House of Commons - Public Accounts

Select Committee on Public Accounts Third Report

2 Priority areas for the BBC to address as Freeview goes forward

4. The BBC Governors have set an objective to drive the market for free-to-air digital television, but this objective is not supported by specific targets.[11] Take-up was one of the two main value for money measures identified by the BBC for Freeview, but prior to launching it, the BBC was uncertain how Freeview would develop and did not publish its take-up projections.[12]

5. The BBC's other value for money measure for Freeview is the cost per digital terrestrial household.[13] The annual cost of delivering BBC services on digital terrestrial is currently £7 per digital terrestrial household.[14] While this is down from the £12 annual household cost before Freeview was launched, it is still more than double the delivery cost of £3 per satellite household.[15]

6. One of the BBC's main reasons for investing in Freeview was to increase the number of licence fee payers watching its digital services, which cost more than £350 million in 2002-03,[16] and hence to improve their value for money. The BBC has 6 digital-only television channels (BBC 3, BBC 4, CBeebies, CBBC, News 24 and BBC Parliament) and broadcasts BBC 1 and BBC 2 in both digital and analogue. The launch of Freeview has helped increase the number of homes who have access to the digital channels, but less than 5% of the Freeview audience watch the digital-only channels.[17] The BBC attributes the relatively small number of people watching these channels to the time needed for new services using new technology to penetrate the market.[18]

7. The take-up of Freeview is affected by gaps in coverage, with one in four households currently unable to receive it. These geographical gaps reflect local topological difficulties and the need to ensure digital signals do not interfere with analogue signals.[19] These restrictions are outside the BBC's control and significant improvements will not be possible before the switchover from analogue to digital.[20] The Secretary of State for Culture, Media and Sport announced in July 2004 that the most appropriate date for the completion of digital switchover may be 2012, and that the process of switching from analogue to digital could start in 2007.

8. The coverage of digital terrestrial has, however, already increased from less than 66% of households before Freeview was launched to the current level of 73%.[21] After switchover, the problem of interference with analogue signals will no longer exist. The BBC expects that by increasing the power of digital signals, it will be possible to extend digital terrestrial coverage to around 99.7% of households[22] and, although this has not been verified, enable reception on the estimated 37% of televisions relying on set-top (as distinct from roof-top) aerials which cannot currently receive digital terrestrial because the signals are not strong enough.[23] Until then, licence fee payers who cannot get digital terrestrial television each contribute £1.22 a year through their licence fee to the cost of running it (just 1% of the colour television licence fee of £121).[24]

9. Meanwhile, the BBC is seeking to address the coverage issue and provide licence fee payers with a reasonable choice of ways of getting its services by looking at the development of low cost subscription-free satellite services.[25] In October 2004, BSkyB launched a subscription-free satellite service and BBC channels are available on this service. However, there is no guarantee that this will remain a free service, and the BBC is considering the options for developing a separate subscription-free satellite service.[26] The BBC is also repeating on BBC 1 and BBC 2 (which are available in analogue and digital) some of the best programming from its digital-only channels so that licence fee payers who do not have digital television can see those programmes.[27]

10. There is confusion among licence fee payers about the cost of obtaining the BBC's digital channels, with more than half of non-digital households not understanding that they can get BBC digital channels subscription-free. The BBC accepts that there is a great deal of work to do but is confident that it will make a substantial impact by adapting its promotional campaigns.[28] The BBC has made efforts through the postcode check facility to help licence fee payers find out if they can get Freeview, but this facility does not make it clear why Freeview is not available in certain areas.

11 Q 8 Back

12 C&AG's Review, para 1.25 Back

13 ibid, para 1.23 Back

14 Q 17 Back

15 C&AG's Review, para 1.26, Q 16 Back

16 C&AG's Review, para 1.6 Back

17 ibid, Figures 18, 19; Q 4 Back

18 Q 4 Back

19 Q 3 Back

20 Qq 1, 40 Back

21 C&AG's Review, Figure 26; Q 1 Back

22 Qq 18, 20 Back