Thank you very much for inviting me to speak to you today.
I wanted to start by making five extremely obvious points.
First, traditional silos are breaking down.
Traditional broadcasters face competition from telcos like BT; hardware and software manufacturers like Apple; over the top services like Netflix and Lovefilm; and social media giants like Facebook.
Equally, telcos and web companies face competition from companies like Sky and the BBC.
Second, the future is arriving very quickly, but not as quickly as you might think.
It’s hard to believe that the iPad only went on sale just over two years ago. People consume content on tablets, mobiles, games consoles and TVs.
At the same time, live linear television viewing has actually increased. The screen in the living room will not go away.
Third, content will change, but also stay the same.
The live television experience is enhanced by twitter, and water cooler moments can take place between friends across the globe via social media.
But people still want to watch TV programmes, films, play games. The product will have to change, and be enhanced by digital tools.
Fourth, more opportunities to consume content, a desire still to consume traditional content, and the need to enhance that content provide massive opportunities for the UK.
We in the UK are very, very good at making content.
- We are the biggest exporter of TV formats;
- We have the third largest film industry in the world;
- We are the largest games developer in Europe;
- We are one of four countries publishing more than 100,000 titles every year; about a third of magazine apps are British publishers.
According to comScore, The Mail online is the most widely visited English language newspaper site in the world. We also have formidable cultural organisations who for the first time can broadcast their content to the world.
Fifth, we are getting better at monetising digital content. Targeted advertising and data provide opportunities for companies to market their product more effectively and target the right audience.
That provides real challenges to policy makers as well, because of the need to protect the privacy of consumers.
In this world, what should the Government’s priorities be?
Pretty obvious really.
- To build the digital infrastructure we need.
- To support content production - and protection
- To bring regulations up-to-date - to enable innovation while also protecting privacy - and our children.
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First, we have to ensure we have the right digital infrastructure in place to take advantage of this content explosion.
As you all know, the Government is investing more than £800 million in the lifetime of this Parliament, [to ensure we get mobile services and superfast broadband to rural areas and ultrafast broadband to many of our large and medium-sized cities.]
This sits alongside the massive investment being made by Virgin Media, who now offer their customers speeds of up to 100 MBPs; and BT, who are connecting a community the size of Singapore every quarter, and who will complete their programme a year ahead of schedule.
We are also amending regulations to make it as easy as possible to build this infrastructure.
In 2013 and 2014, we should see the advent of 4G services for mobile.
Our auction of 4G spectrum is on track for the end of the year, but in any event the spectrum won’t be cleared until the end of 2013.
For people who complain about the delay, you should understand that Ofcom has to undergo an exhaustive consultation process, as there’s a constant threat of legal action.
As well as 4G, we are investing £150 million in mobile infrastructure, and the mobile companies themselves are rationalising their infrastructure to provide a comprehensive service.
We will also, this year, complete a successful digital television switchover.
And this week the BBC, Government and commercial radio are looking to sign a memorandum of understanding for the build out of more DAB transmitters, which illustrates the commitment of the radio industry to work together towards a radio switchover.
Second, we need to create the right conditions for continued investment in content.
This week the Treasury published its consultation on tax relief for investment in high-end television drama, video games and animation.
This comes on the back of the huge success of film tax relief, which we have extended to 2015.
It generates some £1 billion worth of inward investment in film every year, and our decision to extend it has helped to give confidence to companies like Warner Brothers, who are currently investing £100 million in the creation of their own state of the art studios in the UK at Leavesden.
By 2014, we should therefore have in place a comprehensive content tax relief system in place spanning film, television, animation and games.
Along with the world-class skills to be found in this country, the regime will make Britain one of the best places in the world in which to invest in content production.
Investment in content requires a strong regime to protect intellectual property.
In the UK, rights holders are using existing law to successfully block some of the major websites distributing pirated content on an industrial scale.
The UK advertising industry is putting in place the most comprehensive system anywhere in the world to prevent advertising on pirate sites, and credit card providers also react quickly in taking down payment systems on illegal music download sites.
After successfully seeing off litigation from BT and Talk Talk, we are now ready to press ahead with implementing the Digital Economy Act, with notices going out at the beginning of 2014 to people who download pirated content.
But we must ensure our intellectual property regime is fit for the digital age. That is why we are consulting on copyright exceptions.
We will issue our conclusions as soon as possible. Our response will be driven both by fairness - to copyright owners, to those who wish to re-use content legitimately and to citizens and consumers - and by our commitment to drive growth, both for the important creative industries sectors and for the economy generally.
Innovation, and protecting the legitimate rights of copyright owners, should be natural partners - a symbiotic relationship, rather than an adversarial one.
Richard Hooper has completed an excellent report on the proposed Digital Copyright Exchange, which should make it much easier for businesses, particularly tech start ups, to access content legitimately and for a fair price.
Its success lies in the hands of business, and we look to rights holders to work together effectively to bring it about.
Third, at the heart of all of this sits the need to protect the consumer.
Ofcom’s research into what kind of regulation consumers want shows that UK consumers are discerning and intelligent.
They understand that different platforms carry with them different levels of regulatory control.
One thing that did strike me, and which is highly relevant as we move to a world of connected televisions, is their assumption that anything viewed through the television screen would have been regulated regardless of how it was delivered.
This will create challenges for you all as connected television increases its penetration into the mass market.
The Communications Review will look specifically at content regulation.
Fundamentally, there needs to be a balance between flexible, workable regulation and strong protection for the consumer, and we will say more about our approach to this in the autumn.
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We want to achieve several things in particular:
A comprehensive system to protect children from inappropriate content.
We already have one major ISP which has introduced effective parental controls, in the form of active choice.
We have also established Parentport, a one-stop website to enable parents to complain about inappropriate programmes, adverts, products and services.
But we want to go further:
We want all ISPs to introduce active choice as soon as possible.
The Department for Education will soon consult with industry, and more widely, about what more can be done to keep children safe online.
We are also looking at whether to introduce age-ratings for a much wider range of content, such as music videos.
A comprehensive system of content regulation.
**We will be looking across the whole content supply chain - broadcasting, internet and media - to determine a suitable approach to content regulation, taking into account the recommendations of the Leveson inquiry.
As far as possible, we want to see a system that is independent of both industry and government, and which is future-proofed as the silos break down between press, broadcasting and internet delivered content.
A comprehensive system for consumer protection in the digital age.
The internet has brought a series of new challenges, namely the need to protect a consumer’s data, and to make sure their experience on-line is safe.
Much has been said about the increasing collection and use of personal data in media and communications markets.
The recent revelations about the collection of personal data by Google streetview is the most high-profile example of this kind - and one at which the Information Commissioner is looking again.
However, these stories shouldn’t blind us to the fact that there are enormous benefits to customers in being able to be heard by the businesses they choose to interact with.
Services more tailored to the requirements of the individual will better support the needs of both provider and consumer, and in an environment where companies are testing out new ways of securing returns on their investment, the smart use of data will be essential in creating sustainable businesses.
What is absolutely clear in my mind is the need to enable innovation and new business practices to thrive and the need to ensure that appropriate privacy protections and transparency are maintained.
You will be aware that Government is currently negotiating a replacement for the 1995 Data protection directive at EU level and has also implemented the recently revised EU e-privacy directive, which I believe has been a real success.
We have seen real engagement from industry on what has been a very difficult piece of legislation to implement.
Of course we still have some way to go, and the Information Commissioners Office will help sites struggling to comply with the new laws with practical and sensible advice.
I think there are some real lessons that can be learnt from both the negotiation and the implementation of the e-Privacy directive.
We need to be sure that we stay focussed on the real issue, user privacy, and ensure that any legislative approach to safeguarding that privacy is balanced, pragmatic, and above all practical.
Interrupting a user’s experience with constant requests for consent to store or access this or that cookie so you can measure how many people visit a particular page on your website is simply overkill.
And arguably it distracts attention away from the really important privacy choices consumers have to make in the modern online world.
But the kind of legislation we have seen in the past and the kind we are seeing proposed now is a direct reaction to a genuine concern about user privacy and the extent to which data is being collected and used without users knowledge or consent.
So if we want to avoid the same or stricter legislation in the future industry must take the lead and be proactive in this area.
My department will continue to work closely with the Ministry of Justice to negotiate the proposed data protection regulation and we will strive to achieve proportionate, pragmatic regulation which can boost internal market trade and the exchange of information.
If personal data is the currency of the online world people should be aware when and how they are spending it.
You must help people navigate a pathway through this new territory and support them to have control over their personal data. If you do this, then you shouldn’t fear regulation.
It isn’t just data that is a key component in new business models.
The market for micropayments, different subscription models and other payment mechanisms and structures are all being experimented with in various ways.
From Apps to television episodes to monthly subscriptions to a library of content; purchasing digital content is becoming easier and is opening up many more options for consumers.
So we need to ensure appropriate protection in security of payments; a right of redress should things go wrong; and the need to provide a fair deal for consumers so that, for example, once someone has paid for a product they can use it across multiple platforms, within reason.
The Department for Business is working on a consumer bill of rights which aims to set out in one place a simple code of shopping rights.
As part of this work it is expected that consumer rights in relation to digital content should be clarified. A consultation on this will begin shortly.
One of the sessions later today will cover Ultraviolet, a digital locker solution giving increased flexibility to consumers.
We are keen to encourage these kinds of market led solutions and will explore whether there are any regulatory barriers to these types of services developing further or whether more could be done to enable them.
We also need to look at other ways the consumer needs protection, such as:
- the ability to switch providers easily, whether mobile, ISP, or now cloud services;
- further measures to combat nuisance marketing calls;
- better protection from cyber bullying of children and the harassment of internet trolls.
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All of this may sound worrying for people who believe the internet shouldn’t be regulated at all.
But as the internet becomes all pervasive, it is quite right for Government to look at enforcing the normal rules of good behaviour that we should expect from a service that is delivered into the heart of people’s homes and lives.
But make no mistake. The Government is and remains a strong advocate of an open internet providing a platform for new businesses, enabling new products and services for consumers.
We are, I hope, close to signing an industry wide code of practice on the open internet.
This would represent a significant achievement in this regard.
The Government is very grateful to all the industry players who have participated constructively in the debate.
Having said that, we want to ensure that the market doesn’t develop in anti-competitive ways.
To that end we are seeking views on whether Ofcom’s existing powers to intervene are sufficient and sufficiently clear to address any future concerns about blocking or other forms of discrimination.
As well as open access to the internet, it is important that all people have access to the content and services that the market provides.
The UK is a world leader in the extent and quality of access services available and in the commitment of broadcasters and other content providers to meet the needs of disabled people.
As the market develops and evolves in all sorts of different directions I want to make sure that we continue to raise the bar in this area and develop technologies to drive inclusive design and increase accessibility.
Whether this be through EPG accessibility or access to video on demand content I believe there is more that can be done to push for equivalence of access and I encourage you to take up this challenge.
Legislation is hopefully not the solution - I believe that more can be achieved through innovative, market led solutions than can be set out on the statute books.
People matter whether they are citizens, consumers or customers, and the Government has a crucial role in setting out a framework to provide empowerment and protection.
We will publish a paper setting out a little more detail on some of these issues, we will host a seminar on 4 July and throughout the summer we will be encouraging you to respond and participate in these discussions.
This will all culminate in a White Paper in early 2013 which will incorporate these issues, along with other key policies on content regulation, copyright protection, media ownership and plurality, investment in content, infrastructure and a host of others.
I urge you to participate in this debate. I value the work that you all do to contribute to an economic success story and the innovations and future solutions that you are discussing today give me confidence that the future is bright.
I trust that you will put people at the heart of your developments and continue to provide high quality content and services to them in new and pioneering ways.