Lord Currie, the chairman of Ofcom, has predicted that internet delivered content will soon overtake broadcast television. He said that a new approach to regulation will be required and that this will be crucial to the future economic success of the communications industry.

The prediction from the chairman of the communications regulator in the United Kingdom came in the annual Ofcom lecture hosted by the Westminster Media Forum.

Lord Currie said that 16-24 year olds are now watching 7 hours less television a week than the average, viewing less public service broadcasting than ever and spending more time online.

He said the ‘on-demand’ delivery of services is becoming a reality for younger consumers. They expect to watch television programmes and listen to radio stations which interest them, rather than just accept what is on at the time.

He predicted that by 2012, following digital switchover, when the London Olympics is being held, this generation will be parents with young children “for whom broadcast television will have ceased to be the lead medium”.

“As broadcast television overtook radio, then newspapers, so internet-delivered video content will overtake broadcast television,” he said. “Advertising will follow suit, causing shifts in traditional business models.”

He said that between the open internet and free-to-air television, “the world of digital distribution has created a middle ground. It looks and sounds like broadcast telly, but is delivered differently”.

The draft European Audio Visual Media Services Directive is currently being debated in Brussels as the successor to the current Television Without Frontiers regulations.

Lord Currie warned that this is “an important issue for Parliament because this directive will soon land at its door to become UK law”. He said the degree of flexibility that Ofcom is allowed in the regulation of new media will be crucial to the future economic success of the communications industry.

“In a post-switchover world where much audiovisual content will be delivered online, the methods by which we deliver Public Service Broadcasting will also have to change,” he said.

The previous pact of imposing public service obligations on broadcasters in exchange for licences will break down because those licences will not longer be scarce. As a result, he warned that “it will become impossible to impose all but minimal PSB obligations on broadcasters”.

Lord Currie advanced the Ofcom favoured model of a Public Service Publisher to provide competition in public service new media.

These comments coincide with news that Google has exceeded Channel 4 in its share of advertising revenue in the UK. The online search company made £878 million from advertising in the UK and at its current rate of growth is set to surpass ITV, the main commercial channel.

Andy Duncan, the chief executive of Channel 4, a former marketing man from the BBC, said that it reinforces a structural change in the advertising market.
“Some broadcasters have been very slow to realise this,” he said. “The industry as a whole is frankly rather backward looking and is perhaps underestimating the scale of change that is going on and the pace of change.”

He said that broadcasters need to emphasise quality programming to prevent viewers moving to other forms of media. Channel 4 has been lobbying for funding to bridge the gap from declining advertising revenues.