Thank you, Chairman. That is a good introduction. I thank the committee for the opportunity of making a presentation on these issues. Mr. Mohan set out where we stand in terms of our industry and the development of digital broadcasting. Currently, one third of our customer base would be digital — 65,000 out of approximately 200,000 customers. We expect that to increase to close to 100% in the next four to five years and we hope to be close to 40% by the end of this year. With our organisation, NTL and Sky, 37% of the Irish market currently is digital, which is fairly high by European standards, without the introduction of digital terrestrial television. My first point will relate to that issue.
Some witnesses earlier appeared to express concern about the allocation of the digital terrestrial licence. In fact, it is a series of licences, starting with a trial for a transmission and multiplex service provider. A transmission or distribution company might also be involved. We welcome the Minister's announcement of the trial and wish it every success. Anything that increases the level of digital coverage in this country is good for our business and we believe we can play a role in providing a ubiquitous digital service. Given the level to which digital television is already available in Ireland, we may have to consider creative solutions to providing ubiquitous free-to-air digital television here. I am not sure if the model which has worked elsewhere will necessarily succeed here. Initially, in the United Kingdom, digital terrestrial television failed and then the freeview model was introduced. Unfortunately, the freeview model which operated in the UK cannot be introduced here for copyright reasons. We know this from our own negotiations with the BBC and UTV. We know that the Irish public demands the right to watch UK television even though we do not pay the UK licence fee. There is a major demand for such stations. It is the core raison d’être for our business. Therefore, if our DTT is to succeed, it will have to have that element. I do not see how it can compete in such a vigorous marketplace without that element.
This leads me to my first point, namely, the model for licensing which allows the Minister to designate two companies — a transmission company and a multiplex company. That was introduced in 2001 and since then we have had the Communications Regulation Act 2002, which prohibits the Minister from giving directions to ComReg in regard to licensees, licences and the award of spectrum. Since those two legislative measures appear to conflict with one another, there is a need for clarity in that regard.
There was a further development since 2001, namely, European Directive 2002/20, which provides for a framework for the award of spectrum on the basis of criteria which are objective, transparent, non-discriminatory and proportionate. I admit it provides for a type of carve-up for public interest type objectives, but the DTT licensing provisions in the 2001 Act may not be fully in accord with the existing regulatory framework. We tried to be helpful on this matter and not to cause any kind of obstruction but we consider it needs to be revisited. I went into this issue at some length in my paper, the detail of which I hope was not too tedious. I would be happy to talk to whoever will draft the committee's report about what the precise points mean, although I believe I have made it reasonably clear.
Mr. Mohan made a point in regard to the must-carry provision. I heard the other day that the European Commission is considering enforcement proceedings against member states which have not carried through this general interest provision. This can be a hot topic. In the context of the must-carry provision, we have to carry RTE, TG4 and TV3 on our cable systems and we have to carry TV3 on our MMDS systems. They are our current "must-carries". We are proud and happy to carry those channels because they are the ones most viewed by our customers. However, with the development of digital television and more channels coming on line, there must be clearly defined rules as to what can and cannot be a must carry. The nub of this is covered in Article 31 of European Directive 2002/22. Under the terms of that directive there is a basis on which that can be determined.
I can foresee a situation down the line where many channels might seek must-carry status. As matters stand, if the BCI so designates, community channels can become must-carries on our networks. We have already discussed with the BCI the difficulties that will be caused if one had 30 community channels from different parts of Ireland. Spectrum and space are scarce on our networks. It might involve some kind of decision process, for example, a sharing among the community or there might be a single community must-carry channel for the whole of the country and then every locality would have its own space on that channel. There are ways around this. However, we need to get to the nub of the issue, namely, the must-carry obligations which we carry at our own expense. We do not charge for that service. There is provision in the directive for appropriate remuneration for those companies that have to carry must-carry channels. We are not seeking that today; what we are seeking is that there would be a genuine general interest criterion in place.
The final issue on which I want to touch is rather controversial. Currently, the Broadcasting Commission of Ireland has a policy document on ownership and control policy. We will make our own submission in that regard. This has been a vexed issue over the years and, to be blunt about it, there probably are too many legislative measures addressing the same issue. They include the Radio and Television Act 1988, the Broadcasting Act 2001, the Competition Act, which includes media ownership provisions, the Television Without Frontiers directive and I could go on. We consider that it is a legitimate public interest objective to consider issues such as plurality of media ownership. In other words, we are not saying that is not a relevant issue. We view media and content issues as being somewhat separate from transmission issues even though the United Kingdom has followed the model of having a single regulator, namely, Ofcom.
Parallel to that, there is the question of economic regulation of the sector as against what I call media regulation, which is considering extra-curricular criteria in regard to competition law. It does not apply solely to economic concentration, that is, to market power; but rather to the question of whether one person controls all the news in the country. There is a model in the European directives and we checked the European regulatory framework which basically excludes broadcast content. However, it is without prejudice to measures taken at Community or national level in respect to such services in order to promote cultural and linguistic diversity. In other words, in excluding broadcast content, it does not exclude the possibility that one can have regulation in this regard. It is done by a simple device of defining electronic communications services. It excludes services providing or exercising editorial control over content transmitted using electronic communications networks and services. I do not have the time today to go into all the ins and outs of this issue.
I have stated a basic possibility in the paper I submitted. In the context of the next legislative measure on this area, the Legislature would do a good day's work if it could separate these issues and help bodies such as the BCI, the Competition Authority or the various other regulatory authorities involved in this area to be able to make clear decisions. For example, in the context of considering the issue of the new owners of a local radio station on the basis of economic market concentration power or on the basis that they do not want the same body broadcasting all the news. Those are the three points I wished to make.