165.Projections from industry analysts and the experience of European counterparts indicate that the transition to a new funding model could take up to a decade. Olav Nyhus, Director of Legal and Public Affairs at Norway’s NRK public broadcaster, told us that preparations for changing their licence fee to a universal levy started over 10 years ago. He noted that identifying a viable alternative had not been straightforward, they eventually settled on a model that had not been a preferred option. Dr Florence Hartmann of the European Broadcasting Union highlighted that securing public support could also be time-consuming. Switzerland took five years and a national referendum to agree a way forward, for example: “There was a massive effort and a big controversy.” There are two key areas that will affect the viability of possible future funding models: technological and commercial factors, and the political process and timing.
166.The shift towards online-only BBC services will need to be balanced against the ongoing relevance of linear television. Free-to-air digital terrestrial television (DTT) remains the main way of watching TV for around 11.4 million, or 43 per cent of, households in the UK. DTT accounted for over half of all BBC viewing in the third quarter of 2021. While linear television’s viewing share shows long-term decline, Arqiva’s Chief Commercial Officer Shuja Khan argued that this masked DTT’s continued relevance. He said the number of households taking up DTT had grown by 1.5 million over the last five years, as households subscribed to SVODs and replaced pay-TV packages (such as Sky or Virgin Media) with Freeview as a cheaper alternative.
167.This continued prevalence of DTT poses challenges for a domestic subscription funding model. DTT is not currently compatible with the conditional access technology required to impose a paywall. Building conditional access technology around the DTT network, Shuja Khan told us, would be “extremely hard” and would require “a lot of investment”, involving physical changes to the 1,100 DTT transmission towers in the UK. As the other channels currently delivered via DTT would remain advertising-funded and not take advantage of the conditional access technology, the cost of development would solely be to implement a paywall for BBC services. Any BBC subscription service content may therefore need to be online only.
168.The costs and complexities of developing conditional access technology for digital terrestrial television would be disproportionate to the benefits. We do not recommend the Government pursues this.
169.Neither analogue nor DAB radio have the technology to support a paywall. This matters because of the scale of content on and public engagement with these services. Live radio is consumed on analogue (FM and AM), DAB and online—for example through BBC Sounds. Data from Radio Joint Audience Research, the official radio audience measurement body, indicate that DAB accounts for 33 per cent of overall audio listening share, AM/FM 23 per cent and smartphones 17 per cent. Similar to TV viewing, this is likely to change over time as younger audiences prefer digital channels. Mediatique, a media consultancy, predicts that analogue will account for 12 to 14 per cent of all radio listening by 2030.
170.It is not technically feasible to develop conditional access technology for analogue radio. We heard it may be possible for DAB, though Claire Enders told us this would not provide good value for money. All DAB sets would have to be replaced, including in-car radios. Noting that the switchover from analogue television to DTT cost approximately £500 million, she argued “the radio sector is not significant enough to find these resources. The overall income of radio advertising is not far north of £500 million anyway.”
171.We do not recommend a funding model that places BBC radio behind a paywall unless and until both FM and DAB radio listening decline to the point that a switch-off is feasible. We do not believe this is likely within the next 15 years at least.
172.Several witnesses speculated that the trend towards digital would continue to the point that a ‘second digital switchover’ may become necessary. Richard Broughton, Research Director at Ampere Analysis, suggested this could benefit the BBC and other public service broadcasters:
“The BBC and other public and commercial broadcasters are stuck, because they cannot plough the investment into their on-demand services … whilst simultaneously supporting a broadcast market. One slightly radical option would be to have a second digital switchover where everything gets shifted towards an on-demand model. That frees up the BBC and ITV and others to turn off their linear channels, move to an on-demand based model … without having to support the average viewer anymore. That might actually be in the public interest.”
173.Catherine Colloms, Managing Director of Corporate Affairs and Brand at Openreach, told us that current connectivity levels are enough for “most people to do most things”. However, she noted that the network would need upgrading to full-fibre, gigabit-capable broadband to cope with all possible future demands. The Government has committed to nationwide UK gigabit-capable broadband by 2030. Catherine Colloms told us that the full-fibre rollout would likely not be completed until the early 2030s due to the difficulty of accessing hard-to-reach properties.
174.Antony Walker, Deputy CEO of TechUK, agreed that a second digital switchover would require a universal full-fibre broadband infrastructure, capable of carrying the weight of the previous terrestrial traffic. Though he agreed with Catherine Colloms that the 100,000 hardest-to-reach UK premises would be connected in the early 2030s, they would still not receive the same level of connectivity as the rest of the country. For this group, he said digital terrestrial switch-off would be a significant concern, and they would be “a very vocal minority.”
175.If universal access is to be maintained, the affordability and usability of internet-based television must be considered. While data indicate 96 per cent of UK premises have access to a superfast broadband connection, Ofcom estimates that only around 69 per cent actually have a superfast broadband subscription. The Writers’ Guild of Great Britain told us that the cost of broadband remains prohibitive for a significant number of households. A 2021 survey by Citizens Advice found that 2.5 million people in the UK were behind on their broadband bills, with households on Universal Credit nine times as likely to be behind as those not on the benefit. Enders Analysis highlighted that there are just under 8 million adults in the UK who lack the means, or do not wish to pay for, any TV service beyond the licence fee, and rely on free-to-air television for entertainment and information.
176.Even households that can afford broadband and a smart TV may still have difficulty using them. Professor Catherine Johnson told us that some sectors of the population, notably older audiences, “can really struggle to use these technologies, the smart television in particular.” Research by Lloyds Bank and Ipsos Mori found that 19 per cent of UK adults did not have “foundational digital skills”.
177.A second digital switchover, whereby digital terrestrial television, and DAB and FM radio would be turned off, is unlikely to be feasible until the early 2030s at the earliest. If conditional access were not developed for DTT and DAB, this would make full subscription unfeasible until this point. Were such a plan to become feasible its benefits would need to be balanced against the needs of households less able to pay for and use new technologies.
178.The UK’s existing connectivity would support, however, a domestic hybrid top-up subscription service. Current superfast broadband speeds would be sufficient for the vast majority of the population. If, as Mark Oliver told us, developing and rolling out such a service would take around a decade, the capacity of the network will also have increased by the time such a service would launch.
179.A hybrid subscription service would not face the same challenges with digital terrestrial television and DAB/FM. Programming not part of the subscription service package could continue to be broadcast on these platforms. The pace of the UK full-fibre rollout has no implications for a hybrid subscription model targeting international markets.
180.Current connectivity would support a hybrid online subscription model, as described in paragraph 157. The feasibility of these models will be determined primarily by decisions about the BBC’s purpose and commercial viability, not technological factors.
181.Industry trends would affect the viability of a subscription service. A growing number of media and technology companies are launching new SVOD services. Between 2020 and 2022, Disney, NBCUniversal, Discovery and ViacomCBS all introduced new SVOD services, originally launched in the US, to UK markets. As new services become available, the market may become saturated, with consumers reluctant to pay for an increasing number of individual subscriptions.
182.The current Charter ends in 2027, with the BBC’s funding model in place until then. Some witnesses argued that a transition to any subscription model should start well before then given market conditions. Richard Broughton suggested the market would reach saturation by 2035, and that if a full BBC hybrid subscription service were launched between 2028 and 2030, this would be “too slow for the commercial market.” However, Mark Oliver predicted that, while the market is increasingly saturated, there would be a “shake-out” in the near future with “a second wave when some people exit the market.” Nevertheless, he stated that a full review of the BBC’s future needed to conclude “in 2024 or 2025 at the very latest”, noting that there are “two timetables. One is for deciding to do it, the other is for doing it, and they have to be aligned.” Richard Broughton agreed that planning for any transition should start sooner than 2027. However, as discussed in Chapter 4, a less expansive subscription service may require less investment and a shorter transition, and involve greater flexibility around timing and launch.
183.The market for subscription services is becoming increasingly competitive and saturated. If the BBC were to develop a top up subscription service, preparations to launch would need to begin before the end of the current Charter period.
184.Julia Lopez MP, then Minister of State for Media, Data, and Digital Infrastructure, confirmed that the independent review of the licence fee would begin before Parliament’s 2022 summer recess (i.e. 21 July 2022) and was expected to report within 12 months.
185.Robert Specterman-Green, Director of Media & Creative Industries at the Department for Digital, Culture, Media and Sport, told us that the independent licence fee review should not pre-empt the Charter review, which was the appropriate forum for re-evaluating the BBC’s purpose. He stated that the review’s terms of reference would outline strategic considerations, “without crossing the line” to making conclusions. Julia Lopez confirmed that the final decision on the BBC’s future funding model would be made as part of the Charter review process.
186.If a decision on future funding were deferred until the Charter review process concludes in 2027, it may be too late for a hybrid subscription funding model to be viable, given market conditions. Robert Specterman-Green noted that the Government may respond with its preferred model when the review concludes in 2023, but it would not be able to give a firm guarantee. It would be difficult for the Government and the BBC to undertake the multi-billion pound financial preparations required for a subscription service in the absence of a political decision and public support. The Government’s timings suggest that might not be possible much before 2027.
187.The political constraints surrounding the decision on the BBC’s funding raise serious questions about the commercial viability of a hybrid subscription model. The Government must take account of how the timetable of the political process will affect the viability of some funding models. This should not, however, delay the BBC coming forward with the new strategic vision that we are calling for.
188.Any future funding model of the BBC must satisfy the principle of legitimacy: the BBC’s future funding, and the way in which decisions on it are taken, must be viewed as legitimate by the population the BBC exists to serve.
189.A large proportion of our evidence argued that any proposed change to the BBC’s funding model should be subject to extensive public consultation. The Media Reform Coalition told us that there should be “deep and widespread” public consultation about the value and purpose of the BBC, not just the narrower question of its future funding model. The Public Media Alliance noted that the discussion on the BBC’s future “can be distorted by those that ‘shout’ loudest via social media” and any consultation must seek to avoid binary debate. The Voice of the Listener and View argued that to inform any public consultation the Government should carry out rigorous impact studies on any proposed change of the funding model.
190.Changes to public service broadcasting funding models in European countries have involved different levels of public engagement. Switzerland’s 2015 proposal to shift from a TV licence fee to a universal household fee generated significant public controversy, culminating in a reportedly divisive referendum. When Germany changed its funding model to a universal household levy in 2013, various legal complaints were filed against the new fee. These legal challenges were ultimately resolved in favour of the fee in 2018.
191.Written evidence from members of the public suggested that public consultation should be seen as the most important aspect of the decision-making process: Laura Phillips asked, “why is no one asking us, the licence fee payers, is this what we want for our BBC?” The BBC emphasised this issue, noting that the previous Charter Renewal Process consultation received 196,000 responses, and that on decriminalising non-payment of the licence fee received 150,000 responses. Dr Tom Mills highlighted the potential for citizen assemblies to inform decision-making on the future of the BBC.
192.We did not hear a clear plan from Julia Lopez MP for how the public would be engaged. She did not think citizens assemblies were likely to be considered by Government as a method of public consultation. She believed the “public will find a way of raising this. Whether through individual campaigns, support for particular programming or whatever … I do not think that there is a single thing that will be done to engage the public, there has to be a conversation in various arenas.” She stated the Government had the right to disagree with the outcome of a consultation and come to a different conclusion based on its own analysis, as it did with the decision to privatise Channel 4.
193.The BBC told us it was planning to undertake its own consultation on the future of the BBC. Richard Sharp, the Chairman of the BBC, noted that the BBC “has a duty to lead this, but it has to be humble enough and recognise that the decision is for Parliament, because Parliament as a whole represents the people.”
195.Decisions on the BBC’s role and future must not be left to the last minute before the renewal of the next Charter. And these decisions should be taken more transparently than has previously been the case.
196.The Government should publish a plan and timeline for how it intends to engage the public in discussions and decisions about the BBC’s future funding model. It must commit to holding national public consultation in advance of it proposing a funding model. These could take the form of citizens’ assemblies. The Government’s proposed funding model must be debated in Parliament in advance of any decision to introduce it.
197.The BBC has an important role to play in the decision-making process and transition to any future funding model. It holds valuable expertise which could be used to inform future assessments and public debate. Gareth Davies, Comptroller and Auditor General at the National Audit Office, told us for example that the BBC could build on what it has learned about its cost base in recent years to model the costs associated with delivering each of its public service objectives.
198.It also has the credibility needed to change minds. Sir Peter Bazalgette told us that
“The people who work for the BBC and would understandably be alarmed at big change, the independent producers who have programmes commissioned by it … are opposing change … without properly considering what these huge changes that are taking place to the broadcasting and media market entail. There is a massive battle to take on the conservatism of the broadcasting industry itself.”
199.Archie Norman told us that the scale of transformation required for the BBC to tackle its existential challenges required “a combination of strong political and governmental support, together with a leadership in the BBC with an appetite to take it on.” He added that it was “strongly preferable” that the BBC itself takes a leading role in the review of its future:
“Otherwise, you will get the usual thing of an external party that will essentially create a threatening effect to the BBC. The wagons will be drawn around the circle, all the reasons why we cannot change will be wheeled out and it will not happen. Change has to come from within”.
200.The BBC must use the debate on its future funding to embrace its challenges and seize the opportunity to generate momentum for change. The Reithian mission must be adapted for the next quarter of the 21st century. This will require confident and clear proposals from the BBC. Urgent thought is required about how the BBC fulfils its purpose in a changing society and market context. Regulation and the Government must play their part in furnishing the BBC with the tools it needs to transform itself successfully. But it is a discussion the BBC must lead, and it should consider creative and expansive ways to engage citizens. The question of the future funding model is important but only one part of this necessary broader re-evaluation.
270 (Mark Oliver) and (Richard Broughton)
271 (Olav Nyhus)
272 (Olav Nyhus)
273 (Florence Hartmann)
274 (Shuja Khan)
275 Enders Analysis, ‘BBC and subscription: Impractical and not inclusive’ (28 January 2022), p 4
279 Department for Digital, Culture, Media and Sport, Digital Radio and Audio Review: Ensuring a robust and sustainable future for UK radio and audio (21 October 2021), p 24: [accessed 9 June 2022]
280 Ibid., p 25
281 Cited in Department for Digital, Culture, Media and Sport,
282 Supplementary written evidence from Shuja Khan()
287 Department for Levelling Up, Housing and Communities, Levelling Up the United Kingdom (February 2022), p 183: [accessed 3 June 2022]
291 Ofcom, Connected Nations 2021: UK Report (December 2021), p3: [accessed 3 June 2022]
292 Written evidence from Writers’ Guild of Great Britain (
293 Citizens Advice, ‘2.5 million people are behind on their broadband bills’ (4 June 2021): [accessed 29 June 2022]
294 Enders Analysis, ‘Public service television: Something for everyone’ (17 January 2022), p 1
296 Lloyds Bank, Essential Digital Skills Report 2021: Third Edition–Benchmarking the Essential Digital Skills of the UK, p 9: [accessed 9 June 2022]
305 Written evidence from the Voice of the Listener and Viewer ()
307 Written evidence from the Media Reform Coalition ()
308 Written evidence from the Public Media Alliance ()
309 Written evidence from the Voice of the Listener and Viewer ()
310 Swissinfo, ‘Swiss licence fee vote: the demands and potential consequences’ (18 January 2018): [accessed 9 June 2022]
311 DW, ‘German ZDF and ARD public broadcasting household levy ruled constitutional’ (18 July 2018): [accessed 9 June 2022]
312 Written evidence from Laura Phillips ()
313 Written evidence from the BBC ()