20
Examination of witnesses
Dame Melanie Dawes and Lord Grade of Yarmouth.
Q1 The Chair: This is the Communications and Digital Committee, and we are very pleased to welcome from Ofcom Dame Melanie Dawes, chief executive, and Lord Grade, chairman. This is probably the first time we have had an opportunity to discuss with Ofcom some of the issues that have arisen through a range of different inquiries that we have held over the last year or so, and the relationship between them and Ofcom’s role as the regulator. We are very pleased to have you both here. As you know, we are currently transmitting live on the internet. A recording of this will be taken, together with a transcript, both of which will be available online.
During the next hour or so we will range over quite a few different topics, including your strategic priorities and relationship with government, the media Bill and broadcasting more generally, online safety, some of the current work you are doing on news intermediaries, and digital exclusion.
I want to start with the BBC. I will not ask any questions that are specific to the current situation facing the BBC, but I want to explore and understand Ofcom’s regulatory responsibilities for the BBC, which, as we know, are different now since the current charter in 2017.
I am particularly keen to understand Ofcom’s role in the context of the current situation. One reason for that is because this new regulatory framework is different. It has been notable over the weekend that, for example, the Secretary of State has found it comfortable to inquire directly of the director-general how he is investigating this matter. Indeed, yesterday the Prime Minister’s official spokesman said that the Prime Minister had full confidence in the director-general, which I am sure was welcome news to Tim Davie, but I am surprised that there was no qualifier with that remark to explain that the BBC director-general’s position is not a matter for the Prime Minister. That led me to ask: what is Ofcom’s role in this new regulatory framework?
Lord Grade of Yarmouth: Thank you, Chair, and thank you for the opportunity. There is a danger that this current furore might confuse the role of Ofcom and the role of the BBC. We need to be absolutely clear that the public’s interest in the BBC—the money, its independence, its standard of journalism, its quality of management—resides singly and solely with the board of the BBC. They are the BBC and represent the public interest. They are in charge of the public’s money at the BBC, how it is spent, who spends it, what they spend it on, and the independence of the BBC.
Ofcom’s role is very clearly defined and very limited: we create the operating licence under which the BBC television and radio are broadcast; we make sure that they stick to the licence; we are there as a court of appeal for members of the public who have not had satisfaction going through the BBC complaints procedure; and we generally monitor the BBC’s performance against its purposes. That is our role. We have nothing to do with the management of the BBC or the governance of the BBC. That is entirely for the board of the BBC.
The Chair: I will ask in a moment how the framework that you have just described is operating. I have one further question on this topic, though. If the current situation is found not to be a matter for the police and the family exhausts the BBC’s complaints process, would they then have recourse to Ofcom if they wanted to pursue a complaint?
Lord Grade of Yarmouth: I very much doubt it, unless it was a specific programme complaint, a content complaint or a complaint that the BBC had somehow breached its charter. Then, obviously, we would look at it. I do not see us getting involved in this one way or another. I do not think we have any locus here at all. It is for the board—I nearly said “the board of governors”, sorry—of the BBC to take full responsibility for this present crisis.
Q2 The Chair: That is very clear, thank you. On the regulatory framework, there is a need, which is acknowledged, for it to be nimble and somewhat more flexible with regard to the BBC to reflect the pace of changing technology, but at the same time there is the understandable and proper demand from commercial competitors for greater transparency and certainty about what the BBC does with new services and so on and any changes to its operations. From your perspective as the regulator, how is that new framework going? The BBC published its annual report today, so today is a bit too soon to say, but how can you hold it to account for this new regime?
Lord Grade of Yarmouth: Undoubtedly, the BBC’s relationship with the commercial sector is a journey that it is still on. We are pushing in very detailed ways to ensure that it is much more timely in its publication of changes that it may want to make, so that we can assess their market impact and so on. We have been instrumental in improving its complaints procedures, and there is more, which Melanie can talk to—encouraging, pulling, pushing, shoving the BBC towards much greater transparency in a lot of areas.
Dame Melanie Dawes: As Michael said earlier, Ofcom’s role is to hold the BBC to account on behalf of audiences and to make sure that, as the largest single provider in the UK market, it plays fairly with its competitors. When we inherited the operating licence from the BBC Trust, which we largely did when we started our regulation, it was pretty much unchanged. That was a creation of a world of six or seven years ago.
When we approached the new operating licence we needed to give the BBC more flexibility, primarily because audiences are increasingly watching and finding the BBC’s content in new ways. The new operating licence aims to safeguard the interests of viewers who are still watching only on linear TV, but to recognise and bring into regulation the BBC’s output on its other platforms, including iPlayer, Sounds and elsewhere. It gives more flexibility. It keeps two-thirds of the quotas, which people perhaps do not always realise, and where we have removed a quota we are requiring significantly more transparency.
One thing that we, as the regulator, consistently ask of the BBC in everything it does is transparency and more clarity up front when it is about to change things, so that people—whether they are competitors, audiences, members of this House or other politicians—know more of what is happening and do not feel blindsided, as they sometimes do, by something that comes out a bit too late. That is what we are aiming to achieve.
Q3 The Chair: What is your current assessment of how well it is doing with transparency?
Lord Grade of Yarmouth: It is on a journey.
Dame Melanie Dawes: Yes, it is on a journey. I have not seen it yet, but I understand that today it has published an annexe alongside its annual report that, for the first time, sets out in advance how it will fulfil the new operating licence, at a greater level of detail than it has had before. We have already seen some of that in the annual report. On comedy, for example, it did not just give the number of hours; it also said which platforms it was going to use and it talked more about which audiences it was planning to serve. That is the kind of thing we want to see more of. We will be digesting that annexe with some interest in the coming days.
On the commercial side, which you asked about earlier—I did not answer your question—we published the new arrangements in the middle of April and they take effect in September. It is a bit too early to tell. That is about the BBC being required to say more, in advance of launching a public interest test, about things it might be doing that might engage a material commercial change that it needs to do a public interest test on. It simply requires more of the BBC earlier on in the process. It is something that we will be keeping a very close eye on.
Q4 The Chair: One other thing I want to ask is how things are progressing with the review that you commenced this year on how the BBC is connecting with and serving audiences on lower incomes. Clearly, you identified that it was underperforming there and you have commissioned this review. Can you say anything more about how that review is progressing and when we might see the outcome of that?
Lord Grade of Yarmouth: We are, in our usual Ofcom fashion, drilling deep down into audience attitudes, audience responses and audience research. There have been a lot of sweeping generalisations about how the BBC is received by various socioeconomic groups. They may well be true, but we need to look at the evidence and audience attitudes. We have a rolling programme at Ofcom to understand how audiences are reacting to various things at a particular time, and this is one specific project that we have in hand.
Dame Melanie Dawes: Yes, that is right. We said in our annual report last autumn on the BBC that we would do this work, and it is just starting now. We will report on it in this coming annual report, in the autumn of 2023. We are just starting that work now in time for the autumn.
Q5 Lord Lipsey: In February, Ofcom’s responsibility to departments was rather divided up, with DSIT the lead department but DCMS retaining many functions relating to context. One knows from experience one has had in life that if you give responsibility to one body it often gets fulfilled, and once it is divided between two it is usually a recipe for division and stalemate. Into which category would you put this particular change, and how are you working with it?
Lord Grade of Yarmouth: The first thing to say is that the responsibilities of the two departments are very clearly outlined and very clearly defined. Therefore, the scope for conflict, border turf wars or any of the sort of stuff that might go on seems to me to be very limited. It does not even appear on our risk register. It is not a concern that we have. I do not know if Melanie wants to add anything.
Dame Melanie Dawes: When you have a machinery of government change like this—there are a lot of reasons why this is quite sensible, and I can understand why the Government have gone down this route—what the Government do, and which the Civil Service should have done, is be very clear about which departments hold which policy areas. Then it will be the responsibility of those specific departments to resolve any disagreements that there may be across government, which there inevitably sometimes are. We are not expecting this to be too much of a problem. We are already reasonably familiar with working with multiple departments.
I think it is quite helpful that the Government still have a converged communications regulator who can look across the piece—indeed, they have this committee too, with that broader remit—because there are a lot of synergies. We see companies like Amazon, which are in the logistics business, produce TV, run a gaming service, run cloud services that are an integral part of our telecoms network, are involved in foundation models and AI, and so on. It is really helpful that you have a regulator that can look across the piece, see all those things and join the dots.
Q6 Baroness Fraser of Craigmaddie: What happens when there is a disagreement or a tension between the two departments? You mentioned AI and that it sits firmly with DSIT. It has made AI one of its priorities, yet we know that news publishers are concerned about AI developers using their content without restriction or compensation. That is an example of where there could be tension. Where do you sit in a situation like that?
Dame Melanie Dawes: I am conscious that this committee is about to start some work on this, and we are very happy to assist you if we can. AI and the development of more powerful forms of AI like generative AI create massive opportunities in things like healthcare and education, but they also create a lot of risks, and that is the fundamental tension here. I am not sure it is about one department against another. It is just the policy situation that we are in.
From Ofcom’s perspective, how we feel that we can help both departments is by looking across our sectors at the implications. We are doing that in three ways. I will briefly outline them. First, we are about to be regulating one of the main use cases of generative AI in social media, search and gaming, and we will have real-life examples of how you get an industry to take new risks seriously and introduce new measures. Secondly, we are working with our other regulatory partners, through the Digital Regulation Cooperation Forum (DRCF), to look at more forward-looking issues like how you regulate algorithms and where we are going next on the technology. We are doing that work.
The third thing goes across our other sectors. There is a big risk here that scams are much easier. This is a new tool for the scammers. At the same time, there are opportunities for broadcasters to improve their algorithms to get their content to viewers in a more personalised way. There are also opportunities to improve moderation in social media and so on. We are doing our part in a number of different ways, but this is a big set of issues for government to be looking into and I am not sure that I see the tensions emerging at this stage.
Q7 Lord Foster of Bath: I want to begin with a couple of questions about the media Bill. To one, the answer will probably be, “No, sadly, we can’t”, and we can leave it at that. You will be well aware that the public service broadcasters’ biggest ask for the media Bill was in relation to prominence. You will be well aware that the current rules under the 2003 Act do not cover prominence online, streaming services and so on. There is real potential for the media Bill not to get through before the general election that is coming up some time next year, and the delay is deeply worrying to the public service broadcasters. Can Ofcom do anything to help?
Lord Grade of Yarmouth: We are hugely supportive of the media Bill and want to see it on the statute books as soon as possible in whatever form it emerges in from its parliamentary processes. It is hugely important for the creative industries in this country and the public service broadcasters, who are in the forefront of seeding the beds and investing in the creative industries in the UK. The Government well know of our support for the Bill and how anxious we are. At every ministerial-level meeting I have been to since I joined just over a year ago we have raised the question of the media Bill. We just hope that it will not be delayed.
Lord Foster of Bath: We are well aware of your support for it. My question went beyond that. It was: given the ingenuity of Ofcom, can you help on prominence without waiting for the Bill?
Lord Grade of Yarmouth: I do not think there is anything in our statutory remit that would allow us to intervene on anything other than a voluntary basis, perhaps to have conversations between all the interested parties to see whether there can be some kind of interim, voluntary approach.
Lord Foster of Bath: Is that something you would be willing to do?
Lord Grade of Yarmouth: If it looks like the Bill will be delayed beyond the election, we would certainly try. It is a very soft power.
Q8 Lord Foster of Bath: I agree, but that offer, I am sure, will be listened to by the public service broadcasters and they will be snapping at your heels.
May I take an issue that was not in the White Paper and which appeared at very short notice in the media Bill—that is, smart speakers, which, as you know, are the most rapidly growing way in which people are accessing audio? I think many people find it very welcome that the Bill now proposes that measures be taken to ensure that stations are not charged for appearing on platforms, there is no possibility of overlaying advertisements on it, and they get the station they ask for with a voice command. A lot of people, however, have said that doing all that is incredibly complicated. How do you react to the responsibilities you will have for introducing that? Will that have implications for the timeline for implementation of the measures in the media Bill?
Lord Grade of Yarmouth: Hopefully, the representations that different parties are making to government now that the Bill has been published will identify where the drafting is deficient. No doubt Parliament will do its work in scrutinising and amending the Bill to make it very clear who has what responsibilities, that there is fairness, and the rest of it. Melanie might want to come in on more detail than I can provide.
Dame Melanie Dawes: You are quite right, Lord Foster, that some of these issues are commercially sensitive and technically challenging. On the radio side, the proposals did come a little bit later, so not quite as much preparatory work has been done on them. Over the coming months, we will do some of the technical work with departmental officials and the industry so that we are as ready as we can be to go live once the Bill is passed, which, as Lord Grade said, we hope will happen soon. That way, we can implement its provisions as fast as we can. We do not quite have that timetable yet because we are not sure what the overall timings of the legislation will be, but we are doing that planning right now.
Lord Foster of Bath: That brings us back to the first point. There are real concerns, for instance, about the conflict between your role and the role of the DMU. Presumably, you have been, or will very shortly be, in discussions with the DMU about your respective responsibilities.
Dame Melanie Dawes: Yes, that is a very close area of work for us at the moment under the DRCF, which I mentioned earlier, to make sure that the new competition powers for the Digital Markets Unit and Ofcom’s work, whether on broadcasting, social media or telecoms, are closely aligned. I do not see any huge conflicts between the provisions on the media Bill, particularly those on radio, and what the DMU will be doing, but all of that will become clearer. As I say, we have very close working relationships here and we are quite used to handing work from one regulator to another.
Q9 Lord Foster of Bath: One final quick question, because I am conscious that we must move on. One of the criticisms that has been made by some of the platforms is that there is nothing in the media Bill that would require you to carry out a market study on any smart speaker things that you do. It seems to be a slight omission. Would you expect to do a market study anyway before you developed your response?
Dame Melanie Dawes: I am not sure whether we would do a formal market study, which has a very particular meaning in law. There is nothing that prevents us from doing market studies—we are doing one at the moment on cloud markets—but I will have to get back to you on what the Bill says in this respect, which I am not quite familiar with. I think we have the power to do one, and to do the work that we think we need to do to be able to operationalise this.
Lord Foster of Bath: My understanding is that the Bill does not require you to do one. My understanding is that you have the power to choose to do so if you so wish. My question was: is it your intention to so do?
Dame Melanie Dawes: We will certainly need to do some work on the market here. I do not know whether that is a formal market study, which is quite a big undertaking. We are very happy to get back to you on our thinking on that.
Q10 Lord Griffiths of Burry Port: It seems to me that you people will have a fine judgment to make between competing claims and hopes. Two areas concern me. One is the market failure programming—the whole less-specific allocation of time and commitment to certain areas and genres of human activity. In the past, there were targets and quotas. Now, how much for this, how much for that, and how to assess all of that is open to discussion.
The other area, of course, is due impartiality. I am a Welshman, and the word “Duw” in Welsh means “God”. It seems to me to require you to have a bit of that about you. I understand that the business of impartiality does not mean this against that, 50% against 50%, but attempts to define it and refine it seem to leave as much open to negotiation and discussion as to settle the matter. How do you view all these rather more subjective areas of concern where you have a specific regulatory role?
Lord Grade of Yarmouth: I will take the first point first, if I may. The licensed public service broadcasters have a duty in exchange for the privileges that they get—advantageous prominence and so on, the things that go with being designated as a PSB. They are required to have a programme policy that is for everybody. They are universally available. They have to meet that, and we hold them to account for that. They have certain requirements in their licences.
We do not dictate, in a lot of cases these days, how many hours of this and how many hours of that, because that has become a box-ticking exercise. We have had two talking heads in a studio with a single camera for 36 hours a year which nobody wants to watch or make and which has no creative value whatsoever. You are better off taking that money and doing six wonderful hours of something special. The box-ticking quota thing is a legacy of the past.
Nevertheless, PSBs have to remain relevant, and to remain relevant they have to appeal to everybody throughout the nations and regions of this country. They have to provide programming for all kinds of tastes. That is their point of distinction. That is what separates them from the streamers: the fact that you can see hard-hitting documentary series, investigative work, fully funded news, current affairs, drama made specifically for British audiences, and so on. That is their USP. They would not want to abandon it, nor would we allow them to abandon that prescription, but it is much better to look at it overall rather than to prescribe that you have to do X hours of this and X hours of that.
Lord Griffiths of Burry Port: Forgive me. I appreciate that, I really do, and I realise that sometimes in some of the cases you have to look at there are very fine judgments to make as to what constitutes a quality input or output against something that is slightly less so, something that is hugely important for a small number of people and less important for a large number of people.
My particular point of view is that for 30 years I have been contributing to the BBC’s output in religion and have seen the attrition of time, quality and encouragement to religious broadcasting from when it was in London right through to Salford. I still do a bit. I did “Thought for the Day” for many, many years. It has simply been a time of attrition. Religion is not fashionable any longer, and I appreciate the difficulty of saying something new, interesting and punchy, but for all that, a large number of people are still involved in it.
Lord Grade of Yarmouth: Yes, and we must make sure that the people who those programmes serve, who have huge interest and commitment, are still served. It may not quite be to the extent that it used to be in the days of the BBC and ITV duopoly, but our duty is to ensure that those people are still served as part of the whole audience. Are you happy to move on to impartiality?
Lord Griffiths of Burry Port: I am indeed, but I am waiting for the divine attributes you now have to display.
Lord Grade of Yarmouth: It does not take a lot of subjectivity. The obligations on licensed broadcasters to be fair, accurate and impartial are laid down very clearly in our codes, their licences, the statutes and so on. The key word here is “due” impartiality—a very important word, in the English sense rather than the Welsh sense. The word “due” allows us to balance the statutory requirement, and indeed the civil requirement, to balance freedom of expression with fairness and impartiality. If the statute was more prescriptive it would limit our ability to interpret context, size of audience, type of programme and so on—all the contributing factors that we look at.
When we decide to investigate a complaint, we take our time. We weigh up the audience’s absolute expectation and right that we will not imperil freedom of expression to impose some kind of regulation. I should say at this point, if we are going to delve deeper into this, that we have a case that we are investigating at the moment and we have to be a bit guarded in our response, because we would not want to prejudice our inquiry, which is on this question of impartiality and relates to GB News. With respect to the committee, I hope you will allow us to be a bit more cautious than we might normally want to be.
Lord Griffiths of Burry Port: We shall pray for you.
Q11 The Chair: Perhaps this is a question for Dame Melanie. One thing that is not clear to me is how the regulatory framework for impartiality is keeping pace with the public’s changing expectations and understanding of impartiality, which is perhaps not as clearly drawn along party-political lines as it might have been in the past. Could you offer any further explanation as to how Ofcom is ensuring that you are keeping pace with audience expectations and that broadcasters are meeting them? It would be helpful to understand.
Dame Melanie Dawes: You are right that the founding legislation here is the 2003 Communications Act. It is 20 years old, the same age as Ofcom. The Broadcasting Code that flowed from that is from 2005 and has remained largely unchanged since then. As we have applied those principles—which, as Michael says, are high-level principles that give a degree of flexibility—we have had to adapt to a very changing media landscape over those 20 years, with many more services coming along, very different audience expectations with the rise of social media and, I think, a preference for more opinions and maybe slightly more rumbustious debates than we were used to in the 1980s and 1990s.
We navigate that by applying the rules to every case very thoughtfully, looking at the facts of the case and always publishing a substantive analysis, even where we do not find against a broadcaster, when it is a topic or an issue that is particularly sensitive or where we think it would help the industry if we set out more. Also, we start with audiences, as we do when we look at public service broadcasting, and we research audience expectations so that we can answer some of the questions that you are asking. At the moment, for example, we have some research on the question of politicians and whether audiences feel that it is appropriate for them to present various types of programme. We think that is the right way to think about whether the rules are fit for purpose.
Lord Grade of Yarmouth: Can I make one distinction here? In the general public discussion about this issue very little heed is paid to the fact that there are separate rules for what I might have called in an analogue world “news bulletins”—the 6 o’clock, the 9 o’clock, the 7 o’clock, the 10 o’clock, and so on. There are much stricter rules for news bulletins, which are factual reports of breaking news as opposed to what one might loosely call “current affairs”, which would include political chat shows, “Panorama”, “Dispatches”, all the different genres. People tend to think that just because it is called GB News, for example, it is a news service. Sometimes it is, sometimes it is not. There is a distinction, and we need to make it very clear that there is a clear set of rules. Politicians cannot present news bulletins, whether it is during an election cycle or not. There are different rules for what we would all recognise as a news bulletin.
Q12 Baroness Harding of Winscombe: The Online Safety Bill is about to grant Ofcom broad new powers. You will be aware that as a committee we have discussed how Ofcom should be scrutinised and held to account. I will start with an open question. How do you think Ofcom’s accountability to Parliament could be enhanced?
Dame Melanie Dawes: This is a very fair question, particularly in an area of legislation that is so novel and where the industry is changing so much that we will need to keep adapting. Specifically on online safety, there is a requirement on us to produce an annual report of our activities just on online safety. That is quite a big requirement on Ofcom, and we will take it as such and I think our board will take it as such. That provides an annual centrepiece for scrutiny of what we are doing.
More generally, we are very happy, as we have been through the passage of the Bill and as we have prepared for this new role, to provide any information that is helpful for this committee, or for parliamentarians more generally, on what we are up to. All our codes will need to be consulted on publicly. They will all then need to be laid before Parliament before they are adopted. There is quite a lot of scrutiny built in during the implementation process. Beyond that, we do not want to be in a position where somehow Parliament does not know what we are doing, because this is such an important new area of work and we know how important it is to many, particularly in the House of Lords.
Q13 Baroness Harding of Winscombe: In 2021, this committee did some work on digital regulation, and one of our recommendations at the time was that there should be a Joint Committee of both Houses established to oversee and scrutinise digital regulation in the round. What do you think of that as a proposal?
Lord Grade of Yarmouth: I think it is a matter for Parliament. I do not think it is a matter for us.
Dame Melanie Dawes: We would be very happy to work with a committee like that.
Lord Grade of Yarmouth: We would, yes.
Dame Melanie Dawes: Expertise in such a technical area is quite important, and a more permanent arrangement of a Joint Committee could well work effectively, but, as Michael says, it is for Parliament to determine that and not for us.
Q14 Baroness Harding of Winscombe: A final question on this theme. How do you respond to concerns, which we have heard voiced through the passage of the Online Safety Bill, that Ofcom’s role will become politicised on such tricky moral issues?
Lord Grade of Yarmouth: All our work hangs on our ability to demonstrate to the people we regulate that we are politically independent. That is at the core. We would lose all credibility otherwise. We are regulating some pretty big sectors. Hopefully, we do that. Even if they do not agree with our judgments, we have come to those judgments outside the political arena and always, always based on evidence and research.
As a board, I think we would resist any perception or suggestion that our procedures or our decisions were come to in any way other than independently of government. There are some areas where government obviously has a say: health, the nation’s health, security, national security, and so on. Obviously, the Government have a locus in those areas, but in the rest of our operations, absolutely not.
Baroness Harding of Winscombe: You have prompted me and reminded me that I should also, in that vein, declare my interest, as my brother is a member of the Ofcom board. Apologies, I should have done that at the beginning of my questioning.
Dame Melanie Dawes: In my three years at Ofcom, I have observed that the Government are very respectful of our independence as a regulator. They want to work closely with us, but they respect those boundaries, which has been very encouraging. One of the joys of working at Ofcom is that the things we do are very salient to members of the public. The things we regulate are things that people love: their phones, their broadband, their social media, their TV. Of course, that means that what we do is often in the news, but I do not think we are necessarily politicised just because what we do is often much talked about. Usually, when we do something that is really in the news, there are as many people saying that we have done the wrong thing as that we have done the right thing, and that is the way a regulator sometimes has to be.
Baroness Harding of Winscombe: Indeed. Thank you.
The Chair: I am so tempted to connect this topic back to the previous one on impartiality, but I will save myself.
Q15 Baroness Healy of Primrose Hill: Are you confident in Ofcom’s ability to deliver the new regime on time? I know that the Bill is not through yet, and you have set out a timetable in the past. What are the greatest challenges? Yesterday, the Lords said that Ofcom should be empowered to consider harms presented by features, functionalities, behaviour and the design and operation of services, not just content. All of this is adding greatly to the responsibilities that you will carry. How will you do this?
Lord Grade of Yarmouth: If I could deal with the specific amendment last night, we are absolutely clear that functionality is a serious issue and has to be dealt with in the Bill. The question then is: how should it be dealt with in the Bill? Our concern at the moment—we only got it last night—is that we see functionality very clearly as a serious risk of creating harm, and that needs to be covered on the risk side. The exam question is: is functionality harm in itself? That creates a legal confusion and a legal uncertainty in the Bill that we have to work our way through. We have some concerns about that, but obviously there will be conversations through the usual channels to try to resolve this.
I would not want anybody to think that we underestimate in any way, shape or form that functionality is a serious issue that has to be dealt with in the Bill. We think that keeping harms and risks separate is a clear-cut way that offers absolute legal clarity and will not delay us in the work we have to do once the Bill is through. That is a clear steer. The Government know our position, as, I think, do Baroness Kidron and others. We are as concerned as this House is about functionality.
Dame Melanie Dawes: I will expand on that a bit and give you some examples. It is quite clear, for example, that direct messaging that allows stranger adults to contact children is a risk for grooming and child sexual abuse. It is quite clear that anonymity can encourage people to act with greater impunity or to behave illegally. However, neither of those two things are, we would say, harms in themselves. They create a risk of harm, but anonymity, for example, can also be a great protection for people who have suffered domestic abuse and have to conceal their identity in order to be able to participate in a life online. We are a bit concerned that this creates a level of new legal complexity.
On your question about timings, the risk would be to the children’s chapter of the Bill, because that is where the amendment applies. We will seek to deliver on the commitment we have given that we will mobilise that set of consultations six months after Royal Assent, but it adds a level of complexity.
What we definitely will do, and are absolutely ready to do, is launch the first set of consultations on illegal harms as soon as we get Royal Assent. It requires an early commencement order in the Bill, but if that is there, we will come out straightaway. It has been challenging, because the timescale is still not certain, but we have an incredibly motivated and committed team. I think some of you have met some of our team members. People have joined us from across the industry and there is a huge sense of purpose here. We are really keen to get on with this. We are confident that we will make a difference, but we are realistic about the challenges ahead and ready for the starting gun to be fired.
Lord Grade of Yarmouth: I think the greatest risk is managing people’s expectations. I wish I had had a pound for every time the word “complexity” was used in committee, most of which I was fortunate enough to attend. It is hugely complex. We will not flick a switch at Ofcom on Royal Assent and have all the harm disappear. Life will not be like that. We will get there, and get there as fast as we can, but we need to do it effectively, securely and in a way that will be able to resist legal challenge. These big tech companies, with their chequebooks, will be ready to challenge any decision we make that threatens their revenue lines, let us put it that way. We must be ready. Our systems and processes have to be as robust as we will make their systems and processes.
Q16 Baroness Wheatcroft: I will take you back to the subject of news. Lord Grade was very clear about the high standard of impartiality expected for analogue news, but, as you know, more and more news is being accessed away from the conventional media and via online media. I know Ofcom has been looking at the proliferation of online news and how it is accessed. As a starting point, it would be helpful if you could give us an update on where you have got to.
Dame Melanie Dawes: Yes, absolutely. In November last year—I think this is the piece of work you are referring to—we published a study of the impact on people across the UK of getting news online. I think this is the first time that a study of this nature has been done with such a comprehensive analysis; it was done by our excellent economics teams. It showed that if you get your news largely from a social media feed, no matter what your background, your age or where you live, you are more likely to go down a rabbit hole, become more extreme in your views and less able to see other people’s points of view, and you are less able to detect fake news and stories that you might be being fed. Interestingly, that result does not apply to the news feeds such as you will find on Apple, Google and so on. It is a social media environment that we are talking about.
We are thinking now about policy recommendations, which would probably require legislation at a future date, on how we might tackle this. The word “transparency” comes up every time you are thinking about the big platforms, and we think it is relevant here too: transparency about how their feeds work, how they prioritise and rank different bits of content, how they audit for real and fake content, and so on. We are working on this right now and we will come up with recommendations in the first half of 2024.
Baroness Wheatcroft: We have had quite lot of evidence from the big tech companies, and the message that occasionally comes through is that they want to get involved in policing content as little as possible. I hope I am not doing them a disservice by taking that message away. How do you feel you can possibly cope with that and change their attitudes?
Lord Grade of Yarmouth: It depends what you mean by “curating”. The tech companies, in many cases, are making choices from their algorithms as to what services they are pushing and which services they are not. I am not sure that anyone would expect them to curate the content of the news services that they push through. I think it is a matter of understanding how they make their choices so that the consumer, the listener, the viewer or the screen watcher is clear who is making those decisions, what they are getting and, more importantly, what they are not getting. Those are some of the kinds of ethical issues that we will be grappling with, but that is just the tip of the iceberg.
Baroness Wheatcroft: Do you have a timescale on which you hope to grapple with this?
Dame Melanie Dawes: Yes. We will be coming forward with recommendations in the first half of next year. That is what we are currently working to. We are taking lots of input from the industry.
To your point about the reaction of the social media companies, sometimes I think they talk of “news” as meaning only content from news publishers, and they say, “Well, that’s their content, so how can this be our problem?” They also say that this is not particularly highly ranked on their news feeds and not terribly popular with their users. However, our research is looking at what the public call “news”, which I think is the right question. Often, that is just whatever information they have got from their friends, family or from other sources, and it is there we find the results that we did.
There is quite a lot to do to change this conversation with the platforms. This area is not really covered by the Online Safety Bill, so we have other conversations to have with them first, in earnest, once the Bill becomes law, but I believe this is the next stage of the debate. The more you think about generative AI and the scope for fake videos, audio and pictures, the more important it becomes that we are on top of the questions as to what the public need to help them navigate through what will inevitably be a more complex landscape.
Q17 Baroness Wheatcroft: I wish you luck with that. There is more to come on AI. Before I let go of news, I have one quick question, which is about prime-time news coverage on public service broadcasters. You will be aware that there are concerns that suggesting that more advertising could be carried by public service broadcasters during prime-time news might result in cuts to news coverage. Are you relaxed about that?
Lord Grade of Yarmouth: We have just closed a final consultation on the rules governing minutage for the commercial free-to-air broadcasters. We are assessing that and we will publish our results at some point in the autumn, when we have had a chance to digest all the responses. The fact is that these minutage rules—do not read anything into this; it is just a statement of fact and not meant to steer you to where we might come out—are a legacy of the ITV/Channel 4 monopoly of advertising revenue. They were designed to stop the commercial broadcaster ITV, which was selling Channel 4 as a monopoly, reducing the minutage to maximise the price and reduce the supply. These are very much legacy analogue regulations. We must look at these regulations in the light of what everybody tells us and decide whether they are still justified.
Q18 Lord Kamall: I would like to follow up on some of the AI issues that we have touched on, but before I do that I should declare my interest. I am an unpaid member of the advisory council of the Startup Coalition, which used to be the Coalition for the Digital Economy, just so that is clear. That will include some AI firms, I suspect.
I recognise that Ofcom is a member of the Digital Regulation Cooperation Forum, and I have seen some of the DRCF’s workstream on algorithmic processing, for example. I would like your perspective on the AI White Paper. This is an open question. What is your perspective? Also, do you believe that Ofcom has the capacity to deliver on the ambitions that the White Paper sets out?
Dame Melanie Dawes: Overall, I think the White Paper comes out in a pretty sensible place. It is very much for the Government to determine this, but essentially it says, “Don’t regulate the technologies; regulate the use cases primarily”, which is sensible. It is only really when you have specific uses in mind that you can think about consumers and the impact on them of particular services and work out where you might want to intervene with regulations. That is a sensible overall approach.
For Ofcom, what it means is that we have to apply that approach to our existing sectors. Earlier, in answer to Baroness Fraser’s question, I talked about some of the work that we are doing. It is very much part of our normal duties to be abreast of technology, how it is developing, and then to think about how that changes the business models and services, and, by extension, sometimes the regulatory challenges that we face. That work is not something new for us, and the fact that we now have much stronger relationships with our partner regulators, through the DRCF, means that we are quite well equipped to jump ahead more quickly than we used to do, because we have invested in those partnerships. There is quite a lot that we can do together rather than doing individually, not everything, but there are quite a lot of things we can do together.
Lord Kamall: Lord Grade, you said earlier that transparency comes up quite a lot. What about transparency on AI? People are asking for transparency on algorithms and maybe on the dataset. To what level would you be able to drill down into that?
Lord Grade of Yarmouth: Are you talking about the Online Safety Bill?
Lord Kamall: No, I am talking about artificial intelligence generally. How do you get transparency on that? When people talk about transparency for AI, they quite often mean transparency on the datasets or transparency on the algorithms.
Lord Grade of Yarmouth: It is both. We have to understand, and have the tech companies understand, that this has to be open. Whoever ultimately gets to regulate this stuff, in whatever form it is regulated or watched, people need to have access to understand exactly what they are doing and how they are doing it.
Lord Kamall: Capacity-wise, would you prefer this to fall to another partner?
Lord Grade of Yarmouth: As recent history shows, we will be able to get cracking on the Online Safety Bill as soon as it reaches Royal Assent, because we were prefunded by the Government to enable us to tool up and recruit the expertise that we will need to implement the requirements of the legislation. In the event that we get some new remit, obviously we will have to be resourced to do it. Again, it is not public money; it is fees on those who are regulated.
Dame Melanie Dawes: The AI White Paper does not give any new duties to Ofcom, it just asks us and other regulators to apply its principles to our work. If I could give you an example to your question about algorithms, if you think about some of the new Chat GPT-style bots that are on some of the social media platforms, once we are the regulator we will be able to ask questions about those bots. That will include things such as, “What data are you using to drive them?”, and there will be a question from the Information Commissioner about whether that data has been appropriately used and safeguarded.
We will want to know, first and foremost, “Which users are you targeting this bot towards? Are there any under-18s?” Answer, probably, yes. “How are you assessing the impact on those young people, and indeed adults if it is a question of illegal harms? What data are you using to do that? What risk assessments have you done? What systems and processes have you put in place that might be mitigating any potential harms that might arise?” The Bill gives us the equipment, the questions and the tools to be able to ask the right questions.
We will need to keep on top of this, because there are likely to be some areas where the legislation does not quite cover every eventuality, but we think that we will be able to make a difference even in some of the new frontiers of technology that are now emerging or, more than emerging, are now becoming mainstream.
Q19 The Lord Bishop of Leeds: I assume you are familiar with our most recent inquiry on digital exclusion. Two of the main elements that came out of it for us were social tariffs and, as part of that, exit fees from contracts. Can you tell us, in the context of cost of living challenges and our report, what you are doing to ensure that mid-contract price rises for broadband and mobile customers are fair? I will add that it might give a greater degree of certainty to those who are signing up for contracts without being fully aware of the likely implications.
Dame Melanie Dawes: This is obviously a very topical and important question for us right now. Overall, we have a very competitive market here for retail broadband and mobile products. There is quite a wide range of different offers out there, different speeds, different price points and so on. Fundamentally, we believe we are dealing with a healthy and competitive market.
However, at the moment, the mid-contract price rises that have been adopted as part of many providers’ standard contract terms result in some big increases. The question we are asking is twofold. First, are telecoms providers doing what they should do now in accordance with our rules, which is to give proper information up front so that people know what they are signing up to? We have an enforcement investigation on that, which we will come back on early in the autumn.
The second question is: are the rules fit for purpose? That is a piece of work that will come through more in December, but we have done some consumer research on that already and published it. It is clear that consumers are not always aware that prices are going up, despite the information they are given, and they do not have a very good understanding of terms like CPI, RPI and inflation.
We are asking ourselves: should there be a change in the way these contracts are able to be structured to give people a bit more certainty, maybe about cash amounts rather than inflation-based increases? That is a very open question for us at the moment. We do not regulate retail pricing and there is no ban on these sorts of contracts, but they must be transparent. Sometimes they offer people very good value as they enter into them, and sometimes that is overlooked. They can, over the lifetime of the contract, be quite good and helpful things for people to take up, but the uncertainty about the price increases, sometimes several times during the contract, is definitely troubling people right now. We have this right at the top of our agenda.
The Lord Bishop of Leeds: Is the report that you have said would be issued in the autumn the one that Ofcom announced in February?
Dame Melanie Dawes: Yes, it is. I believe we announced our enforcement work and our policy work at the same time. There are two separate pieces.
Lord Grade of Yarmouth: You might be comforted to know that at every board meeting the executive is tested about what progress it is making on the affordability agenda. It is very close to the hearts of the board. We have limited hard powers but considerable soft powers, and we are using them. Without fail, at every board meeting we are asking the executive to report on what progress it is making to help people.
Q20 The Lord Bishop of Leeds: In our report we recommended that Ofcom consults on requiring Openreach to offer a wholesale social tariff. What is your response to that recommendation?
Dame Melanie Dawes: We believe in social tariffs and, indeed, have pushed the industry hard on this since Covid. We have gone from three providers offering social tariffs in 2020 to 20 now, which is great. We now want to see the industry stepping up to drive take-up, because that is still low at only 5%. A number of things have been put place recently that we hope will drive it higher. That is our priority. We are talking here about social tariffs offered by the retailers.
An Openreach social tariff would potentially require us to open up the access review for wholesale fixed telecoms, which is the investment framework that we created for the industry. We would do that only if we felt it was essential, because it is so important that we provide investors with the certainty to continue to invest in fibre networks, which is going well at the moment. You are now more likely than not to have full fibre passing your home because of the massive ramp-up in investment in the last few years. We do not want to open up uncertainty around our regulatory approach there. Also, we believe that an Openreach social tariff would mainly have the impact of redistributing the cost of this across the industry, given that BT is the biggest provider of social tariffs, largely in the BT Group although not entirely.
We think the right focus at the moment is to get the industry to drive take-up of the tariffs that are already there. We also think that will have the biggest impact quickly, over this winter, on families who really need the help. It is potentially £200. It is meaningful support that is available, but at the moment people are not being given the information or are not being supported to take it up.
Q21 Lord Young of Norwood Green: Do you think you are doing enough to ensure that they are publicising the social tariff? Secondly, they have an obligation, surely, to tell people the best deal that is available. You know what people do: they stay on the contract that they have. What positive action are you taking on those two fronts?
Dame Melanie Dawes: We need to do more. I have written to all the providers in the last couple of days saying, once again, that we are on this and we are expecting them to do more. We will publish a full update later this week on our telecoms work at the consumer end and what we are doing on the cost of living, which will set out all the steps we are taking, including on the enforcement side. There is a bit of news in there that you might find useful.
In the end, a few things have happened that we are hopeful will make a difference. The DWP has recently put a process in place so that the telecoms companies can ring up and get a yes/no answer on whether someone is eligible. That is really helpful, because the privacy on the data side can be quite a blocker. That has not been in very long and it was not in before the date of the latest data that we published. We are hoping that when we publish the latest round of statistics in November we will see some improvement from that.
You are quite right that it is not just that. When people are aware of a social tariff, they have not usually found out from their provider; they have usually found out from Citizens Advice or the media. There is a lot more that we think the industry needs to do to push this, particularly over this autumn and winter when people really need the support.
Lord Young of Norwood Green: Their obligation is to offer the best deal rather than just allowing people to languish on a contract that is more expensive than it needs to be.
Dame Melanie Dawes: Yes, they need to be putting this into their call centre script and saying, “This is available, and this could be available for you”. That is the sort of thing we expect, not having it buried away on the website so that it is quite hard to find. I occasionally do a bit of mystery shopping myself there and it is not always easy to find the social tariffs. That is not good enough.
Q22 Baroness Harding of Winscombe: I have an “ex-chief executive of a telco” question from my time at TalkTalk. If you go back 10 or 15 years, this whole hearing would have been about telecoms. Ofcom was not regulating the BBC, you were not regulating the Post Office, and AI was not a hot topic. How are you ensuring that there is sufficient focus on what is essential infrastructure in the country, the telecom sector? We are learning to our cost that sector regulators that take their eye off the ball—I hesitate to suggest water—and can create really big problems for the country. What are do you doing, from an executive perspective and on the part of the board, to make sure that there is enough focus on what might not be the sexy area of Ofcom anymore?
Lord Grade of Yarmouth: The access review, or the results of the access review, which was designed to stimulate and give certainty for investment in infrastructure—touch wood—so far has been a resounding success. The numbers are exactly where we would expect them to be, if not ahead. It is vital for the long-term future of this country that fibre infrastructure goes in. We monitor the access review, all the numbers in investment and so on, and I think it has been a huge success. That has been the biggest contribution we could have made. That is from a fairly recent perspective. Melanie has been here longer than I have and she may have some observations.
Dame Melanie Dawes: It is a very central day-to-day part of our work and it takes a lot of my time—not in a bad way, I should say. It is a lot of what I spend my time on. When you see our annual report and accounts, which are coming out on Thursday, our performance report, which describes what we have done in the past year, starts with telecoms. We are doing loads, particularly on the consumer side, but also on pricing, on wholesale and on mobile. It is a very important part of our work, and it is an area of Ofcom’s work where we have some of our most interventionist powers, because we can go in and control pricing in the market. It is not something we take lightly. It is something that people are looking to us on all the time. It is where we get most of our calls to our contact centre.
As I was saying earlier, it all joins up. We have a cross-cutting remit and we can be more flexible. We have to put more attention into our strategic planning and prioritisation, but we are also able to attract very good people. Our cross-cutting functions—our lawyers, our economists, our technologists—get to work across this whole breadth of material, which I think is one reason why we were able to attract so many good, skilled people. I know it probably looks from the outside like the breadth of the remit is very big, but inside Ofcom, day to day, it joins up and allows us to be more capable, because we have a synergy across our work.
Lord Grade of Yarmouth: I do not see any evidence of any unloved part of Ofcom’s remit, from the management of spectrum to online safety, broadcasting, telecoms or fixed. I have just been through a whole six months of induction and deep dive into all these departments. The commitment in the teams that work in these areas is phenomenal and the knowledge is extraordinary, as is the level of brainpower in the organisation. The solid base of Ofcom has been its recruitment policy since day one. We have a phenomenal team of people who are very motivated and get a great variety of work.
The board would never allow it, anyway. Within the framework of our annual plan and three-year plan, we are absolutely making sure that every aspect of our work gets equal love and the resources they need to do the job.
The Chair: That is probably a good place for us to conclude this hearing. I am not seeking an answer on this. I was going to return to the question of impartiality, but hopefully we can do that some other day. The point that is of interest to me, which I do not think we had the time to do justice to—we certainly will not have the time to do it justice now—is the fact that there are now so many overlapping influences on what drives people’s perceptions of whether something is impartial or not. You commented on that in the context of the Online Safety Bill. There are questions about the battles over social issues and how they influence the way people think a forum is impartial, the effect of what they see on drama and comedy, and all that sort of thing.
It would be good at some point in the future to have a session perhaps where we concentrate on the meaning of impartiality and what Ofcom is doing to understand and get under the skin of what is affecting people’s perceptions, how you are seeking to meet them yourselves as a regulator, the requirements and expectations that you are placing on the various organisations that you are now regulating, and what impact that has on people’s confidence and trust in those media outlets. We will return to that on another occasion.
I am hugely grateful to both of you for your time this afternoon and for allowing us to range over such a wide array of topics. As we have just established, you are a broad, far-reaching regulator, but you have given very strong testimony today and we are very grateful to you for it.
