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This is Ofcom's first statutory review of public service television broadcasting. Parliament has asked us to do two things. Firstly, to assess how well the existing public service broadcasters - the BBC, ITV1, Channel 4 (and S4C in Wales) and Five, taken together - are delivering the range and breadth of programming and audience needs that constitute public service broadcasting. Secondly, to make recommendations to maintain and strengthen public service broadcasting itself.
Our review is thus both retrospective and prospective.

It covers a period of rapid change from the introduction of digital television six years ago; to the point where today, more than half of all households have digital, multichannel television; and it looks forward to the point of digital switchover - a process which will significantly alter the television broadcasting landscape.

This report is Phase 1 of our review and it focuses on the first of our tasks - how well the existing main terrestrial broadcasters are delivering on their objectives.

To carry out this task, we have conducted one of the largest ever audience surveys, to establish what the public think television should provide. We have consulted a broad spectrum of specialists and the professionals who make and commission programmes. We have also put together a comprehensive set of hard data, from the broadcasters and others, to enable us to make a wide-ranging analysis of the output of the main terrestrial channels over the last five years, to gauge their creative health and the extent of their editorial ambition.

Ofcom's core mission is to further the interests of the citizen-consumer. The results of our audience survey reflect that duality of interests. As consumers, we welcome the increased choice that competition has brought to television. But as citizens, we believe that television has responsibilities that go beyond simply serving individual viewers with the programmes that they want. These responsibilities remain valued by all groups of viewers. Television is a special medium: it interacts directly with the society we are and want to be.

The evidence shows that, in the main, the broadcasters are continuing to deliver a wide range of quality television that informs, educates and entertains; with well-funded and well-regarded news output; and with a high proportion of home-grown, UK-made programming, especially in peak-time. However, the pressures of competition and of changing viewer behaviour are leading some of the more challenging or minority genres to be pushed out of peak-time viewing; and, overall, to more ratings-driven schedules with less originality and innovation than audiences wish to see.

These trends may well intensify as more and more homes become multichannel. In this Phase 1 report, therefore, we also advance some propositions that we believe will best serve to sustain and strengthen the vital qualities of public service broadcasting in the years ahead. These propositions will form the basis for fuller analysis and public debate in Phase 2 of our review. Public service broadcasting, in the 'golden age' of television was characterised by two main networks - the BBC and ITV - with the funding, ethos and defined genres that lead to competition for quality. Absent of other competition, regulation as much as shareholder pressure determined output. The BBC kept ITV honest; ITV kept the BBC on its toes. Channel 4 energised the mix, bringing in a whole new group of independent producers.

As we move towards digital switchover, market conditions will change significantly; as most, then all, homes become multichannel. Audiences will continue to fragment, as more viewers take greater advantage of the choice available.

The shareholder-funded broadcasters - ITV and Five - will need to respond competitively or else they will diminish as investment engines for originated British content. They will continue to make a significant contribution to what we define as the purposes and characteristics of PSB (as will some of the output of broadcasters not currently classified as public service broadcasters). However, our regulatory approach to them needs to evolve. It is widely recognised in the industry, though less well appreciated outside it, that, at a certain point in digital take-up, the current balance of privilege and obligation, particularly for ITV, will so have eroded that, absent other measures, their public service broadcasting obligations will become commercially unviable. It is essential not to arrive at that point unprepared. In the meantime, we need to value carefully the benefits - and the costs - of the privileges of guaranteed spectrum and universal access to ITV and Five. We should focus regulatory intervention on those PSB characteristics to which citizens give the highest social value and maximum viewer impact; and not fund that which the market will anyway provide.

This puts an ever-greater premium on the BBC - and those who govern it - living up to the spirit as well as the letter of its remit. A publicly funded BBC needs to retain scale and viewer impact. It should be the standards-setter for the highest quality of public service broadcasting.

However, monopoly provision is never the most effective provision. The viewer, as consumer and as citizen, is best served by competition for quality. That competition for quality needs to be on a scale which conditions the BBC's response and its output. An efficient, tautly run Channel 4 will have an important role to play. But a range of other options to reinforce competitive provision of PSB also needs to be looked at.

Plurality in commissioning is essential to create the demand and funding for original and innovative programming across a broad range of genres. Plurality in the creative supply of such programmes is equally important. Centralised studios and vertically-integrated broadcaster-producers may have suited the old duopoly. They should survive only on their own merits in the digital age. The independent producers will play a key role in 'competition for quality', and a strong independent production sector is an important part of the mix to deliver effective PSB.

We want your views and comments both now and on our Phase 2 report later in the year, when propositions will have hardened into firm proposals. They will shape what our review recommends to Government and to Parliament. We believe that greater choice will increasingly meet the needs of the viewer as consumer. It is to secure the best interests of the citizen that we must decide why, how and when we must intervene. Television matters - to all of us.

David Currie, Richard Hooper, Stephen A Carter

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