Consultation outcome

Consultation on the renewal of digital terrestrial television (DTT) multiplex licences: full government response

Updated 17 August 2021

Background

On 18 December 2020, the government launched a consultation seeking views on the renewal of multiplex licences expiring in 2022 and 2026 on the digital terrestrial television (DTT) platform. The consultation, which ran for 10 weeks and closed on 26 February 2021, sought views on the renewal of five national multiplex licences. These were:

• Multiplex 2 expiring in 2022 and carrying the commercial PSB channels ITV/STV, Channel 4 and Channel 5, as well as some of their portfolio channels (e.g. ITV2, Film4 and More4)
• Multiplex A expiring in 2022 and carrying only commercial services including some of the commercial PSBs portfolio channels (e.g. ITVBe) and some other commercial services (such as QVC)
• Multiplex B expiring in 2026 and carrying PSB High Definition services including BBC One HD; ITV HD, Channel 4 HD and Channel 5 HD
• Multiplexes C and D expiring in 2026 and carrying a range of commercial channels including news channels such as Sky News, RT, Al Jazeera and GB News.

The government identified the following objectives and key factors to be taken into consideration when responding to the consultation:

• Supporting the PSB system and the DTT platform: Supporting the future shape of PSB and ensuring that the DTT platform continues to benefit consumers.
• Regulatory flexibility: Ensuring that Ofcom has the capability to respond to future events, including any unexpected decline in usage of the DTT platform and changes in future global demand for spectrum currently allocated for DTT.
• Deliverability: Ensuring that legislation can be implemented in an effective and efficient way to allow for the licence renewal process to be updated in a timely manner.
• Harmonisation: alignment of the multiplex licences expiring in 2022 with the multiplex licences due to expire in 2026 to allow for a more consistent and strategic approach to future re-licensing.

Respondents were asked to consider these objectives and provide their views on which of the options below would be their preferred choice for renewal of each of the licences:

• Option (a) Renewal on the same terms as before until 2034
• Option (b) Renewal until 2034 but with the inclusion of a new revocation clause
• Option (c) Renewal for a shorter period until 2026 (not applicable to multiplexes already expiring in 2026 whose expiry date would remain unchanged).
• Option (d) Renewal for a different length of time

The government did not state a preferred option for the renewals.

In addition, respondents were also asked for their views on whether certain licence conditions should be included in the renewals such as whether ownership of Multiplex 2 should be contingent on PSB status.

Overview of consultation responses

This section provides an overview of the key points raised by respondents. The government response in the following section provides further detail about responses to specific consultation questions. A full list of respondents can be found in Annex A.

The consultation received 16 responses in total. 15 of these were substantive responses received from a range of organisations within the TV and broadcasting sector including existing multiplex operators, platform providers, public service broadcasters (PSBs), non-PSB broadcasters, and audience interest groups. One substantive response was sent to the department anonymously.

The majority of respondents (10 out of 15 substantive respondents) supported renewal for all five multiplexes under option (a) (on the same terms as before until 2034). Most felt that this was the best option for delivering against the stated government objectives and that there was unlikely to be a credible alternative to DTT before 2034.

There was particularly strong support for the long-term renewal of Multiplex 2 where 12 out of 15 substantive respondents felt this would be important for achieving the government objective of supporting the PSB system. In relation to whether ownership of Multiplex 2 should be contingent on PSB status, only half of respondents offered a view but of these the majority were in favour.

For commercial Multiplexes A, B, C and D, most felt it was important to recognise the DTT platform as a shared ecosystem. Therefore the long-term renewal of all of these, alongside renewal of Multiplex 2, was important to deliver against the government objective of supporting the DTT platform and ensuring it continues to benefit consumers. However, the BBC supported deferring a decision on renewal of Multiplex B until closer to the current expiry in 2026.

None of the substantive respondents supported option (b) (long-term renewal until 2034 with the inclusion of a new revocation clause). Many held the view that a revocation clause created only a limited sense of long-term continuity and therefore undermined confidence and investment in the DTT platform.

Only Sky and BT were in favour of short-term renewals. BT felt that DTT costs were unsustainable for multiplex licence operators in the long term and that short-term renewals were preferable in order to focus attention on planning for a transition away from DTT. Sky argued that any long-term renewal would presuppose the outcomes of Ofcom’s PSB review and the government’s own strategic review of public service broadcasting.

A small number of respondents offered a view about the government’s intention to streamline the licence renewal process by removing the requirement to submit technical plans and marketing proposals; and removing the power for Ofcom to set a percentage of multiplex revenue (PMR).

The government response

This section sets out the government position in relation to renewals of the DTT multiplex licences expiring in 2022 and 2026 following consideration of consultation responses.

A. Multiplex 2

Multiplex 2 is licensed to Digital 3&4 Limited (D3&4), a joint ITV and Channel 4 subsidiary, and it expires in 2022. It carries the commercial PSB channels ITV/STV, Channel 4 and Channel 5, as well as some of the PSB portfolio channels (e.g. ITV2, Film4 and More4).

In the consultation we asked:

Q1. With reference to the government’s stated objectives, which of the options is your preferred option for Multiplex 2 and why? Please provide supporting evidence.

Amend the Broadcasting Act 1996 to allow the renewal of Multiplex 2

• Option (a): on the same terms as before until 2034

• Option (b): until 2034 but with the inclusion of an Ofcom power to revoke the licence subject to a mandatory notice period

• Option (c): for a shorter four-year period until 2026 to bring the next expiry date in line with the multiplexes expiring in 2026

• Option (d): for an alternative length of time not already specified here

Consultation responses

The majority of respondents were in favour of long-term renewals applied across the board to all five multiplexes with arguments centering on the view that DTT remained and would continue to remain a central and crucial part of the UK’s television industry and the public service broadcasting system at least until 2034.

In particular, there was strong support for the long-term renewal of Multiplex 2 in recognition of its status as a PSB multiplex and its importance for supporting the delivery of PSB obligations. The BBC noted ’Multiplex 2 is currently the only DTT multiplex that offers universal coverage for the non-BBC PSB channels’ whilst DigitalUK highlighted the significance of DTT and Multiplex 2 for ‘delivering important PSB principles: universality, accessibility, and choice/competition’.

Nearly all respondents felt that there was unlikely to be an alternative to DTT which could offer the same benefits to support PSB delivery and which would reach full migration and consumer adoption before 2034. Reflecting this view, the submission from Digital TV Group stated:

DTT is currently the only universally available technology, implemented in all televisions, free at the point of use and until this is replicated by other technologies, the case for the long-term renewal of the existing DTT multiplexes is unequivocal.

In contrast, BT were of the view that the current content delivery model on DTT was not sustainable as consumers increasingly moved to viewing TV online; estimating that DTT fixed costs would ‘become uneconomic in the next 5-10 years’ because of declining revenue. They argued this risked the ability of PSBs to meet their obligations via the DTT platform. BT therefore favoured transitioning of the current PSB model to an all IP-delivered universal basic TV service and as such supported a short-term renewal for Multiplex 2, to bring its expiry date in line with Multiplexes B, C and D in 2026.

Sky also supported a short-term renewal of Multiplex 2 until 2024 ’to bring it in line with the expiration of the Channel 3, Channel 4 and Channel 5 licences’ stating that renewal beyond this date ’presupposes the current PSB system continues unchanged’. Sky also noted that post 2024, once policy around the PSB system or the longer term future of DTT had been addressed, Multiplex 2 could be extended again for an appropriate amount of time.

Government response

The government will give Ofcom the power to carry out a renewal of Multiplex 2 until 2034, accompanied by appropriate regulatory flexibility via the inclusion of a new revocation power, which cannot take effect before the end of 2030.

In line with the majority of respondents, the government believes that a long-term renewal of Multiplex 2 until 2034 would best support the government’s stated objectives and in particular the objective of supporting the PSB system.

The longer-term commitment proposed recognises this government’s commitment to the DTT platform. It provides stability and certainty to PSBs about the future of their services on the platform which is important given the longer-term challenges they are facing in adapting to digital disruption and the impacts of a global pandemic. It also provides assurance that PSBs can continue to meet their universal access requirements through the DTT platform. We agree with most respondents that though we want to encourage innovation and have a wider ambitious work programme on advancing the nation’s digital infrastructure, there is unlikely to be a fully viable alternative to the DTT platform before 2034 — and as such maintaining investment and confidence in the future of the platform is important. Further detail about the government position in relation to the future of DTT is set out below in part D of this section.

Enabling an extension of Multiplex 2, which is a PSB multiplex, to 2034 would also have the potential benefit of bringing it in line with the new date for Channel 3, Channel 4 and Channel 5 PSB licences expiring in 2024, were these to be renewed for a further ten-year period. This is not to prejudge the outcomes of the Channel 3, Channel 4 and Channel 5 licensing processes, but recognises the potential value that alignment of the DTT multiplex licences and PSB licences provides through additional regulatory certainty.

We agree with the majority of respondents that a short-term renewal is less well suited to meeting government objectives, with less-compelling evidence that this option supports delivery of key objectives on PSB and the DTT platform because shorter renewals would diminish certainty and undermine confidence and investment in the DTT platform; with the same issues needing to be readdressed in a few years’ time.

However, as set out in the government consultation, one of our objectives is to retain regulatory flexibility. This is to allow the government and Ofcom to set appropriate direction and to respond dynamically to any future events, such as any unexpected changes in the usage of the DTT platform. As a result, we believe that the best option to achieve this is to provide Ofcom with a new revocation power. We acknowledge respondents’ concerns that the inclusion of a revocation clause as originally proposed in the consultation may provide only a limited sense of certainty, causing destabilising impacts on the market without commensurate benefits. Therefore, to address this, we intend that any revocation will not be able to take effect before the end of 2030 at the earliest. This approach meets government objectives on supporting PSB and the DTT platform; regulatory flexibility; and deliverability. Further detail about the government position in relation to the revocation clause is set out in part D.

In relation to Multiplex 2, the consultation also asked:

Q4. With reference to the government’s stated objectives, what is your view on ownership of Multiplex 2 being contingent on PSB status?

Consultation responses

5 out of 7 respondents who offered a view, were in favour of this proposal. Channel 5, Sky, BT and the VLV felt that the requirement for Multiplex 2 to deliver PSB content should be included in the licence conditions as this would formalise the current position. Channel 4 held a similar view but stated that:

in the hypothetical event that one of the owners of D3&4 ceased to be a PSB more detailed discussions would be needed on the implications of this for the remaining PSB licensee and for the future operation of the multiplex itself.

However, ITV and STV respondents did not feel any change was necessary as in their view this was already covered by existing legislation.^{[footnote 1]}

Government response

The government will make ownership of Multiplex 2 contingent on PSB status by giving Ofcom the power to include conditions in the licence to ensure that the licensee remains controlled by one or more of the PSBs. Where this is no longer the case, Ofcom will be able to revoke the licence and transfer it.

The government agrees that because the owners of the licence of Multiplex 2 (ITV and C4) receive access to spectrum in return for delivering PSB obligations ownership should be contingent on PSB status. The existing legislation referenced in ITV and STV responses no longer has effect following the repeal of section 28 of the Broadcasting Act 1996 and therefore new legislation is required which will give Ofcom the power to ensure that the licensee remains controlled by one or more PSBs. To address Channel 4’s concerns about what this would mean for the future operation of the multiplex, Ofcom will be able to transfer the licence to one or more public service broadcasters. Linking ownership of Multiplex 2 to PSB status will not only formalise the current position but also ensure that long-term renewal does not presuppose outcomes of wider ongoing PSB work including decisions on whether Channel 3, Channel 4 and Channel 5 PSB licences continue beyond 2024.

B. Multiplex A

Multiplex A is licensed to SDN, an ITV subsidiary, and it expires in 2022. It carries only commercial services including some of the commercial PSBs’ portfolio channels (e.g. ITVBe, E4 and 5 USA) and some other commercial services (such as QVC and Quest).

In the consultation we asked:

Q2. With reference to the government’s stated objectives, which of the options set out above is your preferred option for Multiplex A and why? Please provide supporting evidence.

Amend the Broadcasting Act 1996 to allow the renewal of Multiplex A:

• Option (a): on the same terms as before until 2034

• Option (b): until 2034 but with the inclusion of an Ofcom power to revoke the licence subject to a mandatory notice period

• Option (c): for a shorter four-year period until 2026 to bring the next expiry date in line with the multiplexes expiring in 2026

• Option (d): for an alternative length of time not already specified here

Consultation responses

Respondents favoured the long-term renewal of Multiplex A largely for the same reasons relating to support of the DTT platform as those set out above for Multiplex 2. VLV who favoured renewal until 2034 for Multiplex 2 stated:

VLV would like Multiplex A to be treated in the same way as Multiplex 2. This would keep the critical mass of Freeview in place to maximise its popularity as a platform and ensure that citizens continue to have access to the wide range of content they currently enjoy.

ITV, whose subsidiary operates the licence for Multiplex A, were of the view that the arguments around the need for long-term licence certainty applied as much to Multiplex A as to Multiplex 2. ITV stated that investment across all the multiplexes had helped ’maximise the value in the DTT spectrum, in turn helping to underpin the delivery of otherwise unaffordable licence obligations such as regional news’. ITV also noted that SDN had invested significantly in the DTT platform (over £200 million) over the course of its stewardship and that ’any further improvements would be contingent on this certainty being extended’.

QVC whose services are carried on Multiplex A were also supportive of long-term renewal stating that:

long-term certainty of carriage on DTT is critical to QVC. Broadcast television is fundamental to QVC’s business and DTT remains the largest broadcast TV platform.

However, one respondent, who submitted their views anonymously, strongly disagreed with this position and was of the view that Multiplex A should not be renewed given the commercial nature of the licence and its potential for generating substantial revenue but that instead it should be re-advertised in open competition. This was also the position of Sky who argued that ‘if the Government were to renew this multiplex for any length of time without the process of re-auction, this would amount to a subsidy for the incumbent commercial licence owner.’ BT favoured a short-term renewal until 2026.

Government response

The government will give Ofcom the power to carry out a renewal of Multiplex A until 2034 accompanied by appropriate regulatory flexibility via the inclusion of a new revocation power, which cannot take effect before the end of 2030.

Whilst the government recognises that the commercial Multiplexes such as Multiplex A are different in status from the PSB multiplexes (Multiplex 1^{[footnote 2]} and Multiplex 2) the government agrees with the majority of respondents who have argued that the value created in the DTT platform is the result of collective investment and delivery by all the multiplexes and not just the PSB multiplexes. The DTT platform is recognised as a shared ecosystem and therefore providing regulatory certainty through longer-term renewals of the national commercial multiplexes alongside long-term renewal of Multiplex 2 will encourage investment and provide confidence in the future long-term health of the platform. This in turn supports government objectives by ensuring that DTT continues to prosper by carrying a wide range of services that cater to the needs of diverse audiences.

The government set out in its consultation document that it was seeking to renew the licences and not seeking to hold an open competition and award them via a comparative selection procedure as set out in the Broadcasting Act 1996, as it did not believe this would be in the best interests of the sector or consumers given the current challenges and uncertainty being faced in the context of the COVID-19 pandemic.^{[footnote 3]} The government acknowledges that Multiplex A is of particular significance and value to ITV as set out in the responses from Sky and the anonymous contributor but does not agree that renewal of this multiplex, as opposed to holding an open competition, would amount to a subsidy for ITV. ITV maintains that Multiplex A and SDN (its subsidiary company) now plays an important role in supporting PSB, including by helping to cross-subsidise genres such as regional news.

Furthermore, a competitive auction as proposed by the anonymous contributor (such as those for spectrum awards) would not meet government objectives on deliverability. In particular changes to primary legislation would be needed. This is because a competitive auction would require a significant change from the existing award process set out in the Broadcasting Act, where an award of a licence is made not on the basis of the revenue that would be generated, but the extent to which awarding a licence to an applicant would ’promote the development of digital television broadcasting in the United Kingdom otherwise than by satellite’.

C. Multiplexes B, C and D

Commercial Multiplexes C and D are licensed to Arqiva, a communications infrastructure and media services company, and they expire in 2026. These multiplexes carry a range of commercial services including news channels such as Sky News, RT, Al Jazeera and GB News.

Multiplex B is licensed to BBC Freeview, a commercial subsidiary of the BBC, and expires in 2026. It mainly carries High Definition services for the PSB channels including BBC One HD; ITV HD, Channel 4 HD and Channel 5 HD but also carries commercial services such as the Shopping Quarter and TBN UK.

In the consultation we asked:

Q3. With reference to the government’s stated objectives, which of the options set out above is your preferred approach for Multiplexes B, C and D? Please provide supporting evidence.

Amend the legislation to allow the early renewal of Multiplexes B, C and D in 2022:

• Option (a): on the same terms as before until 2034

• Option (b): until 2034 but with the inclusion of an Ofcom power to revoke the licence subject to a mandatory notice period

• Option (c): not applicable as these licences expire in 2026

• Option (d): for an alternative length of time not already specified here

Consultation responses

For Multiplexes C and D, Arqiva — the licence operator — favoured early renewal under option (a) arguing that:

DTT is one ecosystem which needs to be managed holistically. Each multiplex plays an important role in delivering a breadth of channels and choice to the audience. With the commercial multiplexes delivering 74% of all channels on the platform they should be treated as being of equal importance as the PSB multiplexes.

This was a position supported by the majority of respondents including the public service broadcasters, COBA, QVC and the VLV who noted that although ‘Multiplexes C and D are operated commercially by Arqiva and carry no PSB. Their value is in offering airspace to minority interest channels, enabling DTT to compete with satellite services.’

In contrast, the anonymous respondent held the same views for Multiplexes C and D as they did for Multiplex A and felt that there should be ‘an open tender for commercial multiplexes’. Both Sky and BT did not favour early renewal of these licences.

In relation to Multiplex B, the BBC supported deferring the option to extend the licence until closer to the current expiry in 2026. The BBC stated that this was primarily because they thought it prudent and sensible to ensure that the most informed decision could be taken over the specific role of Multiplex B within the DTT platform and to ensure that the BBC continued to meet its obligations to exercise rigorous stewardship of public money.

Government response

The government will give Ofcom the power to carry out an early renewal of Multiplexes B, C and D until 2034 accompanied by appropriate regulatory flexibility via the inclusion of a new revocation power, which cannot take effect before the end of 2030.

For the reasons set out above in relation to Multiplex A, the government supports the long-term renewals of the national commercial multiplex licences including Multiplexes B, C and D. As well as encouraging investment and providing confidence in the DTT platform this will also support government objectives on harmonisation. The government considers that the potential alignment of the expiry date for all five national multiplexes until the end of 2034 would be beneficial by allowing for a more consistent and strategic approach to future re-licensing.

In relation to Multiplex B, we are confident that this approach reflects concerns from the BBC who support deferring the option to extend the licence until closer to the current expiry in 2026 in order to allow for a more informed decision about the specific role of Multiplex B in the DTT platform. It also addresses the requirements of ITV, Channel 4 and Channel Five who have high-definition services that are carried on this multiplex.

Ofcom will have the power to extend all national multiplexes in scope until 2034, which will allow the licence holder to determine when to make an application for extension, if it wishes to do so and the length of renewal it wishes to apply for.

D. Revocation clause and the future of DTT

In the consultation we proposed:

a power to revoke the licences would be included to provide Ofcom with the ability to shorten the licence period in response to future events impacting the DTT platform. The conditions for revocation may include responding to an unexpected and significant decline in usage of the platform; responding to changes in future global demand on spectrum; and, for Multiplexes 2 and A, reflecting any significant changes in the PSB system. The revocation clause would also come with the safeguard of a mandatory notice period, which it is proposed would be five years with the requirement for consultation. In addition, the power could only be exercised by Ofcom with the consent of the Secretary of State.

Consultation responses

There was no support for the inclusion of a new revocation power as proposed above. All those who favoured long-term renewals were against it and for the remainder who favoured short-term renewals or re-advertising of the licences in open competition, there was no need for it.

For the majority of respondents supporting long-term renewals, there was opposition to the revocation power because it was felt that this would signal the ’hesitancy of government to commit to long-term licences…and a lack of faith and confidence in the…DTT platform…’ which in turn would significantly undermine the government’s support of PSB. The proposed safeguard of a minimum five-year notice period was not perceived as mitigating these concerns, with STV noting that:

Stakeholders would interpret this 5-year break clause as effectively meaning a 5-year DTT licence

And Channel 4 observing:

The constant uncertainty of a 5-year rolling licence would impact investment both in terms of direct D3&4 spend and wider PSB spend.

Other respondents noted that whilst the inclusion of a new revocation power was not their preference, if this was introduced then certain conditions would need to be attached. Arqiva were of the view that the decision to revoke the licences ’should be the preserve of the government’ and not Ofcom and that the notice period for revocation should be a minimum of 8 years; the BBC felt the notice period should be a minimum of five to seven years; and COBA stated that conditions would need to be reasonable and clear. QVC felt that there would need to be a substantial revocation period and perhaps an initial minimum assured term, as well as a sense of what the pre-conditions for revocation should be.

Government response

The government will provide Ofcom with a power to revoke licences with the consent of the Secretary of State but will also require that revocation cannot take effect before the end of 2030 and that a five-year notice period must apply.

Many respondents drew a link between the inclusion of a revocation clause and what this could signal about the government’s intentions for the future of DTT. The government recognises that, as currently proposed, a new revocation clause may be interpreted as indicating a lack of confidence in the future of the DTT platform and that this in turn could undermine the stability that licence extensions would provide to the sector.

However, as set out above, the government intends to give Ofcom the power to enable long-term renewals for all five national multiplexes until 2034 because we believe that this would best support the government’s stated objectives including those on supporting the DTT platform and ensuring it continues to benefit consumers. The government agrees with much of the evidence presented by respondents about the significance and value of the DTT platform and, as the DigitalUK response outlines, in addition to its importance in underpinning the UK’s PSB system: ‘DTT’s great strength is that it unites a set of core characteristics that no other audio-visual platform will be able to support now, nor in the foreseeable future:

• Wide availability across the UK;
• Great popularity with the viewing public – acting as the principal means of TV reception in 11m homes and being available in 17m homes;
• Excellent reliability, resilience, and security; and
• Easy unmediated access to the best UK-originated content.’

The government also agrees with evidence that there is unlikely to be a credible alternative to the DTT platform which would reach full migration and consumer adoption before 2034. Therefore, as set out in our consultation document, our expectation based on the high level of DTT used by homes across all parts of the UK, is that DTT will continue to be an important content distribution channel for at least the remainder of the 2020s^{[footnote 4]} and likely into the early 2030s, as it is universal, free, reliable and secure. As such it will remain a significant mechanism to meet PSB universal access requirements over this period and it is worth noting that for digital switchover, it took over 12 years from its announcement in 1999 until the analogue spectrum was switched off in 2012.

Although we anticipate that DTT broadcast will continue until 2034, the government does wish to obtain regulatory flexibility in the licensing process to ensure that it and Ofcom have the capability and flexibility to respond to any unexpected future events that may impact the DTT platform. The government is committed to making the UK a global leader in digital connectivity and as set out above, wants to encourage innovation and to support advancing the nation’s digital infrastructure. The inclusion of a revocation clause reflects this ambition by providing the regulatory flexibility to respond in the event of an unexpected change of circumstances; but at the same time also recognises that DTT will continue to play a significant delivery role for the years to come.

For these reasons the government does not agree that the two objectives of supporting the PSB system and the DTT platform; and achieving regulatory flexibility are mutually exclusive as stated by some respondents. However, having considered responses we intend to make a number of amendments to the existing proposals.

The government intends to include a minimum term so that the revocation clause cannot take effect before the end of 2030. The earliest that notice could be given about the intention to use the revocation power would be at the end of 2025 and with the addition of the five-year mandatory notice period this would mean that revocation could not take effect before the end of 2030. Ofcom would also be required to consult and to seek the consent of the Secretary of State and revocation would be limited to reasons related to the management of the spectrum. This would align with Ofcom’s existing revocation powers under the Wireless Telegraphy Act in relation to all television multiplex licences. We believe that these amendments, along with the government’s stated support for the DTT platform, will help address the concerns set out by respondents above about the inclusion of a revocation power for long-term renewals.

We also recognise that the DTT platform and its future will continue to remain an ongoing area of interest for the sector and that this will be of further relevance following the next World Radio Conference (WRC) in 2023. As such the government will ask Ofcom to continue to track changes to DTT viewing and to undertake an early review on market changes that may affect the future of content distribution before the end of 2025.

E. Additional considerations

In the consultation we stated that:

In order to streamline the process, it is the government’s intention that under the amended legislation, broadcasters will not be required to submit new technical plans or marketing proposals; while these were relevant earlier in the lifetime of digital terrestrial television, this is not the case now that the service is mature. The power for Ofcom to set a PMR would also be removed as this has consistently been set at zero for current licensees.^{[footnote 5]}

Consultation responses

Only five respondents offered a view about the government’s proposals. Arqiva, ITV and VLV stated that they would particularly be in favour of the removal of PMR. BT sought further clarification on government intentions and, specifically, reassurance that the removal of the requirement to submit a new technical plan would not represent a weakening on the obligation for multiplex operators to match existing coverage levels.^{[footnote 6]}

The respondent who provided their submission to the consultation anonymously felt that there was no coherent justification for setting PMR at zero when this could be used to generate additional revenue in return for access to spectrum.

Government response

Under the amended legislation, broadcasters will not be required to submit new technical plans or marketing proposals and the power for Ofcom to set a PMR will also be removed.

Having considered responses in which all but one who offered a view were in agreement with our proposals, we intend to proceed with government plans to streamline the renewal process, meaning PMR will remain at zero. As set out in the consultation document, the requirements for technical plans and marketing proposals are less relevant now than earlier in the life cycle of the DTT platform and (addressing BT’s concerns) this will not result in a weakening of the obligation for multiplex operators to match existing coverage levels.

PMR has not previously been applied; it has consistently been set at zero for current licensees because of the wider benefits the DTT platform brings to consumers and the free-to-air broadcasting sector. The decision also reflects future market trends, where shifts away from DTT would make it materially more difficult for Ofcom to evaluate the value in multiplex licences and set PMR accordingly, leading to risks of licensees being under or over-charged.^{[footnote 7]}

A different approach to PMR could also have distortive market impacts as it would incentivise licence holders to maximise other revenue sources in preference to multiplex revenue. For example, a licensee who took steps to carry more video streams, or to carry more profitable services that could pay more for carriage, could end up paying more than another licensee for the use of the same amount of spectrum — creating a possible distortion of their commercial priorities and a resulting potential reduction in the overall benefits available to society.

These changes will support government objectives on deliverability and ensuring that the licence renewal process can be updated and delivered in a timely manner.

Next steps

Following the publication of this response, DCMS will progress work to bring forward an Order made under section 243 of the Communications Act 2003, which will amend the multiplex licensing regime in Part 1 of the Broadcasting Act 1996. The Order will incorporate the proposals set out in the government response above and will:

• give Ofcom the power to carry out a renewal of Multiplexes 2, A, B, C, and D until 2034
• make ownership of Multiplex 2 contingent on PSB status
• include a power giving Ofcom the ability to revoke licences for spectrum management reasons with the consent of the Secretary of State but require that revocation cannot take effect before the end of 2030 and that a five-year notice period must apply
• remove the requirement for applicants to submit technical plans and marketing proposals
• remove the power for Ofcom to set a PMR

The government recognises the need to ensure that Ofcom can undertake renewal of these licences sufficiently in advance of their expiry in 2022 and therefore it is our intention to ensure the amended legislation will come into force in the second half of this year.

Annex A: List of respondents and summary of responses

We are grateful for the responses provided by the individuals and stakeholders who have engaged in this consultation. All responses have been analysed and considered.

A total of 16 responses were received which are summarised below.

Respondent	Summary of Response
Anonymous	Believes that no coherent justification has been offered for two policy decisions: the decision to rule out a competitive process for awarding the commercial multiplexes; and the decision to set licence payments for those commercial licences at zero. The government should proceed with an open tender for commercial multiplexes, starting with that held by ITV plc, ahead of its expiry in November 2022. This approach would provide maximum transparency and derive maximum public value from the public asset of DTT spectrum.
Arqiva	All Multiplex licences must be harmonised and renewed to 2034 ensuring that the platform is considered as a shared ecosystem. Ofcom should not be provided with the flexibility to revoke licences. A decision of this importance with such broad public interest should be the preserve of government. If a revocation right is introduced it should be a minimum of eight years. Agree with the removal of the power for Ofcom to set a PMR. Ownership of Multiplex 2 being contingent on PSB status should be a matter for the government and the licence holder.
BBC	Support option a) for the extension of the multiplexes which are expiring in 2022. Do not hold a strong view on whether this should include a revocation right for Ofcom, but should this be included it should (i) give licence holders a minimum of 5 years’ notice and (ii) allow for licensees to hand back their multiplex operating licences. In the case of Multiplex B, the BBC supports deferring the option to extend the licence until closer to the current expiry in 2026. This is primarily because the BBC thinks it prudent and sensible to ensure that the most informed decision can be taken over the specific role of Multiplex B within the DTT platform and to ensure that the BBC continues to meet its obligations to exercise rigorous stewardship of public money.
BT	Supports renewal of Multiplexes 2 and A to bring them in line with expiration of Multiplexes B, C and D in 2026. Agree licensee of Multiplex 2 should be required to deliver PSB content. BT’s view is that the government should initiate a wider exploration of the future framework for TV distribution in an all IP world and how and when that transition should take place. Considerations on DTT multiplex licence renewals are an opportunity to focus attention on planning for transition away from DTT. BT proposes the DCMS starts an open process to draw in views to establish the interdependencies, opportunities and timetable for an end to DTT broadcast as soon as possible.
Channel 4	C4 supports renewal of all multiplexes until 2034 with no revocation clause and considers that ownership of Multiplex 2 should be limited to PSBs but that more detailed discussions are needed about the implications of this. DTT supports ongoing delivery of C4’s PSB obligations and C4 believes the DTT platform should be treated as a whole. C4 have made long-term investments in the DTT platform and long-term renewal would provide them with certainty to cover these contracts.
COBA (Association for Commercial Broadcasters and On-Demand Services)	COBA support renewal of all multiplexes until 2034 on the same terms as before with no revocation clause; offer no view on ownership of Multiplex 2 and whether this should be contingent on PSB status: COBA members account for a significant share on the DTT platform and longer term renewal will provide them with sufficient certainty to continue making investments in content and infrastructure on a long-term strategic basis. Shorter term renewal creates significant uncertainty for COBA members and a risk to their ability to invest. If regulatory flexibility is desirable then the conditions for this would need to be reasonable and clear and developed in consultation with industry.
Digital TV Group (DTG)	DTG makes a general case for long-term extension of all multiplex licences. An alternative to DTT with equal or enhanced technology capabilities and reach would likely take more than 10 years to reach full migration and consumer adoption; replicating the comparative ease of use and accessibility of DTT services and devices would need to be addressed if licences were not renewed and a cross-industry supported and government funded transition would need to be established.
Digital UK	Supports longer term renewals for all multiplex licences. DUK’s view is that DTT platform has an important role in terms of supporting universality for PSB; DTT remains popular with viewers/audiences; and DTT is secure and reliable. Without substantial licence renewals (resulting in uncertainty) all these benefits will be put at risk. Given all the evidence of the current and future importance and popularity of the platform, DUK would encourage the government to support the long-term health of the DTT platform in its approach to renewing multiplex licences.
Digital 3&4 Limited	Support renewal of all multiplexes until 2034 with no revocation clause. D3&4 view is that this is best for providing certainty on the future of DTT and encouraging investment by their shareholders (ITV and Channel 4) and therefore best for supporting government objectives on PSB. They have a particular concern about inclusion of a revocation clause as this could result in uncertainty leading to a ‘chilling effect’ on the ability of platform operators to invest in future services and the evolution of the platform (eg. development of Freeview Play).
Dominic Carey	Preferred option would be option (a) or (b) because even though streaming services are popular DTT offers a stable and reliable way of viewing. Also as seen with the recent briefings and major announcements lots of people watched via DTT. Mr Carey would encourage a switch to DVB-T2 on all multiplexes to have more space for more channels.
ITV	ITV supports longer term renewal for all multiplexes until 2034 on same terms as before with no revocation clause. ITV does not believe it is necessary to legislate to make ownership of Multiplex 2 contingent on PSB status as this is already covered by existing legislation. Longer term renewal across all multiplexes supports harmonisation and long-term success of Freeview. A short-term renewal will undermine support of the PSB system through diminished commitment and investment; does not cover the length of the next Channel 3 licence and will ‘cast a shadow over the long-term trajectory of the platform’.
QVC UK	DTT platform is critical to QVC who have consistently supported and invested in it. QVC is primarily concerned with renewal of Multiplexes A and C. It supports renewing these on the same terms as before until 2034 with no revocation clause and in principle supports the same for the other multiplexes in scope of the consultation. Long-term certainty of carriage on DTT is critical to QVC. Broadcast remains the primary form of content distribution for QVC who feel that a significant transition away from DTT technology to IP within the next decade is unlikely due to pre-existing investment in infrastructure and IP bandwidth limitations for mass reach channels.
Sky	Supports extending Multiplex 2 for 2 years until 2024 and re-advertising in open competition for Multiplex A until 2026. Sky does not support early renewal of Multiplexes B, C and D. Multiplex 2 should only be renewed until 2024 in line with the expiration of the current PSB licences as there is no guarantee that these will be renewed at all or in their current guise. Sky is of the view that renewal beyond 2024 presupposes outcomes from wider PSB work and that a commercial process is required for Multiplex A as renewal without this would amount to a subsidy for the incumbent commercial licence owner.
STV	STV supports renewal of Multiplex 2 until 2034 on the same terms as before with no revocation clause. Also supports longer term renewal of Multiplex B. Offers no official position on Multiplex A and like ITV does not see reason for making ownership of Multiplex 2 contingent on PSB status as this is already covered by existing legislation. STV concerned that inclusion of a revocation clause would result in considerable uncertainty that would undermine supporting PSB. STV supports harmonising of Multiplex 2 and Multiplex B (until 2034) as Multiplex B augments PSB provision with HD variants of the PSB channels.
ViacomCBS	Channel 5 supports renewal until 2034 on the same terms as before for all multiplexes and with no revocation clause. C5’s view is that this would provide stability and certainty which will give infrastructure providers and content creators confidence to invest which in turn supports the government objectives on PSB. A shorter-term renewal or renewal with a break clause would create ongoing uncertainty for all broadcasters on the platform who regularly make investment decisions based on a content exploitation strategy of longer than five years. C5 also support making ownership of Multiplex 2 contingent on PSB status
Voice of the Listener & Viewer (VLV)	VLV supports extension of all multiplexes on the same terms as before until 2034 (with no revocation clause) as well as Multiplex 2 being contingent on PSB status. VLV’s view is that DTT is a vital part of PSB itself and needs to be protected. VLV supports DTT because as yet there has been no proper assessment of the consequences for citizens if we move broadcasting transmission to a different platform or of how the current standards of universal coverage could be maintained by other means. VLV is concerned by the inclusion of a revocation clause and is not convinced there is a need for it.

1. Under the Independent Analogue Broadcasters (Reservation of Digital Capacity) Order 1996 ↩

2. Multiplex 1 is the main BBC multiplex which carries all BBC channels except for the High Definition (HD) channels. Multiplex 1 is regulated under BBC Charter and Agreement until 2027 and is therefore out of scope for this consultation. ↩

3. The pandemic has also highlighted that a significant minority of viewers are still fully dependent on broadcast for news, so DTT as the free and universally available platform remains crucial ↩

4. In its Future of Free to View TV report 2014 (p.32), Ofcom considered that ‘the on-going importance of DTT and barriers associated to IPTV availability and take up could make a DTT switch-off unlikely until at least 2030’. In addition, Ofcom’s 2018 report on PSB in the digital age (p.13) states ‘Our analysis shows that the DTT platform will remain uncontested for free-to-air TV for at least the next ten years’. ↩

5. PMR is a tax based on revenue to reflect the benefits of holding a licence that the licensee may be required to pay to the Treasury over the course of the licence term. Subsection 16(8) of the Broadcasting Act 1996 gives Ofcom the power to specify, with the consent of the Secretary of State, a PMR. ↩

6. 98.5% for PSB multiplexes and 90% for commercial multiplexes ↩

7. PMR payments are only payable on multiplex revenue and are set as a rate, so the amounts payable would vary depending on the licensee’s ability to generate multiplex revenue. ↩