Media Centre
Digital TV will ‘undermine licence fee’
Digital television will expose ‘fundamental contradictions’ in the BBC’s status and undermine the case for the licence fee, according to Barry Cox, the Government’s digital television adviser.
In Free for All? published by Demos, Cox argues that the current charter review should consider the long-term consequences of the new technologies for traditional public service broadcasting. Barry Cox is chairman of the Digital TV Stakeholders Group and deputy chairman of Channel Four.
“The BBC will at some point have to decide whether it wants to be a large, commercial organisation or a much smaller one funded by public money,” says Cox. “Either way, it is going to be very difficult for the BBC to hold on its current status and funding in the long term, given rapid changes in the way people are watching and paying for television.”
While Cox recognises that the licence fee should continue for now, he believes the BBC and government should start to pave the way for a new kind of public service broadcaster, which maintains its production base but is funded by voluntary subscription rather than compulsory tax.
Sustaining widespread public support for a massive, publicly funded BBC will become impossible in the face of the accelerating pace of take-up for digital TV and broadband entertainment services.
The public now pays nearly £5 billion for TV services, but over half of that sum is in the compulsory form of the BBC licence fee which provides no direct consumer choice. With television revenue growth expected to come from paid-for services rather than advertising, audiences will increasingly expect to pay only for what they watch, he argues.
“One of the main arguments for the BBC has always been that it corrects ‘market failure’ in broadcasting,” says Cox. “In the digital age, the BBC is starting to look like one of the main reasons why a market in television can’t develop properly.”
Free for All? addresses the two ‘powerful monopolies’ in British broadcasting which Cox believes are distorting the television market: the BBC and BSkyB. Cox believes that it is unfair that Sky subscribers are forced to pay for channels they don’t want or watch so they can access the premium services – notably sport and movies – which they do want.
The pamphlet is based on lectures Cox gave in Oxford last year as the News International Visiting Professor of Broadcast Media and includes a new chapter on the future of the BBC. It highlights three technological changes which will create a genuine market in TV and undermine the argument for a licence fee:
- Growth in digital households with broadband and digital television, increasing the number of channels and other forms of content on offer;
- Micro-billing systems so people can pay for individual programmes;
- Personal video recorders which have a number of sophisticated features, including the choice between watching shows with or without ads;
Cox argues that these technologies make it possible to achieve a real consumer market in television programmes, which allows people to choose – and pay for – the programmes they watch.
“A situation where people can essentially choose what TV they pay for argues for the end of the poll tax we call the licence fee, and with it a fundamental reformation of the BBC,” says Cox.
Free for All? sets out some options for reforming the BBC:
- Top-slicing The BBC would no longer be the sole beneficiary of the licence fee, with the creation of a ‘contestable fund’ which producers could bid for to make public service programmes;
- Reforming governance Separating governors from BBC management and giving them regulatory power over all public service television produced with licence fee money, including a contestable fund;
- Tighter remits Cox believes that the government is likely to insist that BBC1 and BBC2 have more tightly defined remits which set out their public service commitments in more detail;
- Open source Following former director-general Greg Dyke’s announcement about putting its programme archive online, Cox outlines a vision for the BBC as ‘open source’ producer committed to creating a national cultural asset.