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The BBC has been set objectives that reflect the benefits. It is defined by its goals as a public service, not only its programming output. The 2005 charter review Green Paper, entitled A strong BBC, independent of government, states:
Television and radio audiences are huge. Almost every programme on the major terrestrial channels will reach millions of people simultaneously. That places such broadcasters in a uniquely powerful position, and since the BBC was first established, in the 1920s, it has been commonly accepted that such power should be harnessed for societys good. Audience research shows that the public agree with this principle. They want programmes to inform and educate as well as entertain.
Like the hon. Member for Teignbridge, I find that The Archers fulfils those three criteria wonderfully: it informs, educates and entertains. I have listened to it for more years than I care to remember.
We recognise the positive contribution that broadcasting can make to the effective functioning of democracy. While people continue to watch television and listen to radio in such large numbers, we are determined that the public should get the service that they need and deserve, and that the BBC should retain the potential to deliver those benefits.
The hon. Member for Wantage referred to the ability to innovate that the licence fee grants. That is an important part of its benefit to the public. Audiences would not reap the full benefit of that sort of innovation or of the information, education and entertainment that the BBC currently supplies without large-scale public funding.
As the scale and sophistication of pay-TV options increase, television viewers may benefit from an increased choice and diversity of different types of service. Ofcoms review of public service broadcasting has concluded that fully commercial providers will never provide us with high quality public service on anything like the current scale.
Anyone who has spent time in another country such as the United States, where there are a couple of good public service channels, will realise that the permeationthe mainstreamingof the public service ethos that pertains in this country does not exist there. I would personally be sad to lose it.
The case for public service radio is, if anything, stronger than that for TV. Even if audiences wanted to pay for the sort of distinctive content that the BBC provides, there is as yet no price mechanism that could allow them to do so. Radio is entirely free to listen. Commercial stations do fulfil a public service role in some waysparticularly through the provision of news and local information. However, the only available commercial models rely on advertising and sponsorship and commercial stations therefore tend to cluster towards the middle ground of taste, in order to reach the widest possible audience.
Richard Younger-Ross: The Under-Secretary makes a valid point. Does she accept that one of the problems with commercial stations is the amount of time given to news? There is always a conflict in those stations between the journalists, who want longer news broadcasts, and the programmers, who want more adverts and music, and less information and news?
Barbara Follett: That is a problem. The 30-second soundbite that politicians are traditionally allowed on the perhaps less pressured stations tends to be reduced to 20 or 15 seconds on commercial radio stations in my area, which is the eastern region and Hertfordshire. One tends to get a great deal of music, quite a lot of advertising and not much information, but people like to have that information.
Whereas average audiences for the BBCs main television channels are falling as digital competition increases, in radio, digital development has yet to have a significant effect on audiences, which remain relatively stable for the larger, well-established stations.
Hon. Members might be interested to learn that the annual percentage share of BBC 1 fell from 30.8 per cent. in 1997 to 22 per cent. in 2007 and that the annual percentage share of BBC 2 fell from 11.6 per cent. in 1997 to 8.5 per cent. in 2005.
In the last decade, the BBC has moved beyond broadcasting into online and interactive services. Such services do not generally have the same sort of mass impact as television or radio programmesthe internet is a more personal, one-to-one medium. Nevertheless the internet is an increasingly important source of information for millions, and the BBC has established itself as a central, trusted presence in the online world. BBC Online is the most popular site in the UK. In this context, the independent review of BBC Online...identified some clear purposes for BBC Online that place it alongside the BBCs television and radio servicessustaining social values and providing high quality, innovative and accessible content for UK users.
In addition, that review noted that BBC Online plays a valuable role in the development of the web itself: using the BBCs position as a trusted guide to bring new users to the internet; encouraging users to try new interactive technology; and setting a benchmark of innovation and creativity. The BBCs internet presence also offers valuable support to its traditional TV and radio programmes.
For instance, the BBC broke new ground in its coverage of the Olympics in 2004, by backing it up on the internet and the radio. Indeed, that has now become usual for television and radio programmes. For instance, we can now go online and watch the Today programme in action in the studio, which is an innovation.
I hope that hon. Members were as impressed as I was with the BBCs extensive coverage of this years Olympics games and of Team GBs triumphant march through London yesterday. The Beijing games were the first time that viewers could watch the Olympics in high definition, on the BBC HD channel. I understand that all in all there were about 300 hours of coverage.
In looking at options for funding, the Green Paper came down unequivocally for public funding of broadcasting. The charter review did, however, consider options other than the licence fee for funding the BBC. They included direct funding from the Government, commercial funding for a free-to-air service through advertising, sponsorship and commercial funding for a pay-TV service through subscription.
Government funding could be considered fairer than the licence fee in that it would be progressive,
each individual would in effect only contribute according to his or her income. This would make the BBC an area of Government spending like any other public service. The objections to this arrangement are made on the grounds that the BBC is a public service like no other, and it is feared that direct Government funding might threaten
Barbara Follett: I am glad that the hon. Gentleman has mentioned the BBC World Service. As someone who has been a consumer of it quite often, I find it very good, but not as in depth as some of the services that we get here. We can see some of the commercial considerations at play there, particularly in countries with quite a high level of advertising. For example, outside Britain, we can see BBC World with advertising.
Barbara Follett: Yes; in fact, that funding comes through the Foreign Office. I am sorry that I got the two confused. I think that, because it is a smaller, niche programme with a particular aim, it is possible to fund it in that way, but the best model that we have at the moment for a public service broadcaster is the one that we are currently using.
Richard Younger-Ross: I listened to the BBC World Service a great deal when I worked in Iraq; it was very important to me. I was in Iraq in 1982, during the Falklands war, and I remember the then Conservative Government putting pressure on the BBC World Service because of what they perceived as its biased reporting of that conflict, although from my position, sitting in Baghdad, I thought that its reporting was very fair. There have been pressures ever since then, in Government circles, in regard to that budget. The hon. Member for Christchurch does not make a good point, because the budget has been at risk in the past.
if the Government held the purse strings.
to be subject to reviews of its funding through the biennial Government Spending Review process.
These objections appear to be supported by public opinion. The public told us they wanted less scope for Government interference in the running of the BBC and nearly two-thirds of them supported the licence fee in its current form as the best method of funding. Ofcoms audience research found there was significant opposition to Government fundingpartly because people wanted to keep the Government out of television and partly because they saw a distinct difference between the luxury of public service television and the right to other forms of universal public service such as the NHS.
The case for allowing advertising on the BBC is a difficult one to make. There was quite vehement opposition expressed to the idea...in the course of our public consultation and research. 60 per cent. say it interferes with their enjoyment of programmes (31 per cent. disagree). The lack of advertising is therefore felt to be a key distinguishing characteristic of the BBCit was the third most frequent value spontaneously attributed to the BBC by contributors to our quantitative research.
The BBC would certainly attract advertisers if it were allowed to, particularly to its mainstream services. However, modelling of the advertising market suggests that the effect of such a move would be to push down prices, since the total amount of money spent on advertising would not rise significantly but many more ad spots would become available.
That would almost certainly reduce the income of both the BBC and existing ad-funded broadcasters (including other public service broadcasters such as ITV and Channel 4).
Mr. Chope: The Minister will know that the amount of advertising revenue received by Google during the first half of this year was no less than £50 million. Does she not think that if the BBC had advertising on some of its internet programmes, it could get back some of that money going to Google?
Barbara Follett: It might well be able to, but if people value what the BBC provides as a service without the intrusion of advertising, I think that we should take that into account. I certainly value the fact that when I go on to BBC Online, I am not pressed to buy something that I do not need, which, sadly, is too often a characteristic of todays world.
Advertising would also create conflicting incentives for the BBCthe requirement to fulfil public purposes would have to be weighed against the need to generate revenue.
The character of programming might drift towards the middle ground of taste as a result. Ofcom has pointed out that such a conflict of incentives already exists for ITV1, Channel 4 and Five, and that it will be increasingly difficult to regulate in future as commercial competition intensifies. 52 per cent. of those we surveyed said they thought the BBC would lose its independence if it relied on advertising or sponsorship.
The long-term trends in the TV advertising market are anyway uncertain. New digital technologyparticularly Personal Video Recordersincreasingly allows audiences to skip through advertising breaks. It may be unwise to increase the dependency of public service broadcasting on advertising at a time of such uncertainty.
There are probably fewer concerns about allowing the BBC to take sponsorship for some programmes. There would still be questions to answer, however, about a potential conflict of incentives
and the commercial impact of such a move. Viewers and listeners may feel it detracted from their experience of the BBC if commercial messages were attached to their favourite programmes.
although our research suggests that people would prefer it to advertising... sponsorship alone would never deliver sufficient income to sustain the BBC without some additional source of funding.
Barbara Follett: The latter is extremely good and I enjoy listening to it, as I enjoy Radio 3. However, if I want to listen seriously and at length, I tend to turn to Radio 3; if I want news or weather information, I tend to turn to Classic FM. We have that choice, and I would be very sad if I lost the Radio 3 side of it and was left only with the Classic FM side. That is the point: we need to cater to both markets.
The BBCs own willingness to pay research suggests that some people are willing to pay significant amounts for access to BBC services42 per cent. say £20 per month and 19 per cent. say £30 per month. If services were put together in differently priced packages, with premium programmes available at different prices depending, for example, on their newness or exclusivity, audiences would have more freedom of choice and some argue that the BBC might retain a sustainable level of funding. This sort of model would raise significant issues of principle. The chief argument against subscription as a funding method is that it would undermine the principle of universal accessBBC content would no longer be free at the point of use. It can be argued in response that the existing licence fee is in anyway a form of compulsory subscription. Services are only free once a bulk licence fee has been paid.
But if people choose not to subscribe then prices might have to rise for those who carried on paying, and some low-income viewers and listeners who wanted to subscribe might be priced out of the market for BBC content. If that content were not universally available, its potential benefit to society would be reduced.
In the short term, there are also significant practical problems. In mainstream radio, no subscription facility exists, nor does one look likely to be available for some time.
While a television subscription service could function in satellite and cable homes, for most terrestrial viewers (including most digital terrestrial or Freeview homes) there is presently no way of controlling access to individual channels. New subscription technology (code-protected cards for conditional access) of the sort used in satellite and cable homes would need to be included in most, if not all, digital terrestrial equipment before any subscription service could function for the BBC.
When compared to the alternatives, we feel the licence fee continues to be the best funding mechanism available for the foreseeable future. That is a conclusion endorsed by Ofcom and the Culture, Media and Sport Select Committee, as well as by licence fee payers. While some people show interest in the alternatives, in all strands of our research work there was more support for the licence fee than for any other mechanism. 63 per cent. of those
who mentioned funding in responding to our consultation accepted the principle of the licence fee. Many respondents argued that the licence fee provided unparalleled value for money, and one of the most common arguments made in its support was that it binds all households together as equal stakeholders in the BBC.
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