Introduction: Globalisation vs localisation
Bill Gates talked about the internet as the "town square for the global village of tomorrow".
Technology has turbo-charged globalisation. Corporate networks, commerce and communication all link seamlessly as if traditional boundaries didn't exist.
And this is all made possible by the fact that we now spend nearly half of our waking hours using communications technology – hooked up to always-on networks in a way that writers like Nicholas Carr believe is actually rewiring our brains
But today I want to talk about a side to the digital revolution that is less often talked about. A kind of reaffirmation of Newtonian law in the digital age, because this drive towards globalisation has been accompanied by an equal and opposite reaction.
A desire to strengthen the ties that bind us to our families, our neighbours and our communities, to rediscover our sense of identity.
And just as new technologies make globalisation possible, they make localisation possible to parents staying in touch with children half way round the world through Skype, groups getting together to support each other through social networks like Mumsnet, families keeping close to their communities through television channels like Midlands Asian TV.
This localising force of the digital revolution is not as widely recognised as its globalising power. But it is actually more significant.
Let me explain why.
Localisation and the Big Society
Look at the huge number of hyper-local websites that are now springing up in neighbourhoods around the country.
When users of some of these sites were asked what they get out of them, more than two-thirds said that they felt more able to influence local decisions.
An even higher proportion said that using the sites had strengthened their attachment to their local neighbourhood and increased their sense of elonging.
Why is this important?
This country is fast becoming one of the most atomised societies in the world.
In a single generation, the proportion of households made up of just one person has doubled. Here in the City of London, the number of households made up of people living on their own has reached an astonishing 60%.
Already, more than half of people on their own say that loneliness is the single biggest stress factor in their lives. And it's the Facebook generation – the 18-34s – who are now twice as likely to feel lonely as the over 55s.
So understanding how technology can nourish the roots of a big and strong society is of huge social importance.
And this has more implications for the media sector than perhaps any other.
An over-centralised media sector
We have always prided ourselves in this country on an extraordinarily strong and diverse media landscape – and rightly so.
With the BBC as the touchstone of quality, we have some of the most creative broadcasters and programme makers in the world. Our independent TV production sector is bigger than any other in Europe or the Americas.
We are a global leader in sales of TV formats, and the world's second biggest exporter of TV programming hours. We can be really proud of what we have achieved.
But for any country, the media has a unique role to play as the mirror that society holds up to itself.
Future generations will learn more about us from what we watched on TV than from any historian. And looking at our media in 2010, they will conclude that it was deeply, desperately centralised.
They will be astonished to find that three out of five programmes made by our public service broadcasters are produced in London. They will note that there is nothing but national news on most of the main channels, beamed shamelessly from the centre.
And they will discover token regional news broadcasts that have increasingly been stretched across vast geographical areas – with viewers in Weymouth watching the same so-called "local" story as viewers in Oxford. Viewers in Watford watching the same story as viewers in Chelmsford.
The idea that somehow the UK "can't sustain" local TV will seem very quaint when they compare us to other countries.
Not just bigger countries like the US – where people can typically access six local TV stations, even in smaller cities.
But countries the same size as us like France – where there are more than 100 local channels.
Or countries with smaller populations like Sweden and Canada – with 80 and 130 local broadcast stations respectively.
And they will not be surprised to learn that in 2010 our communities are weaker, our local identity less pronounced, and our local democracy less developed than in any of these countries.
Decentralisation as core to the government's approach
The coalition government is determined to change this. That's why, when the Cabinet met at Chequers in July, we agreed on two guiding principles that underpin everything we do.
The first is to focus the government on long-term challenges, not short-term presentation. The second is to solve problems by decentralising power, not simply by intervening from the top-down. It is on this second challenge that we need the media to play its part.
How can we devolve power to locally-elected politicians if we don't have a properly developed local broadcasting sector to help hold them to account?
Local radio and newspapers already play their part. But look at the Mayoral elections that take place in cities all over the US. The critical medium that allows voters to form their view is local TV.
Here in Britain, look at the vital role played by the television debates at the last general election.
Are we going to prevent that happening at a local level by refusing to liberalise our over-centralised media landscape?
Are we going to stifle local debate at precisely the moment when – because of the government's open data agenda – communities will have better access to information on things like council spending and the performance of local schools or hospitals than ever before?
As long as we rely on a system that shuts out local voices, we cannot aim to be the most open and plural society in the world.
I believe we should aspire to nothing less. Which is why this coalition government is committed to creating space for local broadcasting in this country.
Addressing the key arguments: Viewer demand
The philosophical case is easy enough to argue. But I believe there is a practical case too.
First of all, there is the overwhelming evidence for viewer demand.
Eight out of 10 people in this country consider local news stories important. "Focus on the local area" is consistently ranked as a high priority, and nearly seven out of 10 adults feel that the "localness" of stories is more important than them being professionally produced.
Think back to January – when the wintry weather drew in enormous audiences wanting to discover what the impact of the snow was in their communities.
10 million viewers on BBC regional news, five million on ITV bulletins.
Imagine what could have been achieved if we had broadcasters with local rather than regional footprints.
Because all the research suggests that, while audiences attach real value to "localness", they find it hard to identify with the concept of a "region".
That for the majority of people, living most of their lives within a 14 mile radius, what we're used to calling "local" is anything but.
Look at the BBC, which has tried make its regional news more locally focused – particularly in cities like Oxford and Cambridge – and which has kept audiences stable over the past five years.
Compare that to ITV, which has taken the opposite strategy – merging some of its regions and seeing its audiences steadily decline.
Look at Sir Ray Tindle who runs one of the most successful newspaper groups in the country from Farnham in my constituency.
He tells a story about how he rescued the Tenby Observer by insisting that every line should be about Tenby and nowhere else but Tenby. It's a locally-focused strategy that has helped his network of 230 titles to hold its own impressively well during the recession.
Demand for local media is strong – as long as we meet it in the right way.
Addressing the key arguments: Commercial viability
Of course, if viewers want the product, then it should be commercially viable. Why then do so many people say that local TV is not possible in the UK?
It may work in America, they say – but not here. It may work in Germany or Spain – but not here. It may work in Lyon or Marseille, Dublin or Galway – but not here.
The answer is that we have established structures in this country that make it virtually impossible for local TV to thrive.
That's why I asked Nicholas Shott, Head of UK Investment Banking at Lazard, to help me understand what changes are needed to make local broadcasting commercially viable.
He will produce a full report later this year, and I'd like to say how incredibly grateful I am to him and his steering group for the work they have underway.
But he has also provided me with some initial findings that I am publishing today. I am pleased to say that that he has taken an extraordinarily thorough and practical approach to the challenge.
None of us should underestimate the scale of the task, but I have been broadly encouraged by what he has found so far.
Of course we know there are challenges. Of course we will need to learn from the experience of stations like Channel M and the difficulties it has faced raising local advertising revenue.
But nowhere in the US, Canada, or anywhere else have I been able to find a broadcaster able to make 24-hour local content commercially viable. So we should be realistic – it is not likely to happen here either.
And when it comes to advertising revenue, we are not helped by the fact that – unlike in France – we have not developed a reliable audience measurement system, one which allows local TV channels to make a full pitch to advertisers based on the number of households they reach and their audience demographic.
More importantly, Nick Shott challenges us by asking if alternative sources of revenue such as subscription, carriage fees, product placement and sponsored programming can work for national TV, why can't they do so for local stations?
The truth is that the whole of the sector must now face up to the impact of the internet, and make sure that their business models are not over-reliant on advertising revenues.
We must grasp the opportunities provided by technology to develop new and innovative models that can really work.
A new generation of local media companies
We cannot simply carbon copy what happens in other countries. We can't rely, for example, on the cable penetration that is a major factor in bringing down costs in North America and Germany. And we don't want to rely on the kind of public subsidy we see in France and Spain.
But we should look at where there are lessons to be learned, like 8tv in Catalonia, which turns a profit as a standalone commercial operation, or LCM in Marseille which uses other TV businesses to support its local broadcasting model, or Sweden, where four of the six local stations are run by local newspaper groups.
Yes, audiences are increasingly using multiple platforms. But TV remains the central point of the living room, more people are watching it than ever before, and local content has a right to appear on that platform.
And the enthusiastic, positive response that we have received from industry, both to the last government's IFNC initiative and to our review by Nicholas Shott, indicates a real willingness to engage – from the BBC, Sky and ITV to Ten Alps, Scottish newspaper groups and Northcliffe Media.
My vision is of a landscape of local TV services broadcasting for as little as one hour a day: free to affiliate to one another, formally or informally, in a way that brings down costs; free to offer nationwide deals to national advertisers; able to piggyback existing national networks, attracting new audiences and benefitting from inherited ones at the same time; and able to exploit the potential of new platform technologies such as YouView and mobile TV to grow their service and improve their cost-effectiveness.
As Nicholas has said, at least initially, local TV is most likely to succeed in urban areas. So we will need to rely on new technologies to deliver local content to more rural communities.
That's why I am determined to make sure that we have the broadband infrastructure in place that will allow people to access the local content they want online.
Through community television stations such as Witney TV – a hyper-local initiative that is helping to prove that the Big Society is alive and well in David Cameron's constituency.
Already, I have announced a number of market testing projects to bring superfast broadband to rural and hard-to-reach areas.
And, more widely, I have set Britain the goal of having the best superfast broadband in Europe by the end of this parliament.
Here we have much to learn from countries such as South Korea that are leading the way. So I'm very much looking forward to hearing what our next speaker – Dr Suk-Ho Bang – has to tell us.
Above all, my vision is for this country to become the first in which a new generation of local media companies will emerge. A hungry, ambitious and innovative new sector which is truly cross-platform and totally multi-media. Companies able to follow their customers from radio to TV, from newspaper to internet, from iPhone to iPad.
And in order to achieve this, the government is ready to do its bit.
We know that what is now needed is a far-reaching re-examination of the communications environment in this country – a process that will culminate in a new Communications Act in the second half of this parliament.
But we want to start immediately by making path-finding changes at a local level.
I have already announced that the government will remove most of the local cross-media ownership regulations – paving the way for local newspaper and commercial radio groups to develop new business models that allow them to move freely from platform to platform.
Today I can confirm that the government will shortly be bringing forward an order to remove all of the remaining local cross-media rules.
And in response to Nicholas Shott's initial findings, there are three other specific areas for government action that I would like to focus on today.
First, I will begin the process of redefining public service broadcasting for the digital age by asking Ofcom to look at how we can ensure that enough emphasis is given to the delivery of local content.
Of course not all PSBs will want, or be able, to be local broadcasters. But I'm determined that we should recognise the public value in those that do.
Second, I intend to bring forward new legislation to clarify which PSB channels should get guaranteed positioning on page one of the Electronic Programme Guide and its future online equivalents.
As we move into a multi-channel, multi-platform era, this is likely to become the principle intervention through which we repay broadcasters who invest in content with a social or cultural benefit. I want to make sure we have absolute clarity on how that will work.
Finally, I've been strongly encouraged by the serious thought that the BBC has been giving to how it might partner with new local media providers.
In the weeks and months ahead, I will be looking at a variety of ways in which our existing public service broadcasters can play their part in supporting the development of a viable and sustainable local TV landscape.
We will produce our full local media action plan before the end of the year – to be published alongside Nicholas Shott's final report.
Shakespeare wrote "Screw your courage to the sticking place, and we'll not fail", so this is my challenge to the UK media and broadcasting sector.
Over very many years you have proved yourself to be amongst the most innovative, dynamic and creative players in the world.
The quality of British TV and the fearsome reputation of our media more widely have been integral to our democracy and have enhanced our standing in the world. But we are not perfect.
If we remain centralised, top-down and London-centric – in our media provision as in the rest of government – we will fail to reflect the real demand for stronger local identity that has always existed and that new technologies are now allowing us to meet.
But if we respond to the challenge we will be able to show that one of the world's most open, diverse and plural democracies has once again been able to reinvent itself as the country to watch and not the country to leave behind.