Canadian Heritage Committee on Jan. 29th, 2008

[The Chair, Conservative, Gary Schellenberger]

Order, please.

Mr. White, my name is Gary Schellenberger. I am the chair of the Standing Committee on Canadian Heritage. Thank you very much for making yourself available today.

For just about a year now we have been studying the role of the public broadcaster in the 21st century, and we felt it very important that we talk to you folks at BBC because we know how you've tackled some of the problems and how great a public broadcaster you are.

Before we start, I'm just going to go around the table and introduce our people. I will start with my clerk, Jacques Lahaie, and then another clerk, Catherine Cuerrier, the honourable Mauril Bélanger from the Liberal Party, Luc Malo from the Bloc Québécois, Mr. Bill Siksay from the NDP, Gord Brown from the Conservative Party--I don't know if he's related to your prime minister or not--and then we have our parliamentary secretary to the minister, Mr. Jim Abbott, and from the Conservative Party, Ed Fast. We also have our analysts, Lara Trehearne and Marion Ménard.

Welcome this morning. I don't know, sir, whether you have a brief statement to make before we have this, but we could start with questions. We're not going to hold to a strict time limit on questions unless someone gets really long.

Again, thanks for making this work, and I welcome you here. It's morning here in Ottawa, but I think it's evening in Britain. Am I correct?

[Wilf White, Chief Advisor, Public Policy, British Broadcasting Corporation]

It's afternoon, yes.

I'm very happy to begin with a statement or to go straight into questions, whatever the committee would prefer.

[The Chair, Conservative, Gary Schellenberger]

We'll let you begin, sir.

[Wilf White]

Thank you.

Ironically, I was going to begin by talking about the challenges of new technology, and of course we faced the challenges of that technology in trying to make this video conferencing work: we couldn't get a line to you.

Here in the U.K., and I think all over the world, digital technology is producing a real challenge for public service broadcasting. We have just gone through the renewal of our charter and agreement, as I'm sure you know. In that process we agreed on new public purposes for the BBC, and our mission, in six points, is essentially: sustaining citizenship in civil society; promoting education and learning; stimulating creativity and cultural excellence; representing the U.K., its nations, regions, and communities; bringing the U.K. to the world and the world to the U.K.; and, in promoting those purposes, helping to deliver to the public the benefit of emerging communication technologies and services and taking a leading role in the switchover to digital television, which has already begun in the U.K. We hope to conclude that by the end of 2012.

Many of those purposes are timeless. They've been with us since the BBC was originally founded in the 1920s, but many are also new and could be achieved in exciting and new ways. I think the impact of digital technology can't be underestimated. Now, the demand for content is not simply for linear content, where people switch on the TV and the radio and see what's on, but for content delivered any time, anyplace, anywhere. The television could be something you're now watching on your computer or on your mobile phone. The radio could be something you're watching through your television or through your computer.

We've just launched a new product called the iPlayer, which will give everyone in the U.K. the ability to use broadband to watch any television or radio broadcast from the BBC that's been broadcast in the last seven days free of charge. This is radically transforming our business. It means that the content we provide can achieve its purposes much more effectively. You no longer need to remember to set your VCR to watch your favourite program. We can archive material and have it available to people for much longer than had ever previously been possible. So although our purposes are to some extent timeless, this change is a very exciting opportunity for us.

There's also a huge appetite growing for interaction, for personalization, for sharing content. We're finding more and more people want to offer their views on our programs on our website, and also use generated content--audio and film clips that they themselves have made. The range of devices that can create and receive that content is increasing constantly.

Some things don't change: quality, originality, trust. All those things matter as much as they always have. We have to respond to a much more demanding audience. The market here, and I'm sure in Canada and elsewhere, is in turmoil. Traditional competitors are under enormous pressure, but new competitors--people like Google and YouTube--are coming in all the time to challenge the role of public service broadcasters. At the same time, we face a constraint in our funding. There's a limit to what we can do. There's a limit to what people are prepared to pay for through the licence fee. We have to look very carefully at the balance of what we do through public funding and what we do commercially.

These are very exciting times for the BBC. I've deliberately kept this statement fairly short because I know that members of the committee will want to ask a lot of questions. I am very pleased to answer them. I hope we can cover everything you're interested in today.

Just to finish by introducing myself, I am the acting controller of policy for the BBC. I had a leading role in the negotiation of our charter agreement and the licence fee settlement. I have an ongoing role in discussions with the BBC Trust, which is our new regulatory body.

My colleague here, Daniel Wilson, is my deputy and has a particular interest at the moment in our regional activities, in which I know the committee has an interest.

My abject apologies once again for the wretched technical problems we have at this end. I think it does go to show that we are perhaps not always as good at responding to the challenges of technology as we would like to be.

Thank you, Mr. Chairman.

[The Chair, Conservative, Gary Schellenberger]

Thank you very much for that, Mr. White.

I think we will move to the Hon. Mauril Bélanger for the first question.

Mr. Bélanger.

[Mauril Bélanger, Liberal, Ottawa—Vanier, ON]

Thank you, Mr. Chairman.

Mr. White and Mr. Wilson, thank you for being here.

I want to explore the concept of the charter, first and foremost. The first question I would ask is, how did it come to be and why did it come to be?

[Wilf White]

That is a very interesting question.

Most broadcasters in the United Kingdom are governed by primary legislation, by acts of Parliament. The BBC is unusual in having a charter. It has always had a charter, and I think this is the seventh or eighth charter that's been issued. I think the reason we have a charter rather than an act of Parliament is that the feeling was that a charter would help to defend the independence of the BBC. It's granted to us by Her Majesty The Queen, admittedly with the advice of government. But it isn't something that is subject to amendment line by line.

This has been a tradition in the U.K. I suspect that if we were starting again, we would probably be governed by an act of Parliament rather than by a charter. As I say, this is our eighth charter, and it has been the tradition since we began in 1927.

[Mauril Bélanger, Liberal, Ottawa—Vanier, ON]

Have they always been of 10 years' duration?

[Wilf White]

No, they have varied. Some have been as long as 15 years; some have lasted for as little as five years. The feeling is that 10 years is about right, I think, from the government's point of view. It gives us sufficient certainty to plan ahead, but it also allows government to review what we do on a regular basis and to ensure we're still doing what parliamentarians feel we should do.

That, of course, is another advantage of having a charter. In the U.K., acts of Parliament are generally not time limited. Having a charter—which is time limited—does give parliamentarians the opportunity to review the BBC from time to time.

[Mauril Bélanger, Liberal, Ottawa—Vanier, ON]

Could you go into the three-year evaluation period the BBC has just gone through, leading to this renewed charter that just came into effect January 1, 2007? And could you tell us what the influence of the review was? What changed between the current charter and the previous charter?

[Wilf White]

There's been a lot of change, but let me start by talking to you about the process.

The process began with papers issued by both the BBC and the government. We produced a paper called “Building Public Value”, which talked about our vision of the future. The government produced a green paper, in which it put out its own view of what the BBC's role should be in public service broadcasting.

There were then meetings around the country with members of the public, and seminars, which again were open to the public but tended to attract people in the media industry and academics rather than the ordinary members of the public who'd attended the round-the-country meetings.

As a result of that process, we then came up with a white paper, which set out the government's views more firmly, and finally the charter and agreement.

Some of the things that changed are pretty fundamental. There was a major review of the way in which we are governed. It was felt that the old system of the BBC governors was not either independent enough of the BBC's executive management or rigorous enough in assessing what the BBC wanted to do in terms of new services.

The governors were replaced by a new unit called the BBC Trust. There are still 12 independent people appointed by government, but they now step back from the day-to-day management of the BBC and have a major role in setting the BBC's purpose remit, which is the way in which they feel we should aim to meet those six purposes I mentioned earlier.

They also set service licences, so every service we offer, every channel, every radio station, has a clear remit as to what it is supposed to be doing, which empowers it but also prescribes it.

We have also established a system of what are called public value tests, where, if we want to make significant changes to one of our services or to start a new service, we now have a rigorous process of assessing the public value of what we intend to do against its market impact, which is independently assessed by Ofcom. That replaced a system in which the Secretary of State gave approval for new services but in which there was a much less rigorous process for the assessment of both public value and market impact.

The public value assessment and test were originally proposals by the BBC, but they were very much in response to concerns from the commercial sector, who felt the approvals process for new services was not sufficiently rigorous. So that's one of the major changes.

I'm afraid if I were to list every change that was made I would intrude too much upon your time. I think those are perhaps the key changes.

[Mauril Bélanger, Liberal, Ottawa—Vanier, ON]

Thank you. I may come back later to follow up on some questions, but I don't want to monopolize all the time here.

Thank you very much, Mr. White.

[The Chair, Conservative, Gary Schellenberger]

Next, Maria Mourani.

[Maria Mourani, Bloc, Ahuntsic, QC]

Thank you, Mr. Chairman.

Good morning everyone. Happy New Year, gentlemen.

My question concerns content. How do you determine British content as compared to foreign content? Do you have quotas you must comply with? Are these quotas set out in legislation? Exactly how does that work in England?

[Wilf White]

Yes, we have very specific quotas for original content that must be commissioned by us. Although we do show a number of programs that have been acquired from other countries, we have specific quotas to fulfill and those are set out in the charter and agreement.

Of course, that doesn't mean everything we commission we do on our own. We're very keen, in a number of areas, to promote the idea of co-production. For example, many of you will know that Doctor Who is a co-production with the Canadian Broadcasting Corporation. We also do a number of co-productions with American and other foreign broadcasters.

[Maria Mourani, Bloc, Ahuntsic, QC]

What percentage of the content is British compared with foreign content?

[Wilf White]

It depends on the service. Let me just check the numbers here. I want to make sure I give you this absolutely correctly.

[Daniel Wilson, Deputy, Public Policy, British Broadcasting Corporation]

While looking for the figures on Britain, it might be worth adding that there are also European Union targets, pan-European targets, for European-commissioned programs, which apply to all broadcasters, including the BBC. Those are about, I believe, 10% of programs.

[Wilf White]

The percentages vary by service, but the average is around 80%.

[Maria Mourani, Bloc, Ahuntsic, QC]

The British content is 80%, is that right?

[Wilf White]

It's 80%, because we're members of the EU. The provision says it must be European Union content rather than British content, but it is primarily British.

[Maria Mourani, Bloc, Ahuntsic, QC]

All right.

Does the government provide all of your funding? If not, do you have any other funding mechanisms? How do you manage advertising?

[Wilf White]

The BBC does not have any direct advertising revenue at all. It's funded entirely by the licence fee, and by the profits from our commercial activities, which are separately run by BBC Worldwide. Those commercial activities do involve channels that take advertising, many of which are available internationally, but the BBC itself and its core public services have no advertising revenue.

[Maria Mourani, Bloc, Ahuntsic, QC]

Therefore, you have other channels that air advertising and produce this income. When you talk about commercial revenue, exactly what are you referring to? Are you selling products, objects, those kinds of things?

[Wilf White]

Again, the licence fee is effectively a tax on every U.K. household that uses a television. That is imposed by legislation and collected by the BBC on behalf of the government. A commercial revenue is dealt with separately by BBC Worldwide, and yes, indeed, they do all the things you might expect. They run commercial channels, which are not BBC-branded in the U.K., but they also publish books, sell programs to other broadcasters, and publish DVDs and other merchandise, as you say.