1 1 THE SEMINAR COMMENCED AS FOLLOWS: 2 3 MR. SNODDY: Let's get these proceedings underway. My name 4 is Ray Snoddy. It's my pleasure to welcome you here to this 5 public seminar of the radio licensing review. 6 7 When I think of radio, I think of two words: one is passion; 8 whether it be from the passion of the accidental 9 millionaires who just somehow managed to drift into radio 10 and become very, very rich; and the other, to the other end 11 of community radio where people give up their time 12 voluntarily because they believe. I have seen for many, 13 many years, there is a radio person who absolutely believes 14 in the medium, and that it's much more important than any 15 other. 16 17 Years ago I once made the mistake of semi-deliberately 18 winding-up a radio audience at an annual conference, it was 19 actually held in France, and it was the start of 20 multichannel television and I issued dire, dire threats and 21 warnings about how television would eat their lunch because 22 radio had no pictures. I was talking partly tongue in 23 cheek, partly deliberate, agent provocateur. I shouldn't 24 have done it. Jimmy Gordon of Scottish Radio Holdings went 25 for my jugular. I got anonymous hate mail with a single 26 word written on it, "scumbag" afterwards in the post. 27 28 To the extent that I wasn't joking, I was entirely wrong. 29 Radio has been a remarkable success story, and as most 30 people in this audience know, it is the fastest, one of the 2 1 fastest growing mediums, and I am happy to note that the 2 success is particularly marked in Ireland. It has taken the 3 Brits more than a decade to get from 2 percent of 4 advertising revenue to about 7.4. You look at the Irish 5 figures, Ireland is already at 9, and I see that only 6 Belgium does better in the listening tables than you do. 7 8 So it's a great passion. And also commercial radio is a 9 great success. But still, the questions have to be 10 answered. It's a scarce resource. You can do as many 11 reports as you like, of whatever length, but really I think 12 the issues come down to, really, relatively simple though 13 difficult to answer questions: Who has the right to 14 broadcast? How can they be chosen? In whose interest will 15 they broadcast? And what is the role of government in 16 setting the framework and establishing what degree of 17 diversity? 18 19 In America you don't have formats. You could be a country 20 western station one day and a classical music the next, if 21 that's what the market dictates. Not normally the way we do 22 it in Europe, but that is at least the possibility. 23 24 We are very lucky to have the responsible minister here 25 today, Mr. Dermot Ahern, Minister for Communications, Marine 26 and Natural Resources, and I am sure you'll be very 27 interested indeed in hearing where government thinking in 28 Ireland resides at this moment. My driver on the way down 29 last night assured me that in the next reshuffle Dermot 30 Ahern would be definitely up for promotion and might even be 3 1 travelling further afield than Athlone in future, and in my 2 experience, drivers rarely get these things wrong. Mr. 3 Ahern. 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 4 1 DERMOT AHERN, MINISTER FOR COMMUNICATIONS, MARINE AND 2 NATURAL RESOURCES DELIVERS HIS SPEECH AS FOLLOWS: 3 4 MINISTER AHERN: Thank you very much, Raymond. First of 5 all, could I thank you for facilitating what I regard as a 6 very important meeting. As regards the reshuffle, I can let 7 the audience know, I suppose it's dangerous saying something 8 about reshuffles to the radio sector, but within these four 9 walls I can tell you that the first time I was made 10 minister, at least a senior minister, I got a phone call the 11 night before to say well, you are in the Cabinet, but I 12 can't tell you what you are getting. The last time I got a 13 flavour of what I was getting the night before, and I 14 actually went home to my wife and the Taoiseach had 15 mentioned so many strings to the bow, as you can appreciate, 16 that I went home to my wife that night and eventually I 17 said, "I am sorry, I can't really tell you what I'm getting, 18 I won't know until tomorrow." So I expect it will be no 19 different this time around. 20 21 Just to say that I have particularly enjoyed, and I do 22 enjoy, and maybe even if I remain in this Department -- I'd 23 like to remain in the Cabinet -- I very much enjoy this 24 particular part of my portfolio, the area of communications. 25 And I suppose it's somewhat fitting that I should be 26 speaking to a radio audience in that as Raymond has said, 27 there is a passion about radio, and personally I am 28 extremely passionate about radio, because my family, my 29 children particularly, constantly give out about the fact 30 that in every room in the house, even in the shower, there 5 1 is a radio for dad to listen to whatever is on. 2 3 I believe radio is the type of medium, unlike television, 4 when people are relatively busy in their lives they can 5 still listen to the radio. You can do a whole load of 6 things and listen to the radio. I am happy doing some work, 7 I'll surprise you by saying that I actually do a bit of 8 domestic work around my house, and I am happy to do it once 9 I am listening to a radio; I'll do anything in the house 10 once I am listening -- I have a radio stuck in my ear 11 listening to whatever. So as I say, I have a bit of a 12 passion about radio, and I want to agree with the words of 13 Raymond in regard to the way in which the radio sector, 14 particularly the independent radio sector, has blossomed 15 over the last decade or so. 16 17 One of the things that we were trying to do as a result of 18 bringing all this together is basically to discuss the 19 future of the independent radio sector in Ireland. I 20 believe, as I think you'll all agree, it has a very bright 21 future. The last 15 years have seen a development of the 22 independent and radio sector in Ireland which has been 23 described as exceptional, successful, and indeed a credit to 24 the hard working individuals who have been involved in the 25 sector. It's developed beyond all expectations, and I think 26 the people in Ireland have been offered more choice than an 27 innovative alternative. The local radios provided a new 28 form of high quality programming that's relevant to local 29 communities, and I think this is one of the successes of the 30 Irish market as perhaps opposed to some of the other 6 1 countries mentioned by Raymond. I am delighted to see 2 Charlie Collins of the Independent Broadcasters of Ireland 3 here today who will give us his views on the independent 4 sector. 5 6 As you know, the Radio and Television Act established the 7 Independent Radio and Television Commission in 1988. This 8 was the legislation that paved the way for the licensing of 9 local radio; first services were licensed in '89. There was 10 talent, expertise and business acumen to run successful 11 independent radio stations. It clearly existed before 1988. 12 The guarantees and certainty given by the appropriate legal 13 framework made it possible to be sustainable into the 14 future. I want to thank the Broadcasting Commission of 15 Ireland for their excellent work -- I know they have 16 representatives in the audience -- for implementing that 17 particular framework. 18 19 It's necessary, of course, to ensure that the framework is 20 kept up to date, remains realistic to its objectives, and 21 continues to be fair in all its procedures, and that's why I 22 have decided that we would have this current review of the 23 radio licensing framework. 24 25 Licensing is rarely a simple or non-contentious procedure. 26 The issuing process for broadcasting licences, for mobile 27 phone licences, for exploration licences, perhaps even for 28 dog licences are always very closely watched. 29 30 As you all know, licensing of radio is particularly a 7 1 sensitive matter, especially in the actual franchise areas 2 involved. In this regard, I want to emphasise the necessity 3 of independence and objectiveness in licensing. As you 4 know, the Oireachtas has clearly determined that radio 5 licensing decisions should not be taken by politicians, but 6 by an independent regulator. I agree absolutely completely 7 with this principle. Assigning licensing decisions to an 8 independent body helps to ensure that those decisions are 9 free from influence and are fair. 10 11 I have gone on record already to say I am specifically 12 ruling out the possibility of any increased ministerial or 13 political involvement in the licensing process. I am of a 14 view, however, that there does need to be an ongoing 15 political role in reviewing and developing of policy, in 16 conjunction, obviously, with the stakeholders. 17 18 While there can be no role for ministerial involvement in 19 the award of specific licences, it is necessary for 20 government to engage in discussion around broad policy 21 direction. Within the telecommunications sector the policy 22 direction tool has proved a useful way for ministerial 23 involvement in driving developments in this sector. 24 The review must consider how these two objectives, 25 independence and useful political, interface can both be 26 best achieved. 27 28 Late last year I announced my intention to carry out a 29 fundamental review of radio licensing in Ireland. The 30 purpose of the review is to examine all aspects of radio 8 1 licensing in Ireland, including what is licensed, the 2 process through which licences are awarded, and to make 3 recommendations for the future. This consultation process 4 marks the second stage of the two part process. The first 5 stage of the process was the comprehensive study of radio 6 licensing in Ireland carried out by the industry experts Ox 7 Consultants. That report informed this consultation, and I 8 am delighted to see Hessel Abbink Spaink from Ox Consultants 9 here today to outline the detail of that report. I would 10 like to thank Hessel for the extensive work done over a 11 relatively short space of time in producing an excellent 12 report. 13 14 The purpose of the public consultation is to seek the views 15 of stakeholders involved in radio licences and radio 16 broadcasting in Ireland, including station owners, 17 advertisers, content creators, information service 18 providers, public service bodies, individuals, and local 19 communities. I think that all of these people are 20 represented here today; I hope they are. 21 22 While I am, of course, seeking written comment through the 23 consultation, an event like today is, I think, very useful 24 in debating the issues, in clarifying perspective, and in 25 gathering new ideas. I hope that all the pertinent topics 26 regarding radio licensing will be aired today. 27 28 The output of the review will be a range of recommendations 29 and positions that government will seek to implement. Your 30 discussions here today will inform the final decisions that 9 1 will be made on proposed changes to be made to the licensing 2 regime. It's an opportunity for everyone gathered here to 3 influence the process by which such changes will be arrived 4 at. The final date for receipt of written submissions under 5 this consultation is the 30th September, and I would urge 6 all participants to follow up today's deliberations with 7 appropriate written submissions. 8 9 The review addresses many issues. My views on these issues 10 are set out in the Consultation Paper published by the 11 Department. I would like to touch on a small number of them 12 now. 13 14 One challenge we face is that of ensuring the appropriate 15 balance in radio offerings to the Irish listener. We need 16 to make sure that there is a suitable mix of public service 17 radio, independent commercial radio, community and special 18 interest radio. For many years we have been well serviced 19 by an excellent public broadcaster, RTE. Independent radio 20 has blossomed in recent years. I believe the community 21 radio and special interest stations are a vital element in 22 developing a rich and diverse sector capable of meeting the 23 needs of the wider community. In this regard, I am very 24 pleased to see that Nessa McGann from CRAOL, the community 25 radio group, is here today to give her views. 26 27 I am anxious to ensure that the franchising and licensing 28 process work dramatically to deliver an appropriate mix of 29 public, independent and community radio including special 30 interest services. The object is to ensure and to achieve a 10 1 balance where both commercial enterprises and not-for-profit 2 services co-exist in a suitable and sustainable manner. Key 3 issues for discussion in this regard relate to the size of 4 the franchise areas, the manner in which the BCI decides 5 formats for stations, and the extent to which we use our 6 available spectrum. 7 Should we make use of our entire spectrum on the radio 8 bands? Can we have too many radio stations? How might the 9 advent of digital audio broadcasting impact on the number of 10 our stations that we have? 11 12 In relation to ownership, something I know is very important 13 to all of you, particularly those people who own the radio 14 stations, it's a critical factor in any discussion of the 15 radio landscape. Over the past few years the independent 16 radio sector has seen a degree of ownership consolidation. 17 Consolidation has benefits such as the economies of scale, 18 but it also raises some issues: does consolidation and 19 ownership act as a constraint on diversity of format? Can 20 it lead to a dilution of media freedoms and independence? 21 Should issues such as cross-media ownership be examined? 22 23 Another issue I want to emphasise is the role of the 24 listener who is, after all, the most important aspect in any 25 consideration of radio licensing. At present, there is no 26 structured mechanism existing to allow the public to feed 27 into the regulatory system on an ongoing basis. This means 28 that the views of smaller concentrated groups are often 29 heard above more general public concerns. 30 11 1 I want to find a way in which the opinions and the needs of 2 the Irish listener can be taken on board in a more 3 pro-active way than heretofore as we develop the radio 4 landscape. Ultimately our policy regarding radio licensing 5 must be driven by the interests of the listening public 6 before those of any other group. 7 8 A central topic of this review is of course the licensing 9 process itself. There are many facets to this, including 10 application, evaluation, licence duration, licence and 11 spectrum charges, appeal processes and formats. All of 12 these are important, and I hope they will be discussed 13 today. I want to select two of these issues just to 14 demonstrate how complex this area is. 15 16 If we consider licence duration and licence rollover, an 17 argument can be made that where an incumbent has met all 18 licence conditions and provides a high quality service, that 19 there should be scope for an automatic renewal. The outcome 20 would be that the public of the franchise area concerned 21 would continue to have a local radio service that they 22 valued. There would of course be a possible downside to 23 this. If the licence was open to competition, then is it 24 possible that another provider would come forward with an 25 even better offering? The approach to be adopted must 26 always be informed by what's best for the audience. 27 28 The issues of appeal with regard to radio licensing is often 29 raised. At present, appeal of a licensing decision is 30 restricted to an appeal on grounds of process alone and 12 1 through the courts. I see some merit in a broader appeals 2 mechanism. Developing appropriate appeals mechanisms could 3 prove to be a difficult task, and I think we have to accept 4 that. If a body is charged with making licensing decisions, 5 then it is that body that should decide who is awarded the 6 licence. If too broad a power is provided to an appeal 7 body, then the appeal body could, in effect, become the 8 licensing body. Notwithstanding the complexity of the 9 matter, it is a central issue to be addressed in this 10 review. 11 12 In considering our licensing procedures, we need to look 13 outward and draw on the experience of other European 14 countries and consider how they have developed independent 15 radio stations. Independent radio has been very successful 16 in the UK, so I am glad that Neil Stock of Ofcom, here 17 today, will give us the UK perspective. 18 19 So, in conclusion, there are many issues I think we need to 20 talk about but I'll leave them for our later discussions. 21 In summary, I would like to emphasise a number of points -- 22 three points: 23 24 Firstly, I expect that the consultations and the conclusions 25 of this review will result in real change in how we licence 26 radio. 27 28 Secondly, I expect that change to allow for the development 29 of a more diverse, more innovative radio landscape in a 30 rapidly transforming world is necessary. 13 1 2 Finally, I want to mention, again, that politicians will 3 continue to deal with the broader issues of general policy, 4 but not the specific issues. Actual licensing must remain 5 an independent function. 6 7 So, again, I just want to thank you all for coming. I know 8 this issue is of great interest to you. I thank Raymond, as 9 I say, for facilitating this discussion. I look forward to 10 hearing the conclusions of this consultation process. I 11 will remain on for a good while, and my officials will 12 remain for all of the day. Thank you very much indeed. 13 14 MR. SNODDY: Thank you very much, Minister, for admirably 15 setting out the complexity of some of these issues, but as 16 an outsider, would you answer me one question: why now? 17 Why have you suddenly -- did you suddenly wake up one 18 morning and say we must have a fundamental review of all of 19 this, given that I was talking to a philosopher in the 20 audience and he said, there is no success that a government 21 can't make a mess of. 22 23 MINISTER AHERN: On a general point, I think after 15 years 24 we have come to a stage where we now have a well developed 25 independent sector. I think we could sit on our laurels and 26 accept that, you know, it's fairly vibrant. But there are 27 issues out there and these were brought to my attention over 28 my two years as minister. I can fully accept that there are 29 some people who are extremely annoyed at the recent 30 licensing round; the fact that, you know, they weren't given 14 1 an opportunity, for instance, to make an appeal to decisions 2 in that respect. So that's one aspect. 3 4 The other aspects generally I think are that, you know, what 5 policy has tried to do over the last 10 to 15 years is to 6 establish the sector and get it to a stage where, you know, 7 it can run on its own. I think now we have to stand back 8 and perhaps rather than deal with it from the radio 9 stations' perspective, look more from the listeners' 10 perspective, and that's one of the reasons why I indicated 11 in the words that I said that I feel there should be a 12 better sort of forum on a more constant and pro-active basis 13 for listeners actually to feed into the regulatory regime. 14 15 MR. SNODDY: Yes, certainly listening to your concluding 16 words, I regard them as fairly clear and unambiguous. You 17 want real change and you want to move in the direction of 18 greater diversity. That's -- you are absolutely signalling 19 a really important shake-up in the legislation in this 20 country. 21 22 MINISTER AHERN: I mean, there are people in this country 23 who might agree with the view that you expressed about 24 American radio and the American landscape. Should we just 25 have a completely, you know, free for all -- 26 27 MR. SNODDY: Obey the law and get a licence and do with it 28 what you will. 29 30 MINISTER AHERN: Have a much more open, you know, suite of 15 1 radio stations, allow them to change and to be much 2 more -- I mean the independent radio sector will say they 3 are over-regulated here in Ireland. I am not sure if that's 4 the case. I mean, one of the issues I think we have to be 5 extremely careful, and I speak as a politician, is the whole 6 issue of balance in discussions. I think that's something 7 that perhaps some of the independent sector would say that, 8 you know, the BCI are down on them like a heavy hand where 9 they don't seem to be down on, we'll say, RTE as much. I am 10 not altogether sure. I just feel that now is the opportune 11 time to go back to sort of basics and look at -- you know, 12 we have a sector now and, you know, what can we do better in 13 this and what are the safeguards for the listeners? 14 15 MR. SNODDY: It strikes me, again as an outsider, to be 16 extremely dangerous to open up an appeal procedure that goes 17 beyond process, because by definition most of these 18 judgements have to be subjective at the end of the day and, 19 therefore, there is no mathematical formula that decides 20 what a good radio station is and, therefore, you'll get a 21 whole bunch of second-guessers from people who are just 22 disappointed that they didn't get the licence. 23 24 MINISTER AHERN: You will, and there is no easy solution to 25 the appeal process issue, but I mean, from my own sort of 26 profession, solicitor, I qualified as a solicitor, I mean, I 27 always had the view that, you know, when a decision is made, 28 there always should be some sort of an appeal process to 29 give the person or the people who might have a grievance, 30 who might feel that the process wasn't done properly, rather 16 1 than have to go to the incredible expense of going to court, 2 that there should be sort of an appeal. 3 4 MR. SNODDY: And usually that process has been followed; not 5 many of those succeed. 6 7 MINISTER AHERN: It's to, in effect, to see was the process 8 fair and to give an independent view of that, because to be 9 fair, let's be frank about it, since the last licensing 10 process took place, there have been some very aggrieved 11 people in the country, not only radio stations, but 12 listeners, very aggrieved with decisions and who feel that 13 the system is against them and unfair, and, you know, I go 14 back to the point that I make, I mean the general public, 15 you know, are in abhorrence of the suggestion that 16 politicians should in some way have an inference about the 17 granting of a licence, but of course when something goes 18 wrong, who is the first person they'll come looking to? 19 The politician. 20 21 MR. SNODDY: It's a hard life being a minister, wouldn't you 22 say? 23 24 MINISTER AHERN: I think we have to be clear about things. 25 26 MR. SNODDY: In my experience, when governments are faced 27 with sensitive issues that they might be criticised on, they 28 bring in consultants so that they will have someone else to 29 blame. This rule of nature has followed through in this 30 case and the government has brought in Ox Consultants, so 17 1 the man to blame is Mr. Hessel Abbink Spaink, and now you 2 have about to hear his ideas. 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 18 1 MR. HESSEL ABBINK SPAINK (OX CONSULTANTS) DELIVERS HIS 2 SPEECH AS FOLLOWS: 3 4 MR. SPAINK: Okay. Well, morning everybody. I am very 5 happy that I can fulfil my role as scapegoat and present the 6 findings of our team to this room full of specialists and 7 stakeholders and active players in the market. 8 9 We conducted a project last year, or at least we started to 10 around the same time last year with a team of say the four 11 key players apart from me: it's Tom Meuleman of Ox -- 12 officially our name is Ox Auction Experts, but the name Ox 13 remains, but it gets various other endings, so now we are Ox 14 Consultants. Then there is Helen Shaw, who is now running 15 Athena Media but has a reputation as a director of radio of 16 RTE; and Phillipa Marks from an independent UK company, and 17 she did quite some work for ComReg and other organisations 18 here in Ireland. 19 20 What I would like to do in this presentation is to run 21 through our report, so those of you who studied this very 22 carefully won't hear too much news. Still, I wanted to 23 highlight the issues we believe are important for the policy 24 making in the next years. 25 26 Basically, the issues are that we still look at what our 27 role was supposed to be and then look at the results, so 28 what is our observation of the radio landscape. As I 29 believe there is a sort of common understanding of it and 30 the most important issue is: what are the implications of 19 1 our observations for the licensing procedures and the policy 2 making? 3 4 First of all, the scope of the study. Well, this is just to 5 remind you it is looking at the whole sector, looking at the 6 objectives of the original, the 1988 Act, at later 7 legislation and what has been achieved. What can you 8 change? And how this process is run and what's the feeling 9 about it, and can we improve it? Fundamental issues like 10 the licensing: To whom? How many? Duration, etc. And 11 what I must say, from our experience also from having worked 12 in other countries, the policy interface is of a certain 13 complexity. The Minister already mentioned that the 14 politicians should stay out of the decision making process 15 to a large degree and only have the political visions there 16 and then the decision making on licensing should be in 17 independent organisation. 18 19 Well, apart from that, we did also spent the time, we 20 analysed the situation in various countries in Europe and in 21 New Zealand and we looked at financial issues. These issues 22 will come -- I will touch upon them during the presentation, 23 some in more extent, some in a lesser extent. At the end of 24 the presentation, you can see on the agenda, there is an 25 opportunity to ask questions. If something is not clear or 26 illegible -- I don't know whether you can see it all from 27 the back -- please ask, but I would like to reserve the 28 discussion for the end of the presentation. 29 30 Well, first of all, I think the Minister already mentioned 20 1 the independent radio. The observation, it's very 2 successful, and radio, as such, is very popular in Ireland. 3 That already started when RTE was the only provider of the 4 service, but it continued. The market share increased in 5 audience share, in terms of audience share, and -- well, 6 it's flourishing, and that's already good. And the last 7 remark, there is an interesting station that sounds a bit 8 like, well, a silly one, but if you look at the telecoms 9 sector, when GSM or new MTS licences are offered, then 10 governments are happy if there are more parties interested 11 than the number of licences they have on offer, and many of 12 them stay unsold. So the sector is still vibrant, you may 13 say, or whatever reason. 14 15 Interesting, in Ireland, the term 'independent radio', which 16 is anything apart from a public service, public broadcasting 17 service radio such as RTE, including purely commercial radio 18 but also the community radio and special interest radio. We 19 should notice that these radio stations, although called all 20 independent, are different in character, in objectives. And 21 in the study, and also in the international comparison, we 22 primarily looked at the commercial radio, and -- well, I'll 23 come across issues of the community and special interests 24 when appropriate, because the basic feeling is the radio 25 stations that are funded by other means than, say, a licence 26 fee, and how can they survive? 27 28 The success of Irish radio can also be demonstrated in an 29 international perspective. If you look at market shares -- 30 audience shares it's called here -- it is some 55 percent, 21 1 which is high, even compared with other countries. So there 2 is a huge interest. Now, this figure may have two meanings. 3 It may make a statement about the quality of the public 4 broadcaster, if that is broadcasting important radio 5 programme, then obviously the market share will be high of 6 the commercial radio station, but that's not the case 7 because the audience share, or the listening times here are 8 also high, if you look at it from an international 9 perspective. So radio is popular, and independent radio has 10 a significant role in it. 11 12 Which immediately raises another issue that's also in other 13 countries coming up. If more than half of the listeners 14 listen to commercial radio, what is the reason of having a 15 public broadcaster and how should it differentiate itself 16 from a commercial radio station? That's a very, yeah, 17 fundamental question. Not easy to answer, but I think it is 18 a very valid question and I think it's a question also that 19 public broadcasters should ask themselves, because it's 20 their raison d'etre and it's important. 21 22 And then we are entering the discussions of licence fees and 23 how to spend the money of the licence fees. That was 24 outside the scope of the study, but I like to touch upon it 25 because it's so crucial. 26 27 Well, if you look at the market, I mean one of the 28 objectives of the study was to look at whether the policy 29 objectives were still applicable, were met and need changes. 30 In summary, we can say there is a vibrant market, so the 22 1 first issue of securing orderly development of the markets 2 is fulfilled. 3 4 Diversity: The combination, again, of the community radio, 5 special interests radio, public broadcasting and commercial 6 broadcasting created already diversity. 7 8 Quality of service: Well, that's more difficult in this 9 context. Of course it's quality because people listen to 10 it, but what's quality in radio terms? That, we can 11 organise a different session on that one. 12 13 And services in Irish language: That's fine. 14 15 Plurality: That's a difficult one. I come across that 16 issue later on. 17 18 The coordination and use of frequencies: Well that's a 19 different -- it is used to a satisfactory level. 20 21 Still, you can be happy and say we can move on to other 22 topics and say we met our objectives and that's fine. The 23 observation we made is that these objectives are very 24 applicable, very useful, but they are not very specific 25 special. I mean, apart from the sentence that surfaces in 26 Irish language, you could use these objectives also for 27 Norway, the Netherlands or Germany, and then you just change 28 Irish by German or whatever language you have. So they are 29 not very specific. So where the differences and the 30 discussions starts is on the implementation: what are the 23 1 actual decisions within the objectives? 2 3 Now, the dynamics of the market are such that making the 4 objectives more specific is not very useful, but the message 5 is, you should always monitor the implementation of the 6 policy or the objectives to see whether they are still 7 useful or need change, so the limitation. 8 9 One thing is, and that's already also referring to the 10 introduction by the Minister, that not all the spectrum is 11 used, according to the ComReg study, and also if we observe 12 the market and look at the number of stations that people 13 can receive, especially in rural areas, then it's lower. I 14 mean, the people in Dublin are well served, but in rural 15 areas the number of stations is on the low side. And there 16 is spectrum available, and -- well, our feeling is it should 17 be used. I mean, just to offer more services. The Minister 18 mentioned the issue of, if you have the spectrum available, 19 should you use it? Well, that's a sensitive discussion. 20 The fundamental thing is, it happens to be a scarce 21 resource, and what is scarce? Meaning that the amount of 22 the resources that are available is less than the demand 23 and, in economic terms, at a certain price. But if there is 24 more available, why should you regulate it? I mean, then 25 it's like a shop or whatever, is there a need to regulate? 26 But that's one of the issues. 27 28 Now, what we feel is that there should be a clear policy 29 development, and that's what I now I come to, the licensing 30 part. In licensing there are essentially two questions: the 24 1 what question and the how question. And the previous 2 remarks were primarily about the what question -- what 3 should we license? And then I'll come to the issue of how 4 later on. 5 6 The feeling is, or our observation is that at the time, 7 we -- there are spectrums identified, expressions of 8 interest phases are started, comments are welcomed and then 9 a decision is taken on issuing the licence, type of licence, 10 franchise area, etc. The feedback we received is that it's 11 not always clear why, how the decision of BCI came or 12 resulted from the inputs from the market. Okay, that can 13 be, but that's a way how you do the process. But what we 14 feel is that what's missing is a sort of guideline -- what 15 is the priority for the next coming four, five years for the 16 policy? And so you come to the question: do we want to 17 develop a national market, regional market? What's the 18 position of the community radio stations, special interest 19 groups, etc.? I would like to work out an example to 20 illustrate the point more. 21 22 If we look at the current situation, then there are a couple 23 of local stations. I tried to sketch the franchise areas, 24 it's not in a precise way but it gives a feeling. The 25 advantage of this system is clearly that you can focus on 26 the local community so you can serve the people better. 27 That's fine. However, the disadvantage is that the market, 28 advertising market, as such, is relatively small. And I 29 think here is a fundamental issue. If you look at the 30 radio, commercial radio, independent radio sector from a 25 1 media perspective, then the question you try to answer is: 2 is this interesting for the people living in this franchise 3 area to have another radio station? We believe that the 4 fundamental question should be: is there a market for a 5 radio station we have in mind? So, is there a specific 6 group of advertisers in this region that want to -- who want 7 to buy advertisement time from, or want to sell 8 advertisement to the radio station? That's the fundamental 9 question: is there a business case in that region? And that 10 should be taken into account, because otherwise you get 11 radio stations that hardly can survive, and for that reason, 12 in scarcely populated areas it will be hard to introduce 13 more stations because there is not a much -- the market is 14 too small to sustain more than one player, which means that 15 the listeners only have the choice of one independent radio 16 station. That's a choice, but it is a very fundamental one. 17 18 Of course, you can scale it up, get stronger markets, but 19 then you get the issue, how important is the local content? 20 How do you regulate it? Well, in other countries there are 21 solutions in the way of having local editions, and that's 22 more of local editions of news, sometimes this is an hour of 23 where every city has its own programme. It's more 24 expensive, but it is doable. But, okay, you can increase 25 it. 26 27 The last step could be international. That's a very obvious 28 one; that is the strongest advertising market. Then you get 29 the question: should we differentiate in formats? So have 30 all the same adult contemporary or middle-of-the-road type 26 1 of music stations until they die or should we differentiate? 2 But it can help. It will increase competition. But the 3 trouble you will face is that it will also introduce 4 competition with RTE, and then we come to the discussion of 5 what's the position of the public broadcaster? How should 6 it position itself relative to the parties that are 7 depending on commercial income solely? That's a fundamental 8 issue and that's a discussion that is not easy. Of course, 9 these are the extremes. It could be that you say, okay, we 10 need at least one local station and on top of that we have a 11 couple of national stations, or one regional or two regional 12 or whatever, so you can make all kinds of mixes. But we 13 believe that in order to get a sustainable market, a viable 14 market, you need to do this and have on this a discussion. 15 16 So for developing this policy, there are a couple of issues. 17 First of all, we feel -- I mean, ComReg mentioned the 75 18 percent that's used,the 25 percent that's available. It 19 would be worthwhile to do a fundamental study of what 20 exactly is available, and even if we would improve spectrum 21 planning, could we free up more spectrum? That's 22 important. So what's available? That's the first question. 23 24 Then I mean, survey of listeners, yeah, the needs, the 25 market needs, they are extremely difficult to follow. I 26 mean, if you ask people 'what are you missing?' It's 27 difficult to answer. But on the other hand, there are 28 market research bureaus that do perform these type of 29 studies, so it can be done. It is difficult. So there is 30 an element of judgement in this, whatever you do. 27 1 2 And what we believe economic analysis should be more. It's 3 not to say that there is a sort of standard economic model 4 that gives answers to all questions on feasibility, but at 5 least you should have a feeling of the feasibility of having 6 a specific format in a specific franchise area. 7 8 Then some options. If you look at scaling up, making larger 9 franchise areas. It could be by combining current stations 10 local stations. It could be in combining advertising or in 11 ownership, but you need to accommodate the policy for that. 12 So look at the ownership rules, look at opportunities for 13 networking and -- or define larger franchise area. 14 15 A very general remark is the fact that the digitisation, 16 especially if you look at digital radio (DAB), that will 17 differ or change the whole dynamics of the discussion on 18 ownership, plurality and diversity, because then you 19 can -- well, you get a multiplex operator and how is the 20 multiplex operator is positioned in this field? If you are 21 interested, we could address it in the discussion. 22 23 The how question. Often generating a lot of discussion. 24 Well, in Ireland the beauty contest is used for all the 25 assignments. Basically the beauty contest can be subdivided 26 in two aspects: one is the business plan, and sometimes 27 people believe that you can rank business plans from ugly to 28 very beautiful, but that's not the function of a business 29 plan. A business plan should only prove that it is 30 feasible; that it's viable; that you have thought about what 28 1 you are going to do; that you make -- that you can believe 2 it. That's a rather technical plan. I mean, in the bank -- 3 we are subsidiary of Frabo Bank, it's common practice to 4 look at business plans. There is basically no taste in it. 5 It's a simplified statement, but I'll leave it as it is. 6 7 More interesting is the aspect is the radio station is 8 offering us a new format. It wants to add something to the 9 market. I mean, generally the commercial radio stations or 10 the independent radio stations all are driven by, yeah, some 11 ideal they want to achieve, and then the question is: do we 12 like it? 13 14 Now, in the discussion it was mentioned that there is this 15 element of subjectivity. Yeah, subjectivity, you easily 16 associate it with personal preference, but I think in this 17 sector, the personal preference shouldn't be the dominating 18 factor. If you have a policy that says, well, we identify 19 that certain types of stations are missing, or there is a 20 need for something or whatever, then you can make a 21 judgement on your principles that you can -- well, that 22 shows the offering of station A was better, or meeting the 23 requirements better than station B. What it means is that 24 the decision shouldn't depend too much on the individual 25 that takes a decision. If you would form another group of 26 decision maker, they are presented with the same procedures 27 and same facts, a similar decision should come out. Now, of 28 course there are obvious cases in grey zones that people 29 will vote for A instead of B and the other way around, but 30 the subjectivity, as such, should be defined in a rather 29 1 precise way: what is the subjective element? And, well, 2 that's rather fundamental, I would say. So it's not enough 3 to say it is a subjective decision. It is not, like the 4 section of the nicest car, or something, where you say, 5 where you just look at the ten people in the room and what's 6 the preference? No. There should be some reasoning behind 7 it. 8 9 Well, how can we realise it? We believe that for the 10 business plan evaluation, the BCI people, executives, should 11 have more prominent role; could also be included in the 12 board and ranking, doing the work. 13 14 A scoring mechanism, I want to show an example later on, can 15 help. 16 17 And, yeah, then there is the sensitive issue. If you look 18 at larger franchise area, and that's more the procedure 19 that's used, for instance, in the UK, you can use a 20 financial bid to determine. Which means that you say, okay, 21 we have a couple of bids, they are all offering a service we 22 like, that meets our requirements. For the final decision 23 it's their financial bid that determines who will win, and 24 the financial bid may be even a payment or a royalty or 25 whatever. 26 27 And what's quite important, the reasons should be published, 28 that's something that Ofcom is doing, or the Radio Authority 29 in the past, is doing very thoroughly. 30 30 1 When we were doing the project we discovered that the 2 scoring mechanism caused some confusion. What I would like 3 to show are a few slides from the publication of the 4 decision that was made in the Dutch licensing process that 5 happened two years ago now, just as an example. There is a 6 lot of Dutch, so I'll take you through it. 7 8 First of all, this was for -- there were a couple of 9 national licences. This was for a licence that, yeah, in 10 Dutch, it was called special music that was modern, recent. 11 The outcome was that for the four winners, the four parties, 12 the scoring was presented like this: The left column is the 13 content that how did it meet the requirements that were 14 defined up front? And the second was: Did they prove or 15 did they make acceptable that they can offer that format? 16 And on this basis, there was a decision table; the double 17 plus meant that ID&T would win this contest. 18 19 The programme, the content issue was not specified, and over 20 in the initial requirements it was defined a maximum amount 21 or minimum amount of certain types of music, and the scores 22 were assigned relatively. There was also a lot of text 23 added to this table, but that's all Dutch and will not 24 reveal too much. 25 26 This is the evaluation of the business plan, also through 27 Dutch. It's one of the parties. What you see is about the 28 financial statement, there is a remark and some -- it's 29 obviously that this is a scant version of the report. You 30 can find it on the website if you are interested in Dutch 31 1 reports. 2 3 The financial statements. Well, the property confidential 4 statements are taken out. Interestingly, there is a 5 statement saying that the market that the company was 6 anticipating was probably too high. It was more than the 7 current market and more than the reference table that was 8 used. This work, by the way, was done by accountants, 9 independent accountants, but nevertheless they got a plus 10 because overall, it was a good business plan. 11 12 So that's the sort of -- well, that's how you can use the 13 scoring mechanism. The thing is, of course these decisions 14 are sometimes challenged in court, but that took only one or 15 two weeks and none of the people that complained got any 16 success. In this court it was -- there were two -- it was 17 not only the process, but it was also the decision itself 18 that was evaluated, but it was according to what was stated. 19 20 Finally, if we look at some other loose ends in the report. 21 We believe that in view of enforcements, that the BCI has a 22 terrible or a very difficult task because there are many 23 details that need enforcement. At the same time, the only 24 measure that BCI basically has is a sort of death penalty, 25 that is the licence withdrawal or suspension, so that makes 26 is very hard. We believe that penalty points could be an 27 alternative. Yesterday from the driver, I heard his 28 comments on the penalty points in traffic. Obviously if 29 you're doing that type of job, you don't like it, but at the 30 same time, it appeared to be quite effective. So, that 32 1 helps. You can include it in an annual report, so it's 2 clear when it's coming up, and that helps. 3 4 Furthermore, there is a lot of attention in the current 5 situation on how the process is done. So, how are you 6 running your company? Who is in charge? Whom are your 7 directors, etc.? Our feeling is the emphasis should more on 8 what programme are you producing? Is it still meeting what 9 you promised? Is it still meeting demand? That's a 10 commercial issue; you don't need to regulate that. But is 11 the output still correct? And how you come to the output is 12 important when you evaluate the business plan and the bid to 13 see whether you can believe it. But for the rest, leave it 14 as it is, apart from criminal acts, etc., obviously. 15 16 Yeah, rollover. The Minister mentioned it. There is an 17 issue. Sometimes it's more of an academic description, we 18 believe. There will be -- our proposition is that if the 19 licence remains essentially the same, if there is a well 20 performing market player, and if you don't identify any 21 interests from other parties, serious interest, then take an 22 easy mechanism, don't introduce all kinds of complexities. 23 That's the feeling. 24 25 The other -- well there is one statement that we should add. 26 If you look at the market where there is a strong player, a 27 well performing player, then there will be little incentive 28 for commercial parties to compete with that player in the 29 market because the chance of winning that licence is so low 30 that you are wasting your time, fundamentally. So the 33 1 question is whether it makes a lot of difference. The issue 2 really is here: what's the documentation that the 3 interested parties need to hand over and what does it add? 4 That's the question. 5 6 Then, digital platforms. Well, I understood that digital TV 7 is of interest. Digital radio is also there. In the UK it 8 seems rather successful by making combination between the 9 analogue licences and participation in digital programmes. 10 That seems to work well. While the issue here is that, say, 11 in Northern Ireland there is digital radio; in Ireland there 12 is not. You -- some day there will be digital broadcasting, 13 so anticipate it, but because there are many issues related 14 to it, there is a spectrum issue, there is a market issue, 15 there is a policy issue, we propose to have at least a sort 16 of digital platform; combine the expertise and define your 17 policy. 18 19 Basically, these are the issues in the report. There are 20 probably a couple of other issues we could discuss. There 21 is time open for questions. 22 23 MR. SNODDY: I have just got one before I move to the floor. 24 From your international experience, I know the money spent 25 on content obviously varies, but from your international 26 experience, can you state a viable minimum size for a 27 commercial rather than a voluntary radio station? Can you 28 say below this population level it can't possibly work? 29 30 MR. SPAINK: Well, this is of course not a rocket science 34 1 figure. But if you look at an indication -- at least we did 2 the exercise in the Netherlands, we came with a minimum size 3 of, say, a quarter of a million people in the age group 18 4 plus; a quarter of a million. So that's larger than the 5 franchise areas here of the smaller radio stations in order 6 to have a market that may be sustainable, and that depends 7 on the area, of course. 8 9 MR. SNODDY: Though it does raise questions on your theory 10 that more should be licensed, it raises questions about how 11 much competition there can reasonably be at such a level. 12 13 MR. SPAINK: Yeah, that's fundamentally the question. I 14 mean, if you would increase, enhance diversity and have more 15 stations, then it seems that that is feasible as, say, a 16 larger scale only. So that -- I would prefer to go to it to 17 look for national level to get some diversity in, say, types 18 of programmes, types of musics, or whatever you like, and 19 then have a facility for local radio and that may be, say, a 20 near monopoly in a region; that doesn't matter. 21 22 MR. SNODDY: In the way that local newspapers have largely 23 become near monopolies because the market can't bear more 24 than one. Questions from the audience I am sure. This is 25 the heart of the material, so deal with it now. 26 27 Sir, and for the record could you say who you are and who 28 you represent. 29 30 SPEAKER: My name is Dave Heffernan from Mission Media. Of 35 1 course, the question is for a consultant but I'd like to 2 address the question to the Minister who has the ultimate 3 responsibility, and I know it's not an easy question but 4 it's one to think about. We call ourselves a Christian 5 country, or at least we used to do. We still have the 6 highest church attendance in Europe at 50 or 60 percent 7 church attendance every week, and yet we are the only 8 country in Europe that has no Christian radio station. I am 9 just wondering if the Minister or his consultants have any, 10 maybe, response to why they think that is? 11 12 MR. SNODDY: Minister, wouldn't that be a form of diversity 13 too? 14 15 MINISTER AHERN: Yeah, it would. But, again, you know, 16 after been coming under some pressure from proponents of 17 Christian radio to allow, and I know the BCI have allowed a 18 spectrum, those are issues that, you know, I would not get 19 into because, in effect, if we were -- they are asking that 20 I give a derogation of the legislation to allow a Christian 21 licence to be granted, and I am not prepared to do that on a 22 basis that I would, in effect, be -- I would then be under 23 pressure, when I say "I", the Minister would be under 24 pressure to do it for any other myriad type of, we'll say, 25 specialist radio licences. And, again, it goes back to the 26 principle: I don't think the Minister should be getting 27 involved in this issue of granting specific licences. I 28 would obviously, at policy, level, encourage diversity and I 29 would encourage the BCI to bring forward, you know, views in 30 that regard, but it's no more than the granting, in my view, 36 1 of a licence to a jazz radio station or a pop radio station, 2 I don't think that it's something that I personally, as the 3 policy maker, at a level would be dictating. 4 5 MR. SNODDY: Do you find that a fair answer in the 6 circumstances? 7 8 DAVE HEFFERNAN: No. 9 10 MR. SNODDY: I thought not. Why not? 11 12 DAVE HEFFERNAN: No, because I can understand the statement 13 but it still doesn't answer the specific question. France, 14 for instance, has a network of 51 community christian radio 15 stations. Even England, who has a tiny church attendance 16 compared to Ireland has a number of Christian radio 17 stations. 18 19 MR. SNOODY: They used to be banned but the ban was lifted 20 by legislation. The concern was to keep out the American 21 hot gospelers who was mostly after people's money, but a way 22 has been found to do that. 23 24 DAVE HEFFERNAN: There is a bad way to do everything, 25 including Christian radio. I'd just like to raise the 26 question, I mean I know the question is better answered by 27 the BCI but this is the Minister's forum, so I thought I'd 28 raise the question here. For instance, I believe the 29 previous minister, Sheila de Valera, had some sympathy or 30 influence towards a licensing of a religious radio station, 37 1 I know that's in process. But it would be wonderful if this 2 Minister could say to the BCI, well can you answer the 3 question why we are the only country in Europe that doesn't 4 have a single Christian radio station? I know there are 5 lobby groups approaching the Minister, but just as a general 6 policy issue, why are we the highest attendance of church 7 in, presumably the most Christian country in Europe, whether 8 the media agrees or not, yet not one, a single Irish 9 Christian radio station. It baffles me. 10 11 MR. SNODDY: Doesn't that come close to a policy issue 12 rather than achieving your Jazz FM radio station. 13 14 MINISTER AHERN: I suppose it's one of the reasons why we 15 are having this type of forum because we don't have that. I 16 would have an open mind in relation to religious stations 17 per se but not just necessarily christian radio stations. 18 When we designate it as a Christian radio station, then I 19 think we are getting into specifics, because we now live in 20 pluralist, definitely a pluralist society, multi-cultural 21 society where there are many more people who are not 22 Christian in this country. So I mean, I am waiting to hear 23 from people, as a result of the consultation process, in 24 relation to it. I mean, we had the issue about the 25 religious advertising, and I know people probably like 26 yourself found fault with the decision I made to continue 27 the ban, but I did that for very good and valid reasons, and 28 I would will challenge anyone who has an interest in this to 29 have a look at the documents which are available on the web 30 as to why those decisions were made. And they go back to 38 1 the point that Raymond made in relation to the proliferation 2 of, you know, gospel advertising, gospel religion 3 advertising, sort of forcing one group's views on others 4 through medium, whether they like it or not, by advertising. 5 6 MR. SNODDY: I think we have to move on. Yes, Sir, could 7 you say who you are and who you represent. 8 9 SPEAKER(JACK O'DONOGHUE): My name is Jack O'Donoghue and I 10 represent CCN, Christian Communications Network, and I must 11 say, I side completely with this man here. You know, there 12 is something more fundamental that we have to look at: the 13 state of our country. We have gangs all over the place, we 14 have drug addicts, we have drunkards, we have suicides, we 15 have a lot of things bothering us, you know, and there is 16 one answer to all these things, and that is a Christian 17 input. It doesn't matter what denomination it is, it is a 18 Christian input to try and get people aware that they have a 19 life, that they have -- that they are loved, you know. It's 20 something I think is fundamental and it is basic. 21 22 MR. SNODDY: Thank you very much. You certainly believe in 23 the power of radio, no question. 24 25 SPEAKER(GARVIN RIGNEY): Good afternoon, my name is Garvin 26 Rigney from the Specialist Radio Association. I represent a 27 number of people looking for specialist radio licences. I 28 have worked in community radio, pirate radio, commercial 29 radio over the years, and just going on from what Dave was 30 saying about Christian radio, I would agree with that, and I 39 1 am not making the point necessarily about Christian radio, 2 but maybe a question for Mr. Spaink would be: is the 3 over-regulation of the industry the reason why maybe more 4 special stations can't exist in a smaller market? For 5 example, I was in Ruba last week and there is 15 radio 6 stations; population: 48,000 people. So I am just wondering 7 is that a reason maybe why the over-regulation with news, 8 sport, you might have seven or eight staff on any one 9 programme, is that a reason why maybe there is no more 10 diversity options, because of the population size? 11 12 MR. SPAINK: Yeah, well, this is not a simple yes or no type 13 of question. There is an issue, and that's also related to, 14 say, the Christian radio. Coming back to the economics, 15 there is a funding issue; if Christian radio can work as a 16 commercial radio, then it should have a special market of 17 listeners that are identified as advertisers, and that also 18 applies to jazz radio, whatever radio, so you should have a 19 target group. That's an issue. Size is important, 20 definitely. But you see even in small communities that 21 there aren't many radio stations. The thing is that 22 at -- there are always the pirates, say, the more the 23 amateurs -- I hope I don't insult them because their passion 24 is incredible generally. It is initiative -- radio 25 broadcasting is something you can do at low cost from your 26 home, basically. So there is an opportunity. So if you 27 don't regulate the market, what you often see happening is 28 that all these pirate stations pop up, or they are not 29 pirates because it's not regulated, but all these 30 individuals and they start to interfere and it ends up in a 40 1 mess. 2 3 Now, the other end is, this is a lot of regulation. Now, 4 you say can that block or is that a barrier to entry? It 5 may be, but it is not necessarily a barrier. I mean, the 6 question always is: is there sufficient amount, so do you 7 get many listeners? What we saw in other countries is that 8 there are many initiatives of specific groups of -- well, 9 different initiatives in our country for Friends of Animals, 10 etc., among themselves they believe that they should address 11 a large audience, but if you look at the reality, it didn't 12 happen. And in our country, perhaps it was a bit simpler 13 because we have a cable radio network, so if you don't have 14 a frequency on air, you can't enter the market and there it 15 didn't happen. So there are more subtleties in it, so 16 obviously if you just say no to any different type of radio 17 station, then, yeah, obviously it's a barrier. 18 19 But the final aspect we shouldn't forget. I mean, for a 20 more professional station, well, as a rule of thumb -- well 21 for a larger national station, I think a million euros 22 annually, two million is not too low. So where is that 23 funding coming from? I think that's the question. 24 25 GARVIN RIGNEY: Just a point, by the way, on that. First of 26 all, I am not advocating, necessarily, pirate radio. What I 27 am trying to say is to get the pirate stations out of pirate 28 radio by licensing special radio stations so they are not 29 pirate anymore. So they are employing people in the 30 industry, they are bringing revenue in and they are 41 1 supplying a service to the market. Now, whether one owner 2 should maybe have three or four stations because maybe five 3 or six companies cannot survive in Kerry, for example, maybe 4 the Kerry stations should have maybe four or five services 5 under the one umbrella. 6 7 Also, by the way, like Christian radio, we don't have -- we 8 are the only country in Europe, in the world as far as I 9 know, without an oldies radio station. We don't have a rock 10 radio station anywhere in Ireland. I think Dublin is one of 11 the major cities in the western world without a rock radio 12 station. Surely Dublin can have a rock, an alternative 13 rock, maybe a classic rock station, whether it's run by a 14 various amount of companies, whether it's run by a large 15 number of companies or whether it's run by small stations, 16 maybe five or six employees surely should survive in a 17 smaller advertising market. In other words, we submitted a 18 document to the Minister from the Special Radio Association 19 outlining how niche small stations can survive on maybe 2 or 20 3 percent of the market. So that's the point I am trying to 21 make. Thank you. 22 23 MR. SPAINK: I'd like to add one more. It's for that reason 24 that we say there should be some sort of spectrum review, 25 that you know at least what's available, because 26 the pirates make use of a frequency that is not in use, and 27 so, if you have clear, a clear mind of what's there, what's 28 on the shelf and you have a policy on how you will 29 distribute it or assign it, then I guess the issue is 30 resolved automatically, apart from the effective life that 42 1 pirates will pop up always, but that's an enforcement issue. 2 3 MR. SNODDY: Minister, that's surely a very good point, that 4 spectrum review would be very necessary to know what you 5 have in order to licence. I just look at the UK example, 6 over 20 years the number of times when they have said that 7 this is the last licence, and then the engineers go away and 8 have another look and my God they find 20 more licences. I 9 mean, it's a moving feast, but don't you need that sort of 10 basic technical advice. 11 12 MINISTER AHERN: We would be in favour of doing a spectrum 13 review, yes. 14 15 MR. SNODDY: One last question before the coffee break. 16 None of these people are going away just yet, so you can 17 have another go. 18 19 SPEAKER(AIDAN CONLON): Aidan Conlon, local radio listener 20 in the northwest. 21 22 I'd like to -- 23 24 MR. SNODDY: I applaud your presence, Sir. You have come 25 simply because you like radio, right? 26 27 AIDAN CONLON: As the Minister will probably be aware, 28 myself and probably others from different parts of the 29 country wouldn't be here but for the feeling that we have 30 that our views, or our interests, have not been represented 43 1 in some of the decisions of the BCI board. But leaving that 2 aside, I would welcome what the Minister has said in terms 3 of this review, taking into account the opinions and the 4 needs of the listener, and that is extremely welcome. I 5 suppose there is some positive things to be got out of the 6 decisions of the BCI, even though they were not welcomed by 7 many in the sense that it has brought forward this review, 8 among other things, I am sure it's not the only thing. So I 9 applaud that. Sadly, having listened to the Minister on a 10 number of occasions, it will not affect some of the 11 decisions that are already being made. But I would urge 12 this review to take the listeners into account. I think 13 particularly in the last maybe seven or ten years, the 14 commercial side of things has taken the forefront in terms 15 of supporting the radio stations, which is fine, in terms of 16 the commercial and the economic side of things, but -- 17 18 MR. SNODDY: Can I just interrupt you there, the Minister 19 made it absolutely clear he is very, very interested in 20 finding a mechanism to represent the views of the ordinary 21 listener. Have you got any proposals as to what sort of 22 mechanism, what sort of body that should be? Because I 23 think the principle has been already agreed. 24 25 AIDAN CONLON: I think the important thing is that a lot of 26 stations that were up and running were supported strongly by 27 the listeners. The listeners' views, by and large, were not 28 taken into account. Even the listenership figures weren't 29 used, and I compliment the Ox report as well in terms of the 30 way he described the different aspects in terms of the 44 1 subjective components and also the objective, or the 2 business plan. I think that was not taken into account in 3 previous decisions, and hopefully it will be in future 4 policy, but it was not, and it has left, as of today, in 5 actual fact, Northwest Radio has announced that it will not 6 be on the air from the 1st of October, so basically, 7 listeners who have listened to that station in an area, and 8 Mr. Spaink has mentioned rural areas having difficulty in 9 getting numbers of stations, and that is true. So they will 10 miss that station even more. I'll just make that point for 11 either the Minister or Mr. Spaink to make any comment he 12 might wish. 13 14 MINISTER AHERN: Well, I have to go out and just do 15 something for RTE -- the alternative. That's one of the 16 reasons why I decided we'd have this review, because I knew 17 there were people like yourself who were gravely 18 disappointed. And I suppose no matter what decision is 19 made, whether it's made by the BCI or some appeals body 20 thereafter, if there is to be one, there will still be 21 people disappointed. But I go back to the point that I 22 make; that in fairness to the BCI, and with respect to the 23 BCI, I don't believe that a decision made by one body and 24 with no recourse to an appeal or a second bite at the cherry 25 is fair; that in every walk of life there is always a second 26 chance for people to put their views forward, and then at 27 that stage, fair enough, if they don't win, they don't win. 28 That's the reason why we are having this process. 29 30 MR. SNODDY: Okay. I think we should break for coffee now. 45 1 We are a little over time. The Minister is coming back and 2 you will be able to ask questions related to this. Back at 3 ten to twelve please. 4 5 THE SEMINAR ADJOURNED BRIEFLY AND RESUMED AS FOLLOWS: 6 7 MR. SNODDY: Ladies and gentlemen, let's get going, because 8 I was aware I wasn't able to take all the questions before 9 coffee break, but I will not be prescriptive. After our 10 present speaker, we can take any leftover questions from the 11 previous session as well before the Minister goes. 12 13 I think you, in Ireland, are terribly, terribly lucky in one 14 respect, because in most sections of broadcasting and 15 commercial radio in the UK is just historically ahead of you 16 in terms of time, and that all of these issues have been 17 faced, sometimes as much as a decade ago, so your lucky 18 position is you can avoid all the mistakes that have been 19 made in the UK, leapfrog those mistakes and move on to a 20 better regime of your own as you expand. So our next 21 speaker comes from the UK and the wonderful new converged 22 all-singing, all-dancing Office of Communications, and it's 23 Neil Stock who is head of radio planning and licensing at 24 Ofcom. 25 26 27 28 29 30 46 1 MR. NEIL STOCK (HEAD OF RADIO PLANNING AND LICENSING) OFCOM 2 DELIVERS HIS SPEECH AS FOLLOWS: 3 4 MR. STOCK: Thank you very much. It's delightful to be in 5 Ireland today. Thank you very much. Nice to come across 6 and show you our exciting new Powerpoint template that we 7 are now using at Ofcom. Everything is pink and purple for 8 Ofcom. It's also, I was very interested to hear the 9 Minister refer earlier on to the fact that radio station 10 owners in this country consider themselves to be 11 over-regulated. It's exactly the same in the UK. 12 13 So today, in my presentation, I thought what I would do is 14 take the various topics that have been described in the 15 Consultation Document and sort of work through, if you like, 16 the way the UK approaches all of these issues, so this 17 covers all the various subheadings that are listed in the 18 Consultation Document. 19 20 So starting off with what obviously in Ireland is the radio 21 landscape, but in the UK I have had to specify the analogue 22 radio landscape because obviously we have a digital radio 23 landscape as well. I'll come on to that at the end. A lot 24 of this will be familiar to many of you. 25 26 Obviously we have the BBC with its five national networks; 27 40 local services, all of which are county sized; and six 28 national services, two each in wales, Scotland and Northern 29 Ireland. 30 47 1 In the commercial sector, which started in 1973, we now have 2 thee national services: Classic FM; Virgin; and Talksport. 3 And the 1990 Broadcasting Act facilitated those, and I think 4 what the national services have done is certainly boosted 5 the credibility of the commercial radio as an advertising 6 medium. Lots of the local services now take national 7 advertising; whereas they didn't before national commercial 8 radio came along. 9 10 As I am sure many of you are aware, Classic FM is a hugely 11 successful radio station which has now branched out into 12 compilations, CDs, t-shirts, all sorts of other things. 13 There is also a television service now. 14 15 Local and regional services, in terms of legislation, are 16 the same; they are described as local services, so that the 17 difference here is in terms of the coverage they achieved. 18 The 17 regional services are all in the most populated areas 19 of the UK: northwest England, northeast England, the west 20 Midlands. There are 17 of those. They were licensed by the 21 Radio Authority from about the mid '90s onwards, and the 22 idea about regional services was to add in a new tier of 23 commercial radio above and beyond what was then just a tier 24 of county sized services. And the rationale behind them was 25 that if you offer licences with a greater population 26 coverage, more specialist formats can be provided, because 27 it makes them more economically viable, and so broadening 28 choice, which I'll come on to, is one of the key criteria in 29 UK radio licencing. And I think it's widely agreed that the 30 regional services around the UK have certainly broadened 48 1 choice for listeners in those markets. 2 3 Then we have the 256 local services. Again, these come in a 4 variety of shapes and sizes, from stations in the very far 5 north of Scotland serving about 1,500 people, up to Capital 6 FM in grater London serving an audience of about 9 million. 7 They are all local services, and obviously their reason for 8 being is catering for the tastes and interests of listeners 9 in their respective markets, but obviously they do it on a 10 variety of economic models. 11 12 Community radio is obviously something where you're slightly 13 ahead of us. We are just starting with community radio in 14 the UK. The Communications Act of last year is facilitating 15 the introduction of community radio. We have had the Radio 16 Authority, the previous radio regulator before Ofcom, 17 licensed 15 pilot radio stations -- which were then called 18 access radio -- around the UK, and most of those are still 19 on the air, but Ofcom has been developing its policy around 20 community radio in tandem with an order being produced by 21 the UK government which sets out the framework for community 22 radio, and just within the last two weeks Ofcom has invited 23 applications for the very first time for community radio 24 services. As the slide says, they are designed to be very 25 localised coverage, probably no more than about a 5 26 killometre radius, and there are going to be limits on the 27 percentage of commercial revenue that community radio 28 stations are able to take, and these rules are essentially 29 designed to protect the very smallest commercial radio 30 stations. 49 1 2 There are many commercial radio stations which have 3 population coverages of 100,000 or fewer. There are 17 that 4 have 50,000 or fewer. And those stations have some concerns 5 about what community radio may well do to them. But part of 6 the legislation also allows for a review of the development 7 of community radio after two years, and Ofcom fully supports 8 the opportunity to have a look again at some of the 9 legislation as it currently stands to see whether or not any 10 changes can be made to it. 11 12 Restricted services are -- they have been around since 1990. 13 They are effectively for temporary radio stations, largely 14 based around event coverage. We do about 700 of those every 15 year, squeezing them in on FM and AM where possible, and 16 they are used for an enormous variety of reasons. Lots of 17 religious events like Ramadan, for example, is incredibly 18 popular for short term radio stations. They are up to about 19 a month, and people pay on a daily rate, and this is very 20 much entry level radio. We even have radio licences issued 21 for drive-in movies, which still go on now and again around 22 the UK, and in order for the people in their cars to be able 23 to pick up the sound from the movie, they need a radio 24 licence from us to be able to do that. But all sorts of 25 other reasons as well: local fetes, local fairs, festivals, 26 and commercial radio companies also use restricted service 27 licences to test out new formats, particularly if we have 28 announced we are going to be advertising new licences in 29 certain areas, you tend to find you get a flurry of 30 applications for temporary licences in those areas for the 50 1 major companies to start introducing the format they intend 2 to apply with into that local area, and also to develop 3 local support, which again is one of the key licensing 4 criteria. 5 6 So, the BBC, commercial radio, and then community radio are, 7 if you like, the thee main parts of the UK radio landscape. 8 9 In terms of policy objectives, these general duties are 10 described in the Communications Act. So the first one is to 11 secure the availability throughout the UK of a wide range of 12 TV and radio services which, taken as a whole, are both of 13 high quality and calculated to appeal to a variety of tastes 14 and interests. High quality is the interesting element of 15 that. The Radio Authority spent a lot of time and effort 16 wrestling with the concept of what is high quality? Quality 17 is one of those words that means different things depending 18 on who you are asking. Obviously these general duties, as 19 they relate to radio, it needs to be borne in mind that 20 Ofcom now has a lot more general duties than this around all 21 of its other responsibilities in terms of efficient use of 22 the spectrum, a variety of communications services for 23 telephones. There is a long, long list of general duties 24 that Ofcom has. These are the ones that I have picked out 25 which have specific relevance to radio. 26 27 Plurality is obviously a key public policy objective, as it 28 is in Ireland. 29 30 And the third one there under general duties is obviously 51 1 about content regulation. Previously before Ofcom, the ITC, 2 the Independent Television Commission regulated commercial 3 television and the Radio Authority regulated commercial 4 radio. They each had separate codes of conduct that their 5 licensees had to follow. Ofcom will have a single code for 6 all TV and radio. 7 8 In terms of the specific policy objectives related to radio 9 licensing, they are slightly different for commercial radio 10 and community radio. 11 12 In terms of commercial radio, when Ofcom is making licensing 13 decisions, it has four criteria that it must have regard to. 14 And one of them is about the ability of an applicant to 15 maintain its service; that's the business plan bit Hessel 16 was talking about. The format must broaden choice. It must 17 cater for local tastes and interests, and there must be 18 evidence of local demand for it, or support. 19 20 Community radio has all of those, and more. Community radio 21 stations must deliver social gain; they must provide access 22 to the radio station for the members of the community it's 23 serving; they must be accountable to the communities they 24 are serving, and they must be run on a not-for-profit basis. 25 And, as I say, in the respective community radio, this is 26 all new legislation. No licensing decisions have actually 27 been taken yet, so this is all new stuff for us at Ofcom to 28 get our heads around. 29 30 In terms of diversity and plurality. Diversity, the way we 52 1 do it in the UK is, as I mentioned, via the requirement that 2 when someone is applying for a new licence, they have to 3 demonstrate that it's broadening choice in relation to 4 what's already available in that area. We don't specify 5 formats, and lawyers have consistently said that we cannot 6 and should not. And I personally believe we should not 7 either. I believe it's for the radio industry to decide 8 which formats are most appropriate in their local markets, 9 and make their case to the Regulator for that. So we do not 10 specify formats. 11 12 The slight difference is with the three national commercial 13 radio licences. They were partly defined in the sense that 14 the first commercial radio licence, national licence had to 15 be non-pop, and there is a fantastic description of what pop 16 music is in the 1990 legislation; and that was Classic FM. 17 The second national licence had to be mostly speech, and 18 that's what's now TalkSport, what started as TalkRadio. The 19 third national commercial licence can be anything it likes. 20 At the moment it's Virgin, which is a rock format, but that 21 could actually change. The national licences are awarded on 22 a cash bid basis rather than a beauty contest. 23 24 So, as I say, we don't specify formats, but applicants for 25 new licences inevitably are going to be providing something 26 that's different because the legislation says they need to. 27 And I think one other key way of encouraging diversity is to 28 get new stations into the market place. And some of you may 29 be aware that when we started in Ofcom at the start of the 30 year, we conducted our own review of our own radio licensing 53 1 processes, and we have come up with a slightly new process 2 and we have also come up with about 30 new FM licences that 3 we think we can squeeze in around the UK over the next two 4 to three years. And we are currently just about to publish 5 a document, a discussion document which sets out some 6 proposals for how we can actually license some further 7 stations on AM. Obviously in the UK, where we are certainly 8 driving much more towards a digital future, there are some 9 question marks about AM being a very old technology, and why 10 are we bothering? But we think there is still demand in the 11 market place for people to operate medium wave radio 12 stations and so we are setting up a process to try and 13 estimate the level of that demand, and where it exists, and 14 where we have spectrum, we will make every effort to licence 15 those services. 16 17 In terms of plurality, we have very, very complicated 18 ownership rules which effectively are designed to ensure 19 that in any local, in any developed local market, which is a 20 fairly key question, this doesn't happen everywhere, there 21 are at least two owners of commercial stations plus the 22 BBC -- bear in mind that the BBC has a local service in 23 pretty much every market in the UK; this is the famed two 24 plus one rule, although it's not quite that straightforward 25 because the way the UK radio market has developed, it's a 26 lattice of overlapping stations. It's not nicely distinct 27 markets which makes ownership much easier. And it's all 28 about overlaps. It's very complicated, and there is a point 29 system allocated to how much a station overlaps with another 30 one. But anyway, the general principle is that, as I say, 54 1 in any local market there should be at least two owners of 2 commercial services, but this is only in markets where there 3 are three or more licences, and we have still have quite a 4 number of underdeveloped markets with only two stations, 5 they can both be owned by the same company. It's only if 6 that company seeks to open a third when the ownership rules 7 kick in. 8 9 These ownership rules are more liberal than they used to be 10 prior to the Communications Act, and there has been a lot of 11 talk in the press and around the industry about a widespread 12 consolidation. It hasn't happened yet. There has been a 13 few station changes at the edges, but still a lot of talk, 14 but nothing actually happening yet, but we do expect it to 15 happen at some point. 16 17 This is the section of the consolidation which talks about, 18 which a gentleman was raising earlier on, about getting the 19 listeners' input into the licensing process. We don't have 20 a formal body, as such, in the UK. This is an organisation 21 called the Voice of the Listener and Viewer, which tends to 22 focus more on BBC output. But we think that within the 23 licensing process we have, there are ways in which 24 listeners' voices are heard. 25 26 First of all, when we advertise a licence, we invite public 27 comment throughout the process when we first advertise the 28 licence. When applications are submitted, the Radio 29 Authority used to place copies of applications in local 30 libraries. We have decided to go all 21st century and put 55 1 them on the web at Ofcom, so all applications will be 2 available for everyone to see and comment on. 3 4 As I mentioned before, one of the key licensing criteria is 5 evidence of demand. There is no good the Regulator just 6 deciding it likes a format without knowing that the people 7 in the area actually want to listen to that format. And so 8 the way we mainly measure that is obviously through audience 9 research. And as any applicant for a radio licence in the 10 UK will tell you, research is probably the most important 11 part of their application. It's certainly the part they 12 spend the most money on, and that's a key criterion, and 13 clearly that's a demonstration of local demand, you know, 14 what is it the people in this market are actually saying 15 they want to listen to. 16 17 And obviously the other way that we can, as a regulator, 18 find out, you know, what people are thinking about the radio 19 stations they have, is through the complaints process. When 20 they complain about content, they are clearly making a 21 statement about, you know, I like this and I don't like 22 that. And we get complaints about all sorts of things. So 23 it's a good temperature gauge on what listeners think about 24 the radio stations they have. 25 26 So in terms of the process itself, again I have split this 27 up in the same way that the Consultation Document has, 28 looking first at the actual application process. As I 29 mentioned before, in Ofcom we are actually planning a new 30 process, different from that the Radio Authority employed, 56 1 and we hope that it's more streamline, and certainly many 2 companies in the radio industry, at least at this stage, are 3 telling us that it is. So we are going for a much shorter 4 application form than previously. The Radio Authority 5 application form was about as long as the BCI application 6 form. We are going for a considerably shorter application 7 form which much more focuses on the four criteria on the 8 basis that if a question doesn't relate to one of those 9 criteria, why are we asking for that information? And so we 10 hope it will also cut down on costs for applicants and focus 11 their minds much more on what it is they have to demonstrate 12 to the regulator. 13 14 The way we actually advertise licences has also changed, and 15 we have now advertised six at Ofcom over the last three or 16 four months. In the sense that as part of each 17 advertisement, we actually now set out, in very broad terms, 18 how the four criteria that I mentioned before will be 19 weighted. I think this is one of those things where under 20 the Radio Authority one assumed they knew how they were 21 weighted but the Radio Authority never actually stated it 22 publicly. We feel, as Ofcom, there is merit in giving 23 people some indication. So, for example, for a smaller 24 licence, we say that broadening choice is probably less 25 important than being able to maintain a service and having a 26 local flavour to the output. Whereas for a larger scale 27 licence, clearly broadening choice, you know, is the raison 28 d'etre of that licence and, so, the assumption is that as 29 it's most of the major market players that apply for those, 30 they probably have got the ability to maintain the service, 57 1 so that's less important. 2 3 So for each advertisement we set out an indication, but 4 again that has to be in fairly broad terms because as the 5 lawyers keep reminding us, we are not able to fetter our 6 discretion; we must be able to accept any application for 7 any format. Anyone is able to make their case to the 8 Regulator. 9 10 And one of the other major changes to the application 11 process is, under the Radio Authority, the programming 12 section of a licence application was quite long and detailed 13 and people were asked to set out in a lot of detail their 14 news proposals, their speech proposals, their music 15 proposals, but eventually all that ended up in a one page 16 document which is a format which is part of each station's 17 licence. We have decided that it's probably better to start 18 off from the premise of a format, and so, effectively, what 19 we are asking applicants to do now