection system will, in itself, give rise to issues. We have raised, in a very pragmatic business sense, the view that evasion is running at 15% to 16%. We believe this is double the figure in the United Kingdom and this suggests there must be some scope for improvement. The phenomenon is no more extensive than I have outlined. Putting the running of the system out to tender does not mean that An Post, which currently runs it, would not continue to do so. Tendering would make the whole process much more visible and transparent.

Chairman

Has Mr. McMunn legal experience?

Mr. McMunn

Yes.

Chairman

Will he give us his opinion on whether the EU procurement rules would be breached if the system was not put to tender?

Mr. McMunn

It is not an area I have considered in any particular detail but I believe it would be appropriate to put it to tender regularly. The whole licence fee collection system should be reviewed regularly.

Deputy Perry

How many television licences were issued in each of the years 2004, 2005 and 2006?

Mr. Hayes

In 2004 the figure was 1,235,000; in 2005 it was 1,250,000; and in 2006 it was 1,318,000.

Deputy Perry

Given that in excess of 80,000 houses are built per year, it would appear that many of the occupants have not obtained licences.

Mr. Hayes

We had extensive discussions with this committee two years ago when the Comptroller and Auditor General examined the evasion rate. We disagreed with the methodology used at the time. The number of new houses built from 2002-03 to the end of this year amounted to 370,000. In 2001, there were 1,097,000 licences issued and in 2003 there were 1,318,000 issued, which results in a difference of 221,000. While the number of new houses increased by 370,000 in the period in question, the number of new licences increased by only 221,000. While we are happy that additional licences are being sold, the economy has been very prosperous, resulting in more house builds, thus suggesting that the underlying problem over the past four or five years has not been subject to any improvement.

Deputy Perry

Considering the figures outlined by Senator Finucane, the fact that 80,000 new houses and apartments are built per year, and the double-check on mobile homes, one realises there could be a very easy catch. Everyone is obliged to pay the licence fee and, given the number of new homes being built, their failure to do so is clearly an impertinence. It appears that the work is not being done to issue licences to new homes.

Chairman

RTE does not collect the licence fee. Deputy Perry will appreciate that we must conclude. We will have the next session at 11 a.m.

Deputy Perry

I am glad to have made that point.

Chairman

Will Mr. Hayes make a final point before things start hotting up?

Mr. Hayes

Senator Finucane made a point about mobile homes. They are not included in the numbers because we are talking about permanent houses.

Deputy Perry

I am very unhappy with the way the licence fee is being collected. There is a great impertinence given that the collecting agent can justify its fees in spite of the rate of non-collection pertaining to the large number of newly built houses.

Chairman

The members of this committee want to ensure that those with mobile and second homes are covered by current legislation. The Minister and his officials could look at this area when dealing with it. I acknowledge that the officials are making notes of today's proceedings.

We will now suspend for five minutes before coming back to discuss the right to reply mechanism. I thank all those witnesses who have appeared this morning, they have been very helpful.

Sitting suspended at 11 a.m. and resumed at 11.05 a.m.