Digital Britain report renews debate

Yesterday's unveiling of the British government's much-anticipated Digital Britain report has both the broadcast and broadband sets in the UK talking.
June 17, 2009

Yesterday’s unveiling of the British government’s much-anticipated Digital Britain report has both the broadcast and broadband sets in the UK talking. Upon its release, it reignited the debate regarding top-slicing the £3.6 billion annual BBC license fee and shone a light on plans for laying the financial groundwork for investment in universal broadband in the UK.

While Lord Stephen Carter’s 245-page report (available as a PDF here) acknowledges that in many people’s minds, the TV license fee is ‘indissolubly linked in the public mind with the provision of services by or through the BBC’, the British government has decided it will consult with relevant parties on the use of a ‘contained contestable element of the license fee used by or channeled through other organizations, primarily for news.’ That use would begin after 2013, with the amount of the fund being roughly equivalent to 3.5% of the license fee, and would come from the approx. £130m-per-year currently set aside for the digital transition Help Scheme. Besides funding a news programming consortium that could replace ITV’s regional news service (as ITV has announced its intentions to reduce its news programming due to prohibitive production costs), some of the monies could also go to children’s programming.

As referenced in the interim Digital Britain report at the beginning of this year, the government also plans to use the £200 million ‘digital switchover surplus’ from the license fee to help create universal UK broadband access by 2012. A ‘small part’ of that surplus money may also be earmarked for three ITV regional news pilots in Scotland, Wales and one regional area in England, according to culture secretary Ben Bradshaw, who delivered the report to Parliament.

The report reiterated support for a partnership or joint venture between Channel 4 and BBC Worldwide, but also threw into the mix the option of a sale of part of the BBC’s commercial division. The report says such a transaction would provide ‘greater financial and operational separation between BBC Worldwide and the BBC which would inject the greater transparency all wish to see,’ as well as enabling ‘BBC Worldwide to have greater commercial freedom and to develop towards becoming a powerful, global British Rights Company.’

Reaction from different parties was quick and predictable. Sir Michael Lyon, chairman of the BBC Trust, had this to say about distributing license fee funds to other broadcasters: ‘The license fee must not become a slush fund to be dipped into at will, leading to spiraling demands on license fee payers to help fund the political or commercial concerns of the day. This would lead to the license fee being seen as another form of general taxation. The trust will not sit quietly by and watch this happen.’ Meanwhile, ITV released a statement, reading in part, ‘ITV warmly welcomes the Government’s confirmation that the costs of our public service licenses exceed the benefits. The Digital Britain report contains a number of proposals aimed at redressing this imbalance.’

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