Watchdogs do battle for digital TV

The industry has welcomed Ofcom in principle. But Oftel and the ITC are resisting merger, writes Cathy Newman

The Government is pressing ahead with plans to create a super- regulator for the communications industry. The move will intensify the battle between Don Cruickshank, director-general of Oftel, the telecoms regulator, and the Independent Television Commission (ITC), the television watchdog lead by Sir Robin Biggam.

The Department of Trade and Industry is to issue a consultation document in the autumn, asking for comments on its proposals to form a joint broadcast and telecoms regulator, provisionally entitled Ofcom.

A DTI spokesman said the department was liaising with the Department of Culture, Media and Sport (DCMS). He said: "The Government is committed to having a look at this issue due to the convergence of the telecoms and broadcasting industries. A document will be going out to the industry and interested parties for consultation in the autumn."

The idea of merging Oftel and the ITC to form Ofcom was first mooted two years ago. Although the details have not been fleshed out, there is a growing conviction in the industry that present regulatory arrangements are ill-equipped for the convergence of telecoms companies and broadcasters.

For example, the ban which prevents BT from broadcasting is likely to be lifted within months. BT is also indirectly involved with broadcasting through its stake in British Interactive Broadcasting, the interactive television service.

If the ITC and Oftel do merge, the burning question is which will come out on top? Their most recent - and most public - spat occurred after the ITC awarded three digital terrestrial television licences to British Digital Broadcasting. BSkyB was forced to pull out of the consortium - now jointly owned by Carlton Communications and Granada Group - after competition worries. But the satellite broadcaster secured a long-term programme supply deal with BDB. Mr Cruickshank issued a strongly worded statement criticising the ITC's decision, saying BSkyB's programming deal still "raised substantial competition concerns".

Mr Cruickshank's intervention illustrated the problem caused by the blurring of the two watchdogs' roles. Before digital television reared its head Oftel and the ITC had clearly separate functions. The ITC was charged with ensuring fair and effective competition in the television industry, while making certain broadcasters provided a wide range of services. Oftel was to look after "traffic over networks" and control "access to these networks".

At the moment, regulation of digital broadcasting is awkwardly split between the two bodies. The ITC had, for example, hoped to regulate conditional access, the encryption technology used to decode digital television signals. But Oftel was given responsibility for conditional access in the 1996 Broadcasting Act. The recent decision that interactive services should also come under Oftel's remit has increased the watchdog's power in this field.

Although the ITC has taken the initiative with its extended consultation on the "bundling" of cable and satellite channels, it has been forced to share with Oftel control over electronic programme guides (EPGs), which will enable consumers to navigate digital television channels.

Senior industry figures are virtually unanimous in their belief that, if a super-regulator is created, Oftel is in a better position to take the leading role. One senior television executive delivered an acerbic judgement of the ITC, saying: "They have consistently proved themselves to be inconsistent. The DCMS does not hold the ITC in particularly high regard."

City analysts agreed. Derek Terrington, media analyst at Teather & Greenwood, said: "Oftel has the greater status and the technological spin on everything. The ITC, which seems to become more archaic day by day, has surely got a shrinking remit."

The warring watchdogs are unlikely to thank the Government if it decides to throw them into bed together. The ITC yesterday reiterated its belief that a single content regulator could be created for the broadcasting industry, but resisted a merger with Oftel. "We don't believe telecoms and broadcasting regulation fit together. Broadcasting regulation is too important to be put in with something as large as telecoms," a spokeswoman said.

Oftel was just as keen to resist getting any closer to the ITC. "There is a need for regulatory streamlining, but not necessarily through a merger of Oftel and the ITC," a spokesman for the telecoms regulator said.

Despite the amount of interest, and antagonism, Ofcom is already generating, the communications super-regulator is unlikely to get the all-clear for some while yet. It is thought detailed plans for Ofcom may be put on hold until after the results of a review of utility regulation, launched last month by Margaret Beckett, President of the Board of Trade, are known. The blueprint for the communications regulator may also have to wait until after Labour's new competition Bill is passed. The Bill, drafted by Mrs Beckett earlier this month, may make some of the duties of Oftel and the ITC redundant.

The Government needs to answer a whole host of questions before Ofcom becomes official. There is still doubt whether Ofcom would cover radio. Chris Smith, Secretary of State for Culture, has indicated that the radio industry, currently regulated by the Radio Authority, would be better served by a separate regulator.

Neither the DTI nor the DCMS will be short of advice on which media should come under Ofcom's jurisdiction. Interested parties have already written many column inches on the subject. Benet Middleton, principal policy researcher at the Consumers' Association, published a paper in June saying a single communications regulator should merge "many of the functions" of the ITC and Oftel, but added that the new body should also cover the BBC and the Post Office. Mr Middleton is to expand on his initial theories next month. The ITC is also preparing a response to Mr Middleton's points.