Memorandum submitted by the Department
for Culture, Media and Sport (DCMS)
Summary of Evidence
The following memorandum provides written evidence
from the Department for Culture, Media and Sport (DCMS) on public
service broadcasting policy in the UK and, in particular, the
future of public service broadcasting( PSB) in the digital age.
It provides information on the role of Government
in relation to public service broadcasting and explains the relationship
with the main providers of PSB broadcasting; the BBC, ITV, Channel
Four, FIVE and S4C. It also provides background on Ofcom's Review
of Public Service Broadcasting and the impact of new media on
PSB provision.
HISTORY OF
PUBLIC SERVICE
BROADCASTING IN
THE UK
What is Public Service Broadcasting?
1. The term Public Service Broadcasting
(PSB) refers to broadcasting that is intended for the public benefit,
rather than for purely commercial purposes.
2. Viewers in the UK benefit from provision
by five main public service broadcasters—the BBC, Channel
3 (ITV1), Channel Four, FIVE and S4C. Teletext is also a public
service broadcaster.
3. The Communications Act 2003 set out for
the first time the remit of public service broadcasting in the
United Kingdom. Government has always believed in the value of
public service broadcasting. This is because public service broadcasting
is a matter of culture. It speaks of what kind of country we are.
4. In Phase 1 of its most recent PSB Review
Ofcom defined the characteristics of PSB as:
— Programming that is of high quality,
original, innovative, challenging and widely available;
— It must also be delivered in channels
that have a high reach among and impact on their target audiences;
and
— If it is to be publicly funded, it
must be clear that the market would not deliver a similar output,
of the same quality, on the same scale.
5. The Secretary of State has identified
public service broadcasting as being about common spaces and shared
experiences. It is about celebrating diversity, recognising and
nurturing regional identities and encouraging creativity.
6. All TV stations which broadcast on terrestrial
analogue spectrum are obliged to provide public service programming.
7. The BBC is at the heart of public service
broadcasting in the UK. All of its public services have to contribute
to its public purposes, as set out under its Royal Charter and
Agreement with Government, and all of its UK television channels
have to make a contribution to public service broadcasting, as
defined in the Communications Act.
8. The commercial PSB television broadcasters
(ITV1 and Channel 5 (Now FIVE)) have historically been required
to fulfil public service obligations in return for their allocation
of analogue spectrum.
9. They have also been given certain other
privileges in the digital world including, for example access
to digital terrestrial capacity and due prominence on Electronic
Programme Guide (EPG) listings. However, as Ofcom pointed out
in their most recent Public Service Broadcasting Review, increasing
competition in the digital world puts pressure on the current
funding model for public service broadcasting.
History of PSB in the UK
10. The BBC was founded as a Company in
1922 and became an independent public Corporation in 1927.
11. It started daily radio broadcasts on
14 November 1922 and by 1925 it could be heard throughout the
UK. In 1932 it broadened the horizons of its radio broadcasts
further with the opening of the Empire Service (the forerunner
of the World Service).
12. Today the BBC runs 10 national domestic
radio stations, four of which are available only in a digital
format (via DAB Digital Radio), 6 UK digital only television services
and live streams and listen again on the Internet.
13. The main stations available via both
analogue and digital are Radio 1, Radio 2, Radio 3, Radio 4 and
Radio Five Live. The digital-only radio stations are BBC1Xtra,
Five Live Sports Extra, BBC 6 Music and BBC7. The BBC Asian Network
is primarily a digital station, but is available in parts of the
Midlands on medium-wave.
14. The BBC also transmits English local
radio and Radio Scotland, Radio Wales, Radio Ulster, Radio Cymru,
Radio Foyle and Radio Nan Gaidheal.
15. The BBC started experimental television
broadcasting in 1932, becoming a regular service (known as the
BBC Television Service) in 1936. Many of the concepts that define
PSB were introduced by its first director general, Lord Reith,
when he adopted the mission to "inform, educate and entertain".
16. The Corporation also runs the bbc.co.uk
website, formerly known as BBCi and before that BBC Online. It
is a comprehensive news and archive website, which the BBC claims
is Europe's most popular content-based site. According to Alexa's
TrafficRank system, in July 2006 it was the 13th most popular
English language website in the world.
17. The site allows the BBC to produce material
which complements its various television and radio programmes.
It also allows the users to listen to most of the BBC's radio
output live and for seven days afterwards, using its Radio Player.
Some TV content is also available.
18. The BBC has plans to develop its online
offering further, subject to passing the Public Value Test, for
example through the iPlayer which is currently under development.
19. Competition to the BBC has developed
gradually.
20. The first commercial television broadcaster
originally began broadcasting in 1955, and was required by the
Government to ensure that its local franchises fulfilled public
service obligations, mandating a certain level of local news coverage,
arts and religious programming, in return for the right to broadcast
and earn broadcast advertising revenues.
21. The next commercial television broadcasters
in the UK, the state-owned Channel Four and S4C, were set up by
the Government in 1982 to provide different forms of PSB. Channel
Four was required to be a public service alternative to the BBC,
whilst S4C was to be a mainly Welsh language programmer.
22. When Channel 5 launched in 1997 it was
also given a number of public service requirements, albeit fewer
than the other PSBs given its narrower reach. These included the
obligation to provide minimum amounts of programming from various
genres and minimum amounts of programming originally commissioned
by the channel. It also had to meet re-tuning costs.
23. Commercial radio broadcasters in the
UK began with the launch of LBC in October 1973, under the Broadcasting
Act 1972, quickly followed by Capital Radio.
24. Local Commercial Radio licences which
use terrestrial spectrum do not have specific public service obligations,
but are chosen by "beauty parade", which has led to
public service content, such as general and travel news and weather
forecasts, being offered; local analogue stations also have a
"localness" obligation. The three national analogue
licensees have format obligations, but the highest bidders are
chosen.
25. All public service broadcasters, excluding
the public corporations, have, as well as their responsibilities
to invest in public service content, obligations to pay licence
fees to the Consolidated Fund in recognition of the income they
can earn from the use of the public resource of wireless telegraphy
spectrum.
GOVERNMENT POLICY
ON PUBLIC
SERVICE BROADCASTING
26. The Government believes that public
service broadcasting, which is statutorily defined only in relation
to television broadcasting, offers significant benefits to UK
citizens and is committed to strong public service broadcasting
provision in the future; this would best be provided from a plurality
of sources.
27. Plurality has helped to meet our aim
of maintaining a healthy public service broadcasting sector, reflecting
UK cultural traditions and meeting the needs of diverse communities
and has been to the benefit of viewers and listeners.
28. Plurality is important for a number
of reasons. It helps to ensure that a range of views are expressed,
especially in news and current affairs. It also provides competition
which inspires innovation and investment in new and challenging
formats and programmes.
29. At paragraph 2.12 of its Digital PSB
issues paper Ofcom stated that plurality is needed at three levels
of the broadcasting production and distribution chain:
— Plurality of outlets: so that viewers
do not have to be reliant on a single provider in order to receive
PSB
— Plurality of commissioning: so that
a range of commissioners working for different organisations can
bring their different perspectives to bear on the system
— Plurality of production: so that
there are different creative organisations competing for commissions.
The Communications Act
30. The Communications Act 2003 requires
that Channel 3, Channel Four and Channel 5, the licensed public
service channels, deliver programmes and services which cover
a wide range of subject matter and which meet the needs of a diverse
audience, in accordance with each channel's Statement of Programme
Policy.
31. For Channel 3 services, and Channel
5, the remit is to provide a range of high quality and diverse
programming. For Channel Four, the remit specifically includes
the need for programming to be innovative, creative and distinctive,
for it to take account of cultural diversity and to make a significant
contribution to meeting the need for educational programmes. Licences
relating to each of these must include a condition requiring that
the public service remit be satisfied.
32. It is Ofcom, however, who are tasked
with setting the appropriate targets. To this end, the Act requires
them to include conditions in the licences of all licensed public
service channels to secure that they:
— broadcast a designated amount of
independent productions;
— allocate an appropriate amount of
airtime to original productions; and
— include news and current affairs
programmes.
33. They also include in every regional
Channel 3 licence conditions to secure nationwide broadcasting
of news programmes that are able to compete with other television
news programmes broadcast nationwide in the United Kingdom and
conditions to ensure that each region is provided with programmes
appropriate to the region concerned.
34. Ofcom also include in every licence
for a Channel 3, 4 and 5 service conditions to secure that a suitable
proportion of those programmes that are made in the United Kingdom
are made outside the area enclosed by the M25.
35. The aim behind these conditions is to
retain a strong regional dimension to public service broadcasting,
reflecting UK cultural traditions and meeting the needs of diverse
communities.
THE BBC
History
36. The BBC is established under Royal Charter.
The first was granted in 1927 and since then the BBC has been
our main public service broadcaster. Licence fee funding has enabled
the BBC to remain free from commercial pressures and it has used
this freedom to produce a wide-ranging PSB portfolio on all platforms,
including its recent moves into new media. The portfolio at present
includes eight television channels, 10 national radio services,
a large number of local radio stations and a wide-ranging online
service.
37. The BBC is run in the interests of its
viewers and listeners. From 1927 until 2006 it was run by a Board
of Governors, who acted as trustees of the public interest and
regulated the BBC. They were appointed by the Queen on advice
from ministers.
New Charter
38. The new Charter and Agreement came into
force on 1 January 2007. The two legal documents represent the
culmination of a Charter Review process lasting almost three years
and involving an unprecedented level of public participation and
debate.
39. The new Charter will run until the end
of 2016. It sets out the BBC's newly formulated public purposes
and confirms its editorial and operational independence. It also
establishes an entirely new constitution and system of governance
for the Corporation.
40. Under the new Charter, the Board of
Governors has been replaced by a new BBC Trust which has an explicit
duty to uphold the interests of licence fee payers and secure
the effective promotion of the BBC's public purposes. There is
also a new, formally constituted Executive Board with its role
and responsibilities defined in the Charter.
41. These changes reflect the Government's
conclusion in Charter Review that the responsibility on the Governors
for both running the BBC and assessing its performance was no
longer sustainable. The new regime thus involves a clear separation
between the roles of the Trust and the Executive Board. Operational
responsibility rests with the Executive Board, and the Trust—as
the body responsible for the strategic direction of the BBC—is
responsible for scrutinising the strategies put forward by the
Executive Board. The Trust sets Purpose Remits, issues Service
Licences and holds the Executive Board to account for its performance
in delivering BBC services against the terms and conditions of
these documents.
ITV
42. ITV (Independent Television) was the
name given to the original commercial British television broadcasters,
set up on a regional basis in 1955 to provide competition to the
BBC.
43. It was the Independent Television Authority
(ITA) who had the responsibility of regulating the new service,
which was made up of regions, with each run by a different company.
Each company had to provide a local television service, including
a daily local news bulletin and regular local documentaries.
44. Space for commercials was sold region-by-region
by each company, rather than nationally. This was to fulfil the
requirement in the Television Act 1954 to have competition within
the system and to prevent one individual company obtaining a monopoly.
45. There were franchise rounds in 1964,
1968, 1974 and 1982.
46. The system remained the same until the
Broadcasting Act 1990 paved the way for the deregulation of the
British commercial broadcasting industry.
47. As a result of that Act, the Independent
Broadcasting Authority (which replaced the Independent Television
Authority in 1974 when it was given the responsibility of regulating
the new commercial "Independent Local Radio" stations
under the Sound Broadcasting Act 1972) was abolished, and replaced
by two new regulators: the Independent Television Commission (otherwise
known as the ITC) and the Radio Authority. The small Cable Authority
was also abolished, its powers transferred to the ITC.
48. The main change caused by the Act was
to the system of licence allocation. The system by which applicants
needed to show good programming ideas and appropriate financial
controls was supplemented by highest-bidder auctions to determine
the winner of each ITV regional franchise.
49. ITN, the news provider for ITV, was
also no longer to be exclusively owned by ITV companies and the
legal name of the ITV network was changed to Channel 3, although
the network was still generally referred to as "ITV"
by the general public and the media.
50. One further change in the 1990 Act related
to the way the ITV networking system was run. Since the 1960s,
the Independent Television Companies' Association's Programme
Controllors' Committee, representing the "Big 5" network
companies (Thames, LWT, Central, Granada, and Yorkshire) had decided
which programmes would be broadcast in network programme timeslots.
51. The Act required that ITV's scheduling
be performed by a nominated person independent of the regional
companies. This led to the creation in 1992 of the ITV Network
Centre, a central body in charge of the network schedule, with,
for the first time, a single ITV Director of Programming.
52. The relaxation of the rules regarding
franchise ownership in the 1990 and 1996 Broadcasting Acts meant
that mergers between ITV companies were possible.
53. The process of consolidation culminated
in October 2003, when, as a result of further reforms in the Communications
Act 2003, the Government announced that it would no longer statutorily
prevent Carlton and Granada from merging, provided there were
safeguards in place to ensure the continued independence of the
Scottish Media Group (SMG), UTV and Channel Television.
54. As a result, the merger of the two companies
officially took place at the end of January 2004 and the new company,
ITV plc, started trading on 2 February.
55. ITV is funded via advertising revenue.
Despite the proliferation of channels, ITV is still the UK's biggest
commercial broadcaster. Its flagship analogue channel is ITV1,
though it also now runs digital-only non-public service broadcasting
television channels ITV2, ITV3, ITV4, ITV Play, CITV and Men &
Motors.
56. However, as revenues for advertising
start to diminish the question has arisen about how ITV1 will
continue to compete with the commercial channels that broadcast
solely on digital platforms and who do not have public service
requirements imposed on them. This competition will continue to
intensify as the take-up of digital television increases.
57. ITV has sought to reduce its obligations
to produce and broadcast unprofitable PSB programming. So far,
Ofcom have allowed them to reduce their obligations for off-peak
non-news regional programming, which their research indicated
was less valued by viewers. However, they have resisted their
requests to reduce their regional news and children's programming
obligations.
58. Ofcom did, however, raise ITV's out-of-London
production quotas to lock in the then current levels of programme-making
and to encourage wider dispersion of production outside London
and across the nations and regions of the UK.
59. They believed that these changes would enable
ITV1 to concentrate on its strengths—high quality news and
original production from around the UK.
CHANNEL 5 (FIVE)
60. Channel 5 (FIVE) became the final analogue
terrestrial broadcaster when it was launched in 1997.
61. It was licensed in 1995 after an exhaustive
bidding process that lasted through 1993 and 1994. The initial
round of bidders, which included a network of city-TV stations
planned by Thames Television, was rejected outright and the Independent
Television Commission contemplated not awarding the licence at
all.
62. The difficulty with the project lay
in the use of television broadcast frequencies that had been allocated
to RF outputs from domestic video recorders. To achieve national
coverage, large numbers of domestic video recorders (which output
at a nearby frequency) had to be retuned or fitted with a filter,
at the bidding company's expense.
63. The project was revived in mid-1994
when the Independent Television Commission re-advertised the franchise.
Tom McGrath, then-president of Time Warner International Broadcasting,
put together a revised frequency plan with NTL and consulting
engineer Ellis Griffiths, involving less re-tuning and greater
signal coverage. Lord Clive Hollick, then CEO of Meridian Broadcasting
(later United News) took up the project as lead investor as UK
law prohibited Time Warner from owning more than 25%. Time Warner
then dropped out of the project and was replaced by RTL, Europe's
largest television broadcaster, which took full control of the
channel in August 2005.
64. The channel launched two new non-public
service broadcasting channels, FIVE US and FIVE Life in October
2006.
65. Like ITV, it is funded by advertising
revenue and in the run up to digital switchover will face the
challenge of competing with the commercial channels that broadcast
solely on digital platforms and which do not have public service
requirements imposed on them.
CHANNEL FOUR
66. Channel 4 is a public corporation with
a public service remit that places a particular emphasis on innovation
and cultural diversity. As a publisher-broadcaster, Channel 4
does not produce its own programmes but commissions them from
independent production companies across the UK. It works very
closely with the independent production sector, and invests heavily
in training and talent development throughout the industry.
67. The Government believes that Channel
Four must be able to play an important role, alongside the BBC,
in the provision of PSB for the foreseeable future.
68. Although it is financed by advertising,
it has an embedded public service remit as a result of its public
ownership; and, since it does not have to pay out dividends to
shareholders, can reinvest all its profits. Its aim is to be distinctive
and it has a remit to experiment and push the boundaries of traditional
broadcasting.
69. Although Channel Four is currently performing
successfully, like ITV and Channel 5 it is likely to face increasing
financial pressures as we move towards digital switchover and
beyond.
70. Channel Four has built on the success
of its core channel by launching commercial channels such as FilmFour
and More4 which reflect its public service remit.
S4C
71. S4C, the Welsh Fourth Channel Authority,
has played a special role in the public service broadcasting landscape
since its launch in 1982. It has a general public service function,
to provide television programme services for the dissemination
of information, education and entertainment, offering a broad
range of high quality and diverse programming, but is distinguished
by the provision of those services in Welsh. The Government recognises
the contribution of S4C not only to the interests of Welsh-speaking
audiences but more widely to the cultural life of Wales.
72. Under the Broadcasting Act 1990 (as
amended), S4C receives a government grant that is uprated annually
in line with the Retail Prices Index. The grant for 2007 is £94.395
million. But S4C will not be immune to the competition for audiences
facing other public service broadcasters in the multi-channel
world. Digital switchover will also mean that the Authority loses
the advertising revenue it currently receives from the broadcast
on its frequency of Channel 4 programmes in Wales.
73. The Government therefore welcomes the
new S4C/BBC strategic partnership agreement concluded last year.
This was a key recommendation of the 2004 Laughton Report on S4C
and will enhance the value to S4C of the BBC's statutory programme
contribution to the Authority. The agreement not only envisages
an increase in the cash value of the contribution but also establishes
a new, joint planning framework and provides for the development
of performance targets and indicators to measure the success of
the BBC's contribution.
74. Discussions are in progress between
the Authority and the BBC on the carriage of S4C services on one
of the BBC's digital multiplexes after digital switchover.
Ofcom's Role
75. Ofcom was created to be a new type of
regulator in an age when media platforms are converging.
76. In the Queen's Speech on 20 June 2001,
Her Majesty announced that a draft Bill (the "Communications
Bill") to create a single regulator for the media and communications
industries and reform broadcasting and telecommunications would
be published. It was published in draft, for pre-legislative scrutiny,
in 2001-02 and introduced to Parliament 2002.
77. The aim was to create a less complex
system of codes and rules which would be flexible enough to cope
with the pressures of technological change over the long term
in a fast-moving sector. Ofcom would apply and enforce these new
codes and rules and have competition powers, concurrently with
the Office of Fair Trading. It would also take responsibility
for spectrum allocation.
78. However, establishing and managing the
practical transition from the existing five regulators would be
a complex task. Therefore, the Office of Communications Act 2002
enabled the Government to create Ofcom prior to the Communications
Act 2003 receiving Royal Assent, enabling regulatory functions
to be transferred to Ofcom more quickly thereafter.
79. On December 29, 2003, Ofcom inherited
the duties that had previously been the responsibility of 5 regulatory
bodies:
— the Broadcasting Standards Commission
— the Independent Television Commission
— the Office of Telecommunications
(Oftel)
— the Radio Communications Agency
80. It also took on some responsibilities
for the regulation of the BBC and S4C.
81. Ofcom was given responsibility for the
television licensing system and for the regulation of licensed
public service broadcasting.
82. They were also given the duty to prepare—twelve
months after commencement of the Communications Act, and thereafter
no less frequently than every 5 years—a report on the current
state of public service television broadcasting, documenting the
extent to which broadcasters have together satisfied the requirements
of the public service television broadcasting remit.
83. The first Review started in April 2004
and was concluded in February 2005.
84. Based on the findings of that review
Ofcom concluded that the traditional means of securing public
service broadcasting from commercial companies would be challenged
by increasing multi-channel competition, especially after digital
switchover, which would accelerate the increasing competition
for commercial revenues. That is why it concluded that ITV1's
PSB obligations were unsustainable and should be reduced in certain
genres (principally English regional programming).
85. Ofcom's second review of Public Service
Broadcasting is set to be completed by 2009-10.
The Future of Public Service Broadcasting
Government View
86. Since the introduction of competition
to the BBC in 1955, it has been the Government view that a sustained
plurality of PSB providers, who both complement and compete with
each other, is the best way of ensuring that the quality and diversity
of PSB broadcasting is maintained.
87. In that context, it is our view that
the BBC will remain at the heart of public service broadcasting
system with commercial providers of such broadcasting continuing
to play a part in that.
88. However, we recognise there are challenges
to be faced.
Changing Environment
89. The broadcasting environment is changing
and it is these changes which are causing both Ofcom and Government
to re-evaluate the future of public service broadcasting in the
UK.
90. The multi-channel environment and the
move from analogue to digital television are, of course, the major
catalysts for change. For example, multi-channel penetration is
now at more than 70% of households including satellite, cable
and digital terrestrial. This is currently due principally to
the growth in digital terrestrial television, with in excess of
1.5m Freeview boxes sold in 2005.
91. We cannot deny the fact that in this
environment the incentives in place for commercial broadcasters
to provide PSB television are reducing as we move towards a fully
digital television age, a process which will be completed by 2012.
92. As Ofcom noted in their PSB Review,
the reduction in spectrum scarcity and increased competition means
that Government will no longer be in a position to offer exclusive
access to spectrum in return for extensive public service broadcasting
obligations. This was one of the major conclusions noted by Ofcom
at the end of its last Review.
93. Freeview has also been a key driver
in the growth of digital take-up in the UK since it launched in
2002. Its menu of free-to-air channels, in particular those of
the Public Service Broadcasters, have attracted viewers who were
previously more challenging to reach. It has also encouraged more
competition in the digital TV market.
94. Neither can we ignore the impact of
new media. There has been accelerated growth in new mobile and
internet based technologies and this has created opportunities
for new services, such as Local Television.
95. Ofcom's Communications Market Report
2006 also showed that there had been a further shift in communications
consumer patterns among the 16-24 age group, the future consumers
of PSB content. Whilst there has always been a difference between
that group and others, 2005 showed it to be more marked.
96. It is clear that these changes are having
an effect on the commercial providers of PSB. However, they also
offer the possibility that new providers will step in and provide
some types of public service content.
97. The growth in Video on Demand (VoD)
services, for example, has raised a significant challenge to the
traditional methods of receiving television broadcasts, particularly
with the increase in broadband penetration.
98. Mobile TV services have also increased,
with 3G VoD available from a number of service providers.
99. It is especially young people (16-24)
who have embraced the multitude of new technologies and means
of communication to the detriment of "traditional" platforms
and services. For example, they are now watching less of the main
PSB channels, a drop from 74.3% in 2001 to 58% in 2005, but are
using the Internet for 21 minutes more per week than the UK average.
100. In fact Ofcom research suggests that
among internet users the activity which has suffered most as a
result of being online (either because less time is available
or because the Internet provides the required information) is
TV viewing—with 18% of all people and 13% of young people
saying they watch less.
101. Mobile phone usage, particularly text
messaging, is also more extensive in the 16-24 bracket than in
any other age group. There is also a significant substituting
effect resulting from internet usage. Young people state that
internet usage is also replacing reading magazines and local and
national newspapers, as well as listening to the radio and using
other entertainment platforms.
Broadcasters rising to the challenge
102. However, whilst this is a challenge,
it also provides broadcasters with new opportunities.
103. The BBC is one of the most advanced.
It is trialling VoD post-transmission and some shows are even
being broadcast online before being broadcast on television.
104. Channel Four has also launched broadband
offerings built around its public service broadcasting remit and
recently launched 4oD—On Demand.
105. ITV has also expanded into on-line
ventures, including Friends Reunited, and is also trialling the
online delivery of its local services.
Too early to tell how far changes will go
106. Of course, it is too early to predict
the final impact these developments will have on the current PSB
system and the prospects for commercially funded PSB.
107. But the pace of change seems to be
accelerating: Ofcom state in their Digital PSB Issues paper that
digital take-up has been well in excess of that forecast in its
PSB Review.
108. That is why we, along with Ofcom, want
to ensure that we have a workable structure for PSB television
in the approach to digital switchover and beyond.
109. Neither Government nor Ofcom want to
be in a position where, in 2012, we have a PSB system that is
no longer sustainable, but have nothing to put in its place.
110. Ofcom has already announced its intention
to examine the future of children's television. A move welcomed
by the Government.
111. They will also do further work as part
of their next review of PSB, which is due to be completed in 2009-10.
Impact of the Communications Act
112. To a certain extent, the Communications
Act anticipated these changes. For example, the Act created Ofcom
in such a way as to allow for a more flexible approach to regulation,
aiming to minimise regulatory burdens and regulatory overlap.
113. Also, by giving Ofcom the duty to report
periodically on the current state of public service television
broadcasting, they are a in a better position to monitor and react
to changes in the broadcasting environment.
114. This has allowed them to document the
extent to which broadcasters have satisfied the requirements of
the public service television broadcasting remit and make changes
to the obligations as necessary.
115. As noted above, as a result of the
last review, concluded in February 2005, Ofcom decided that ITV1's
PSB obligations were unsustainable and should be reduced in certain
genres (principally English regional programming).
116. Section 264 of the Act also requires
Ofcom to ensure that "those [PSB] services (taken together)
include what appears to Ofcom to be a suitable quantity and range
of high quality and original programmes for children and young
people".
117. Therefore, Ofcom regularly review and
report on the extent to which the PSB purposes have been fulfilled,
with a view to maintaining and strengthening public service television
broadcasting in the UK. In addition, the PSBs are required to
consult Ofcom on proposals for significant changes in their statements
of programme policy and take account of any opinions expressed
by Ofcom.
118. Section 216 of the Act also provides
that Ofcom can decide not to renew a digital licence for Channel
Three or Channel Five if it is not satisfied that the applicant
would meet the requirements imposed by the Act regarding the public
service remit, programming quotas, news and current affairs programmes
and programme production and regional programming.
Implications for current PSB providers
119. The new BBC Charter and Agreement establish
a framework within which the BBC can continue to play a central
role within a fast-changing media landscape. The framework involves
six new public purposes for the BBC and a new approach to governance
and regulation which puts the interests of the licence fee payer
at the heart of all the BBC does, whilst also ensuring that the
Corporation does not inhibit the continued development of a dynamic
commercial sector.
120. Whilst the BBC will always remain at
the heart of PSB broadcasting in the UK, it is not the only PSB
provider. The others, ITV, Channel Four, FIVE and S4C, all make
hugely important contributions to a system which generates high
quality programming across a huge range of genres, including news,
current affairs, drama, arts and regional programming.
121. We believe that sustaining plurality,
with broadcasters who complement and compete with each other,
is the best way of ensuring that quality and diversity is maintained.
122. The Government is fully alert to concerns
at the potential impact of the digital revolution on the long-term
sustainability of PSB and its existing funding base.
123. In looking to the future, therefore,
our policy has been guided by three key considerations:
— The developing technologies and increased
competition;
— Our commitment to a strong BBC, funded
by the licence fee for the next 10 years;
— The benefits of sustaining plurality
of PSB provision.
124. As stated, in the Charter Review White
Paper, it is our policy to conduct a review, as the impact of
the move to digital becomes clearer, of the case for public funding—including
licence fee money—to be distributed more widely beyond the
BBC.
125. 2012-13, which is the beginning of
the all-digital era for UK television, will also form the first
year of the next licence fee settlement. We will undertake the
wider review of funding for public service broadcasting, committed
to above, well before that settlement is announced.
Importance of Channel Four—Ofcom review
126. The Government has always been clear
that Channel Four has a vital role to play, alongside the BBC,
in the provision of PSB. That is why we welcomed their moves to
strengthen their commitment to providing high quality, diverse
public service content across an increasing range of channels
and platforms.
127. However, we also noted in the Charter
Review White Paper that Channel Four was likely to face financial
challenges in the future as competition increases in the digital
world. We therefore said that we would consider possible forms
of help.
128. Ofcom's detailed review of Channel
Four's financial prospects is now under way. The aim is to assess
the Channel Four Group's financial position and undertake a financial
review to assess the organisation's likely future development.
129. If that review indicates a medium-term
threat to the Channel's funding model and its ability to deliver
its PSB remit, Ofcom will consider what form of regulatory intervention
is appropriate.
130. Government is also keeping an open
mind and will examine, within the licence fee settlement, the
possibility of requiring the BBC to contribute to the first six
years of Channel Four's switchover costs.
Conclusion
131. Our aim is to maintain a healthy public
service broadcasting sector.
132. That is why we look forward to the
outcome of Ofcom's second review of Public Service Broadcasting.
133. Government is also committed to a review
of public service broadcasting funding towards the end of the
switchover process. This will examine further the merits of Ofcom's
proposal for a Public Service Publisher to fund PSB content in
competition to the BBC. Other developments, such as local television
and internet provision, can also be taken into account at that
time.
134. The Department itself commissioned
some research as a contribution to the debate and this was published
on 18 January (The Robin Foster Report) to coincide with the Oxford
Media Convention, for which the Secretary of State set out a vision
for future public service provision going beyond broadcasting
but holding firm to certain core principles, including:
— Ensuring the universal availability
of public interest content—especially free, impartial news—preferably
from a number of different suppliers, and in forms which people
find convenient to use.
— Maintaining a legislative and regulatory
environment that encourages innovation and creativity across the
sector.
The potential for this is shown by the tremendous
growth of the independent production sector following the 2003
Act.
— Helping to ensure the highest standard
of content reaches the highest audiences.
— Protecting citizens and consumers—with
roles for legislation, industry and, increasingly, individual
responsibility.
— And, in that context, helping to
foster a "media literate" society—able, in the
age of Wikipedia, to discern fact from opinion.
January 2007
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