News Analysis: The future of digital Britain will be policed by one man. Can it work?

The appointment of a Labour peer to head the new communications super-regulator, Ofcom, has already led to claims of cronyism
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The Independent Online

This is a multimedia era. The days when a newspaper owner confined himself to the printed word and the broadcaster was content with his small-screen output are long gone.

There was a time when television programmes were watched only on television screens, radio shows heard only on the wireless and telephones were just for conversation.

But that was before the digital age. Now content can be accessed via mobile phones or the internet, using cables or satellites. However you like, in fact.

In this multimedia age, companies which could once afford to confine themselves to radio, films or television now span the sector. Rupert Murdoch's empire, which combines newspapers, film production studios, television channels, websites and much more, is typical

In the UK, the job of regulating these behemoths ­ monitoring the quality and decency of their output, ensuring that control is sufficiently divided to prevent one tycoon accumulating too much power ­ has until now been the preserve of a rather quaint quintet of bodies.

That will end next year when a single body, Ofcom, takes charge. Yesterday, the identity of the man chosen to run the super-regulator and stand up to the media moguls was revealed, and he immediately walked into a row about government cronyism.

It is easy to see why the appointment of Lord Currie of Marylebone ­ a former Labour peer who resigned the party whip to take the job ­ is politically sensitive. It is not just politicians, however, but also newspaper readers, television viewers, radio listeners and internet browsers who should keep track of his performance.

Lord Currie's empire will merge five existing fiefdoms: the Radio Communications Authority, which manages civil radio spectrums in the UK; the Radio Authority, which licenses commercial radio stations; the Independent Television Commission, which regulates independent television companies; the Broadcasting Standards Commission, which sets public decency guidelines on broadcast content; and Oftel, the telecommunications regulator.

The problem with this system has been its focus on specific sectors, rather than broader economic regulation. It has also been mired in bureaucracy and duplicated effort.

In some cases, television broadcasters have received complaints about the same issue from the ITC, the BSC and other bodies including the Broadcasting Complaints Commission and the BBC board of governors. Not only was it necessary to respond to all of them but also, on occasion, the regulators disagreed among themselves on the issues with which they were dealing.

The Government is banking on Lord Currie to ease Britain into the digital age. But he has been handed a vast canvas. Competition, or economic objectives, are only one consideration ­ diversity, plurality and quality are equally important.

Presumably, that is why Ofcom has been awarded parallel competition powers with the Office of Fair Trading, although quite how the two authorities will divide those powers remains to be seen. Perhaps most difficult of all will be Ofcom's need to manage Mr Murdoch's News Corporation; his relationship with Labour has been a constant thorn in Tony Blair's side.

The company has manoeuvred itself into a position where it controls some of the most compelling media content available in the UK ­ notably the rights to show sport and films ­ as well as the means to distribute it through British Sky Broadcasting.

Crucially for Labour, the company reaches the lion's share of newspaper readers in Britain as well.

Managing the vertical integration of television content and distribution so that competitors get equal access to both is arguably the toughest issue facing Ofcom, one that has foxed the Office of Fair Trading for the past three years.

Oiling the digital wheels will inevitably jeopardise the delicate strategic relationship between Mr Blair and Mr Murdoch. Hence the concern among the Prime Minister's political opponents that he has entrusted the lubricant to a Labour peer.

The power assumed by Lord Currie may worry some people, but the world has been changed irrevocably by the digital revolution, and the existence of five separate regulators no longer makes sense.

Telecommunications has merged into a broader category called digital communications, which also encompasses media and online content. Since the Government is hell-bent on turning Britain digital, the distinction between what's on television, down your phone line, on the radio and on the internet has begun to blur.

Previously separate communications networks now carry the same thing: digital zeros and ones. That is why television programmes, films and music are increasingly being carried on more than one type of network.

At the same time, ownership of media and distribution networks is falling into the hands of fewer, more powerful companies. That process is expected to accelerate, because the Government plans to lift foreign ownership rules on British media companies from next year. It has decided that the media industry should no longer be afforded protection from free-market principles. Ofcom will have to determine how that works in practice.

The regulatory environment may be changing, but the companies that will need the most urgent attention from Ofcom remain the same. Claims from competitors that BSkyB has abused its dominant position in the supply of programming through pricing as well as controlling access to its own pay-television platform remain unresolved. In the meantime, ITV Digital has gone bust.

The Office of Fair Trading recently declared itself minded to rule against the wholesale charges that BSkyB asks other platforms to pay to use its channels. The case for separating the content and distribution businesses is becoming increasingly compelling.

It's not by chance that companies such as AOL Time Warner, Bertelsmann, CBS Viacom, Disney, News Corporation and Vivendi have been positioning themselves to control media content and its distribution around the world. The power of owning content and distribution is the dream that has driven the mega-media mergers of the past few years, including AOL's acquisition of Time Warner and Vivendi's purchase of Universal.

With the most liberal regime in the world in terms of foreign ownership, the UK is likely to be among the fiercest battlegrounds for the world's biggest media companies in years to come. Even as refereeing jobs go, Lord Currie's task is likely to be a thankless one.