By Jane Wakefield
Technology reporter, BBC News website
Lord Carter discussed a range of issues with MPs
Lord Carter has been answering questions from MPs, including ones about the current YouTube versus PRS rights row.
Facing the Business Committee about his Digital Britain report, Lord Carter said new models of paying for content were inevitable in the digital world.
He also reassured MPs that universal broadband would be a reality in the UK by 2012 - albeit using public money.
He hinted that the BBC may be asked to contribute to next generation access.
Order of change
Lord Carter said the row between YouTube - which has removed all UK-viewed music videos while it agrees new terms with the Performing Rights Society - was indicative of one of the main difficulties facing industry and government in the digital arena.
"Mass access to multiple forms of content demands that it is priced differently. We are talking about an order of change that we have never seen before," he told the Business and Enterprise Committee, a group of MPs set up to examine the work of the Department for Business, Enterprise and Regulatory Reform.
It was affecting all industries, including newspapers and TV, he said.
"Advertisers are simply not willing to pay as much money to put ads on TV as fewer people are watching it," said Lord Carter.
It is estimated that around 20% of media consumption is now done via the web, he said.
As the traditional method of funding content via advertising fizzles out, there was a role for government to play, he said.
"We can look at existing regulation, at competition rules and at mechanisms for raising additional funding,"
"These new technologies are inescapable and a reality for traditional ad-funded newspapers and TV but I'm not sure it is government's role to ensure they survive," he told MPs.
He said that regulator Ofcom and the Office of Fair Trading were currently looking at existing competition rules to see if it was possible to remove obstacles to allow for more consolidation in the industry.
The fibre rollout will only reach around half the population
On broadband Lord Carter said he was hopeful that his pledge to provide universal broadband speeds of at least 2Mbps (megabits per second) by 2012 could become a reality.
"It requires a change in European legislation, a decision about which technologies will provide it and how it will be funded. It is very possible that these building blocks will be in place by 2012," he said.
But it is likely to require public money he said.
"Universal Service Obligations are not funded by the market, they are funded by regulatory or public intervention," he said.
In terms of next-generation access and ensuring that super-fast broadband reaches the half of the population that are currently not included in either BT or Virgin's fibre plans, it may be that the BBC could be asked to contribute, he said.
"More and more people get their media from the internet and that usage is doubling every two years. Would the nation's state-funded content provider have a role in this? It would seem to me it would," he told MPs.
In a wide-ranging discussion, Lord Carter also outlined some of the disputes he is currently trying to broker, including one between the rights holders and internet service providers.
The report contained 22 specific actions for the government to carry out
"It would be fair to say that at the moment there is no outbreak of peace and harmony between rights holders and ISPs," he said.
While he said that illegal activities needed to "be codified in primary legislation," he admitted making hard and fast laws about the ever-changing world of peer-to-peer file-sharing was a difficult job and that any legislation could be "out of date" before it was written.
He said industry had to make things easier and cheaper for users.
"There is a category of people for whom file-sharing is driven by frustration. There is resentment towards the traditional rules about accessing content. People are not willing to wait to see a movie and they want simple ways to share it," he said.
"That puts pressure on providers," he said.
The Digital Britain report recommended a Rights Agency be set up to encourage people to use legal sources of copyrighted material.
Lord Carter admitted setting up such an agency had not been popular.
"It is one of those ideas that no-one is entirely pleased with which might mean it is a good idea," he joked with MPs.
He promised more "flesh and bones" on how the Rights Agency would actually work later this week.