MEDIA FORUM: Will an extra BBC licence fee halt digital’s take-up? How compelling are the arguments advanced in the Davies report on future BBC funding? Is a digital poll tax as damaging as the commercial broadcast sector argues? And has advertisi

Gavyn Davies has probably earned the knighthood that is the customary reward for chairing committees of the great and good in deliberations of weighty national import. He’s paying his dues because, perhaps predictably, everyone’s very angry with him. Everyone in broadcasting at any rate.

Gavyn Davies has probably earned the knighthood that is the

customary reward for chairing committees of the great and good in

deliberations of weighty national import. He’s paying his dues because,

perhaps predictably, everyone’s very angry with him. Everyone in

broadcasting at any rate.

Even a member of his committee, Lord Gordon, chose to disagree with the

central recommendation of its report into future BBC funding, published

last week.

That central recommendation was that a digital licence fee levy be

introduced in order to ’give the BBC the chance to succeed in the

digital world’.

A wailing and gnashing of teeth was heard immediately at the BBC, which

complained bitterly that the sum involved wasn’t enough and it certainly

wasn’t what it had asked for. The BBC’s commercial rivals take a

contrary view, loudly reiterating their belief that any extra sum would

be too much - it’s effectively, they argue, a digital ’tax’ that will

slow the uptake of new broadcast technology in this country. In other

words, the future of the UK’s media industry is being sacrificed to

guarantee the survival of a once great British institution.

The Davies Committee has proposed a sliding scale digital tax (payable

by those opting to upgrade to digital reception) that will be introduced

at an initial level of about pounds 24 a year and then progressively

phased out by 2010 - by which time everyone will have switched to the

new technology. The average payment over the ten-year period will be

pounds 18.84 a year.

Davies states: ’Contrary to industry fears, a digital supplement at this

level will not appreciably slow the take-up of digital technology, which

depends far more on the upfront cost of acquisition of equipment and on

the switch-off date for analogue services. This temporary digital

supplement will not kill digital television any more than the colour

licence fee killed colour television.’

Wishful thinking? Obviously, the BBC will agree with this bit of


But the corporation is not at all happy. The BBC director-general, Sir

John Birt, maintains that the digital surcharge - which will deliver

more than pounds 150 million annually in extra funds - is so meagre that

some planned services are now under threat. He had been asking for

pounds 650 million extra a year.

He states: ’The level of future funding the committee has recommended

will not enable the BBC to offer its licence payers the substantial

public service choice in the digital era that the committee desires.

Moreover, we are not convinced that some of the panel’s specific

proposals - for example, selling BBC Resources and a major stake in BBC

Worldwide - are in the best interests of BBC licence payers.’

This sale of assets is, of course, part of the quid pro quo. And that’s

not all. The Davies report also recommends that the BBC be held ever

more closely to its public service broadcasting remit - it should, the

document urges, be regularly audited to see if it’s honouring its

commitments. But, as the BBC Charter must be amended to achieve this

last proviso and the Charter is not up for review until 2006, that’s not

going to be implemented overnight.

A consortium of commercial television interests - including ITV, BSkyB

and cable companies - which has come together to oppose the digital

surcharge remains adamant that any form of digital levy will damage the

broadcast economy in this country.

Clive Jones, the chief executive of Carlton Television, speaking on

behalf of the consortium, observes: ’Free set-top boxes have tempted

thousands of people to go digital. Yet they are now about to be landed

with a bill for an extra pounds 24. This poll tax will set back this new

technology by years. Many existing customers could hand back their

set-top boxes rather than pay a new tax for channels they may not want

to watch.’

And Richard Eyre, the chief executive of ITV, says: ’A licence fee,

whether analogue or digital, depends on public consensus. It is

unsustainable if there is a loss of public support for it or if people

do not believe it is value for money. The BBC has not begun to persuade

the public that there is scope for extra digital funding. We believe

there is scope for more investment on programmes and services from

within the BBC’s existing budget.’

Does the ad industry agree? Jim Marshall, the chief executive of

MediaVest and a member of the Media Policy Group of the Institute of

Practitioners in Advertising, states: ’We have some sympathy with the

view that take-up won’t be affected. However, I still question why the

BBC needs to be subsidised when it comes to digital, a luxury that the

rest of the business is denied. But it is the first time that a

government body has recognised that the BBC should not act in an

aggressive manner towards the commercial sector and that it should be

evaluated against a public service broadcasting remit. That’s a massive

step forward. Unfortunately, nothing will be done about it in the short

term. Meanwhile, the BBC may feel it has to justify an increased licence

fee by showing an improvement in ratings.’

Observers have pointed out that the report is similar to the scenario

outlined in the IPA’s submission to the committee, which urged that the

BBC needed to be ’put back in its box’.

In that respect, the IPA must be happier with the outcome than the

Incorporated Society of British Advertisers, which wanted to force the

BBC to carry advertising on at least some of its services. That

suggestion was rejected out of hand by the committee.

Does ISBA now recognise this is a lost cause? Its director-general, John

Hooper, says: ’We are surprised the Davies Committee, while seeking to

contain the BBC’s excessive demands for additional funding, has opted to

deliver the needed extra revenue by a digital licence fee it admits will

be hugely unpopular. Just one minute of advertising per hour on BBC1 and

2, slotted in appropriate programmes, would more than deliver the money

needed. That’s what the public prefers. Why should its view not be