Appendix: The BBC's response
On the basis of the review by the National Audit
Office (NAO) and the BBC's response to this review, the Committee
of Public Accounts (PAC) took evidence from the BBC on its achievements
to date from the investment in Freeview and on priority areas
to address as Freeview progresses. The review of Freeview was
carried out under the arrangement agreed in 2003 between the Government
and the BBC in the context of Parliament's consideration of the
Communications Bill.
The BBC Governors welcome the PAC's conclusion that
the BBC's investment in Freeview has succeeded in ensuring subscription-free
access to its digital channels is available on digital terrestrial
television. We also acknowledge that the BBC must do more to dispel
viewer confusion about the service and to explain the reasons
for current gaps in coverage.
The Governors are satisfied with the BBC's achievement
in driving digital take-up throughout the United Kingdom. The
range of services offered has been enhanced and audience awareness
of digital platforms is increasing. However, the Governors are
fully aware of the current limitations of digital terrestrial
television coverage and the need to extend the availability of
the BBC's free-to-air digital services to other areas.
Freeview plays an integral role in supporting the
move to fully digital broadcasting. We are pleased with its successes
so far and look forward to viewers increasing their use of BBC's
digital services.
This paper provides a response from the BBC to the
conclusions and recommendations raised by the Committee in its
Report issued in February 2005.
BBC Board of Governors
11 May 2005
1. By investing in Freeview, the BBC has succeeded
in ensuring subscription-free access to its digital channels is
available on digital terrestrial television. When ITV went into
administration in 2002, there was widespread uncertainty about
the future of digital terrestrial television. The BBC's investment
helped ensure that digital terrestrial television continued and
was available subscription free. Nearly four million homes now
have Freeview.
BBC response
Since the Report there has been sustained growth
in the take-up of digital television, with Freeview being the
key driver. According to BBC estimates, Freeview is now in more
than 5 million households. This is an increase of nearly 2 million
households since the NAO review was undertaken in 2004. This increase
has been supported by continued platform-neutral BBC promotional
activity, including on-air campaigns explaining how to access
the BBC's six new digital channels on cable, satellite and Freeview.
During the 'Summer of Sport' campaign (June-August 2004), monthly
receiver sales ran at 185,000 per month which was around 60% up
on the same period in the previous year. During the major Christmas
campaign at the end of 2004, sales averaged 125,000 per week,
with a record breaking week in mid December of 190,000.
2. One in four households cannot get Freeview
because of gaps in coverage. The gaps are due to local topographical
difficulties and the need to ensure that digital signals do not
interfere with analogue signals. The Freeview website and promotional
literature should explain why Freeview is not currently available
in some areas and the potential for future increases in coverage,
depending on plans for switchover from analogue to digital television.
BBC response
The BBC will continue to work to improve digital
coverage. We acknowledge that there are significant limitations
in the current coverage of digital terrestrial television (primarily
due to technological and topological factors beyond our control)
and that we need to extend the availability of the BBC's free-to-air
digital services to other areas.
Since the NAO's review, the BBC has updated its digital
website to carry information on why Freeview is not currently
available in some areas. The BBC is also integrating these messages
into the development of external communication materials regarding
digital switchover. Call centre staff are fully briefed on the
coverage issues and are equipped to handle enquiries regarding
future availability of digital coverage across the UK.
3. The BBC should establish whether subscription-free
satellite could satisfy in a cost effective way the demand for
its digital channels in areas where Freeview is currently unavailable.
The BBC needs to identify whether there is a case for a new satellite
service, which could offer near universal coverage, bearing in
mind that BskyB launched a new subscription-free satellite service
in October 2004.
BBC response
The BBC is continuing to work with industry partners
to explore options for launching a new subscription-free satellite
service during 2005. The BBC is aiming to encourage an open horizontal
market and more consumer choice. It is expected that a subscription-free
satellite service would be cost effective and that it would be
comparable to the 2003/04 cost per household of Freeview.
Recognising that around a quarter of the country
lives outside Freeview coverage areas, the BBC refers to Sky's
subscription-free satellite option in the BBC digital guide and
website.
4. The BBC should establish whether set-top aerials
and not just roof-top aerials will be able to receive digital
terrestrial television after digital switchover. Freeview is not
usually available to licence fee payers relying on set-top television
aerials because digital television signals are not strong enough.
The BBC believes that after digital switchover, when the power
of digital signals can be increased, digital terrestrial will
work on televisions with set-top aerials. The BBC should carry
out early field tests to establish whether the licence fee payers
will be able to use set-top aerials to receive digital terrestrial
television after digital switchover.
BBC response
The BBC recommends that reliable reception of analogue
and digital television broadcasts is most readily attained by
using an external receiving aerial, mounted at the highest possible
location outside a viewer's property.
Nevertheless, the BBC recognises that many households,
and many more second and third sets, rely on set-top aerials for
the reception of BBC services. Through the activities of its Research
& Development department, the BBC has been investigating and
researching the performance of set-top aerials for some years,
primarily to inform the debate around switchover.
The BBC has also been an active partner in a recent
study co-ordinated by Ofcom under the Government's Digital Action
Plan into just this matter, which sought to identify the number
of viewers using set-top aerials and the potential for these to
be served with digital terrestrial after switchover.
It is partially because of the need to serve as many
set-top aerials as practicable that the BBC believes it will need
to use the highest possible power for its digital terrestrial
transmissions following switchover. In addition, the BBC believes
that a significant improvement in the performance of set-top aerials
could be achieved if a diversity of reception techniques were
adopted by the industry, which would enable the set-top box to
make more effective use of the received signal improving overall
performance. With a commercial partner, the BBC has brought to
market a suitable chipset (for integrating in set-top boxes) that
is capable of achieving this, and continues to work with the Digital
Television Group and others to investigate and promote the benefits
of these techniques.
The BBC anticipates that through its involvement
in the Government's Digital Television Trial in Ferryside it will
be able to learn more about set-top aerials in the field in a
real switchover situation. As the decisions about power and mode
for digital terrestrial broadcasts after switchover are made and
the shape of the future network becomes clearer, the BBC will
revisit its modelling in order to gain a better understanding
of the set-top aerial issue.
5. The BBC should publish value for money indicators
for subscription free digital television. Driving the market for
and improving take-up of free to air digital television forms
one of the BBC's key objectives. The BBC identified cost per household
as a value for money measure for Freeview, but it needs to revise
the take up estimates it produced prior to launching Freeview
as these have been significantly exceeded, and include the cost
of increasing the coverage of digital terrestrial television.
BBC response
The BBC is committed to driving digital uptake and
ensuring licence fee payers have access to the full range of BBC
channels and services. In response to the report, the BBC has
set internal targets for take-up of subscription-free digital
television. These figures have been based on current market projections
and levels of marketing support anticipated across the next five
years.
As outlined in the review, the BBC has identified
cost per household as a key value for money measure for Freeview.
In 2003/04 the cost per Freeview household was identified at £7.56.
This figure was based on total costs of £25.7m (£24.4m
for distribution costs and £1.25m to DTV Services Limited)
and 3.4 million Freeview homes. We have updated the figures for
2004/5, based on BBC estimates that Freeview is now in more than
5 million homes (GFK data, January 2005). The analysis has indicated
that the cost per household has reduced from £7.56 to £5.14.
6. The BBC's spending is not subject to the full
independent scrutiny, and accountability to Parliament, that rights
of access for the Comptroller and Auditor General would provide.
The interim arrangements covering the period up to 2006 are a
step forward. But as we said in our response to the public consultation
on the BBC Charter Review, the Committee has long pressed for
the Comptroller and Auditor General to be given full rights of
access to the BBC to provide full accountability to Parliament
for the public money it receives. He would then be able to decide
what to examine and when, on the basis of a full and independent
assessment of value for money risks.
BBC response
The BBC shares the Committee's interest in ensuring
that the public money the BBC receives is spent well and it welcomes
this review undertaken by the NAO. The compromise reached during
the debates on the Communications Bill balanced the independence
of the BBC and the role of the Governors with the need for independent
scrutiny and parliamentary accountability. Though in its infancy,
the arrangement is working well and we believe it should be given
time to mature.
7. The BBC's activities need to be carried out
in accordance with the highest standards of probity, propriety
and value for money. Under the Royal Charter the Governors must
satisfy themselves that these standards are being maintained.
Recognising the Governors' role, this Committee would expect to
take evidence from them in its future examination of the BBC's
spending, as it did in the case of Freeview.
BBC response
Under the agreement with the DCMS, the value for
money studies are addressed to the BBC Audit Committee and laid
before Parliament by the Board of Governors. The Governors are
therefore happy to give evidence to the Committee on subsequent
reports by the NAO or other external bodies. Normally the responsible
Governor in these circumstances will be the Chair of the Audit
Committee, who will usually find it helpful to be accompanied
by the relevant members of the BBC Executive who will be responsible
for progressing any agreed actions.
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