Memorandum submitted by Broadcasting Policy
Group (BPG)
1. The BPG report of February 2004 made
a series of recommendations designed to secure the future of the
BBC and of public service content (PSC) in the digital age. We
find no reason to change the basis of our analysis or the thrust
of our proposals; indeed, subsequent events have served to highlight
rather than diminish our concerns regarding the plurality of PSC
delivery in a digital age.
2. Discussion of PSC provision is still
beset by two key misunderstandings. The first is the assumption
that it is necessary to use complex definitions of PSC, such as
the nature, genre, source or method of financing of programmes.
The second misunderstanding is that PSC needs to be provided through
the funding—directly or indirectly—of public service
broadcast institutions (the BBC, ITV, Channel 4, five).
3. Trying to define PSC by its purposes,
characteristics, categories or origin is inevitably doomed to
failure. Why should licence fees or taxes be used to fund Sky
News, when the market will do so? Why should anyone be threatened
with fines or jail in order for the BBC to show feature films
or Diagnosis Murder? None of the elaborate attempts by the BBC
or Ofcom to define PSC—curiously always seeming to require
their own perpetuation as institutions—gives us a clue as
to how much public service content we actually need, nor how much
to pay for it.
4. The BPG offered a mechanism which was
crystal clear. We identified two types of output: that which the
market supports and which therefore requires no public funding;
and that which is socially desirable in a democratic society but
which the market will not or cannot support, either at all or
at a sufficient level (to be defined by politicians, not broadcasters),
such that only public funding will deliver—Newsnight, Radio
4, Welsh language broadcasts, and so forth.
5. The second misconception—the need
for institutional delivery of PSC—is a creature born of
analogue spectrum scarcity, and should be interred with it. The
notion of "public service broadcasters", these days
enshrined in legislation, stemmed from the trade-off whereby the
use of scarce spectrum was licensed to companies at discounted
or nil prices in return for their provision of certain types of
programming.
6. With the BBC, which originally enjoyed
monopoly access to both spectrum and licence fee funding, there
grew an acceptance that by definition everything it transmitted
constituted PSC in one form or another. At least when commercial
broadcasters were allocated spectrum, there was an attempt to
differentiate between what they would anyway provide and what
regulators required of them. Yet—curiously again—regulators
found that much of the former provision might count as PSC, too.
Until all participants in this debate recognize these basic facts—that
there are market products and non-market products, and that institutional
delivery should not determine either how we define nor fund PSC—we
will all remain stuck firmly on first base, contemplating a progressively
worsening situation.
7. Since the BPG report three years ago,
the trade-off between receiving valuable spectrum and delivering
non-market content has become increasingly unworkable. Scarce
analogue spectrum faces plentiful cable, satellite and telephony
spectrum, and all the old commercial broadcasters are expected,
even by Ofcom, to abandon the PSC commitments they made in exchange
for spectrum access, in line with the declining value of that
access. ITV and five are well down that path, and Channel 4 is
now looking to direct subsidy as the means to perpetuate its old
analogue role.
8. This process has accentuated the dominance
of the BBC as a provider of PSC to the detriment of plurality
of voice: one of the main justifications for intervention in the
market in the first place. The BPG foresaw that, unless the licence
fee system were phased out, the decline of PSC within ITV, five
and (it would appear) Channel 4 would leave the BBC even more
overwhelmingly dominant as a supplier of PSC: a major setback
in a democratic society.
9. The BPG recommended that, during this
transition period, charging the full (if declining) value of spectrum
to ITV and five, whilst withdrawing all PSC obligations, would
provide funds for direct provision of PSC content. We are inclined
to believe that this may soon apply to Channel 4, as well. As
it happens, while the value of analogue spectrum is declining,
government policy has created new spectrum value within the confines
of the digital terrestrial transmission system. Most recently,
vacant DTT channels has been auctioned for up to £12 million
per annum. Given that only the BBC channels will qualify for free
spectrum under the arrangements proposed by the BPG above, it
follows that when the current licence periods for DTT multiplexes
expire, in excess of £200 million per annum could be raised
for a PSC fund, such as the Public Broadcasting Authority (with
"broadcasting" interpreted to include new media) recommended
by the BPG.
10. Another option was top-slicing the licence
fee, and handing chunks of it to other terrestrial broadcasters
to make up for the loss of value of their previously precious
analogue spectrum. However, what this gained by way of plurality
of supply was offset, in the BPG's view, by the continued reliance
on the opaque mechanisms of institutional delivery. It also seemed
to us that subsidizing the likes of ITV and five so as to continue
to induce them to transmit certain classes of programmes perpetuated
the lack of transparency and accountability that characterised
the old trade-off system. Moreover, if the BBC used top-slicing
as an excuse to dilute its own provision of what the BPG would
regard as PSC, the licence fee payer might feel distinctly short-changed.
11. Recently, however, the government imposed
a licence fee settlement on the BBC which did indeed top slice
the fee: not for the benefit of other so-called public service
broadcasters, but to subsidise the forced migration to digital
television of the millions of people too poor to pay the full
cost themselves.
12. We regard this diversion of licence
fee revenue to pay for a government technology project as highly
questionable. However, we also note the lack of any protest from
the BBC at this diversion of their ear-marked income to a non-BBC
proposition: what Sherlock Holmes might have described as the
dog that did not bark in the night. However objectionable the
purpose, it would appear that the BBC can tolerate over £100
million a year being sliced off the licence fee without threatening
to close orchestras, BBC4 or Radio 3.
13. Some commentators thought that the BPG
was seeking to attack or damage the BBC with its recommendations.
This is far from the truth. If, as recommended, BBC Production—the
UK's largest production entity—were separated from BBC Broadcast,
thereby delivering a transparent commissioning process for the
creative industries, the BPG expected both to flourish. We also
recommended that the BBC be slowly weaned off its dependence on
the licence fee, because we thought such an anachronistic, inflexible,
costly and non-accountable funding system was not in the best
interests of the citizen or the BBC, and should be superseded
once technology allowed an obvious alternative.
14. We also felt that transferring, first
the BBC's digital services, and later its main television channels,
to a subscription basis would at long last allow a clear separation
to be made between the BBC's market output and non-market output.
At that point, the BBC, too, could apply to a central fund—which
we called the PBA—to pay for some or all of the PSC it wished
to deliver, over and above the rich mix of programmes that a subscription
service would be expected to supply.
15. As we now know, the government has decided
instead to leave the licence fee in place, at least until the
planned end date for analogue switch-off, with a review beforehand.
It does not seem to us that the issues of plurality of PSC supply,
contestability and accountability can be satisfactorily addressed
whilst postponing discussion of proposals like those from the
Burns Committee that the dependence of the BBC on the licence
fee be progressively reduced.
16. An example of the kind of contestable
funding the BPG envisages has been the interesting experiment
of Teachers' TV, whereby central funds have been deployed to create
a new form of public service content. This material has been transmitted
using broadcast and internet delivery, with the contractor being
installed by means of an open tender, which is now being re-advertised
despite the success of the original winning bidder. Here we have
a prime instance of targeted, transparent, accountable, contestable
PSC funding, with a clear value-for-money assessment available.
17. Why, then, is Ofcom seemingly fixated
on its notion of a Public Service Publisher, or Provider—either
way, PSP? This idea was heavily criticised on first viewing as
an unnecessarily bureaucratic response to the problem of PSC delivery,
with many commentators warning against the dangers of ghetto-ising
PSC content and diverting scarce funds to infrastructure, transmission
and marketing. It also placed Ofcom in the position of facilitating
PSC provision whilst at the same time having to assess that provision
in its five-year reviews.
18. The PSP has re-emerged on a much smaller
scale, and laden with current buzz words such as "new media",
"participation", "re-usability" and "personalisation".
As such, it is both less worrying, but also less relevant. It
would make very little difference to the problem of super-dominance
by the BBC in securing public funding for broadcasting. It is
still trapped in the concept of institutional delivery, though
less so than previously. And its buzz words have been overtaken
by the likes of the BBC, with its 360-degree commissioning (ie
across all delivery methods), and Channel 4, with its push for
re-usability. The guiding principle appears to be technology,
rather than content: another example of Ofcom pursuing the surface
of PSC rather than its core.
19. Ofcom prides itself on being an "evidence-based""
regulator. Its surveys of public service broadcasting, however
deeply flawed, have at least demonstrated that the disappearance
of plurality in PSC delivery is the key concern for the future.
A PSP would make only the most minimal of differences in this
regard. However nervous of tangling with the BBC Ofcom might be—and
it shares this anxiety with many a politician—we will never
solve the problems of PSC in the digital age until we grasp the
nettle of the BBC's funding. Everything else is a sideshow.
February 2007
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