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Aim of the PSB review

1.The debates around the Communications Act 2003 produced a consensus view that:

• public service television broadcasting (hereafter referred to as PSB) remains a vital part of the broadcasting environment, that needs to be supported;

and

• the pace of change in the television market raises new challenges to the existing model of PSB, and these challenges will need to be monitored closely.

2. The Act therefore requires Ofcom to carry out a review of the PSB environment at least every five years, with the first review taking place in its first year. The Act identifies a set of public service television broadcasters: all the BBC's TV services; ITV1; Channel 4; S4C; Five; and Teletext. Ofcom must assess how far these broadcasters, taken together, are fulfilling their role to:

• inform, educate and entertain;
• support production outside London; and
• provide a suitable quantity of high quality programming to a diverse range of audiences across a wide range of genres (programme types).

3. We are asked to consider the costs of this provision, and the sources of income available to the broadcasters to meet those costs. We are then required to report on how the quality of PSB might be maintained and strengthened in the future.

4. This is a particularly important time to be reviewing the state of PSB. As the BBC's Charter comes up for review again, the market is undergoing rapid change. The main five channels still dominate the TV landscape but new models of delivery look as if they may supersede analogue terrestrial transmission within the next decade. For 20 years, since the arrival of cable and satellite, people have been predicting that a burgeoning choice of commercial channels would erode the viewing base for traditional, mass-audience network TV. In the last five years, however, that has become a real possibility. The speed of change has increased. At the beginning of 1998 no-one in the UK had digital TV. Today 50 per cent of homes have digital equipment and a wider range of channels. Take-up continues to rise and audiences are fragmenting as a result. Emerging technologies such as video-on-demand, PVRs and broadband threaten to further erode the audience for network-scheduled programming. The major terrestrial broadcasters will have to adapt if they are to continue to prosper.

Our approach

5. The project consists of a 12-month programme of work broken into three phases, with a report and consultation at the end of each of the first two phases:

• Phase 1 (Oct 03 to spring 04) focuses on measuring and assessing the current position.
• Phase 2 (spring 04 to summer 04) will examine prospects for the future and their implications for PSB.
• Phase 3 (late autumn 04) will put forward proposals and recommendations for maintaining and strengthening PSB in a digital world.

6. Ofcom's analysis is distinct from the concurrent review of the BBC's Royal Charter. However it is timed to dovetail with that work and elements of our review will inform the Government's conclusions.

The Phase 1 report

7. Our Phase 1 work focuses on measuring and assessing current provision but it cannot ignore the backdrop of tremendous change. This report therefore has four main sections:

• What do we mean by PSB? How did the existing system develop? What does the Communications Act say? What are the different meanings of the term 'PSB'?
• Current effectiveness What are the broadcasters providing? Are they fulfilling their remit? What do people watch? How satisfied are they? Is the system working?
• A changing environment How is the market changing? How is that affecting viewing patterns? What are the implications of change?
• The way forward? What are the purposes of PSB in a digital age? Do they justify intervention on the current scale? What principles should guide us when we look at the longer term, in Phase 2 of this review?

8. This work establishes the issues for debate and the priorities for our future work programme, which are summarised at the end of the report in two sections:

• Next steps: Work we will pursue in Phase 2.
• Questions for consultation: Summarising the questions raised by our work so far.

Our research base

9. Television is a well-researched area. We have used many existing research sources but have also looked to build on this evidence base by:

• asking viewers what they think, through a quantitative survey of 6,000 individuals and a series of qualitative focus groups, interviews and deliberative forums;
• analysing what viewers watch, through the audience data provided by the Broadcasters' Audience Research Board (BARB);
• examining the information that public service broadcasters have given us about their output (in terms of hours and spend) over the past five years;
• conducting interviews with broadcasting professionals, producers and other interested parties to gather opinions on the effectiveness of current PSB delivery; and
• re-examining the concept of PSB, its purposes and the rationale behind it.

10. This report brings together the conclusions from each piece of work. More detail on the research findings is available in the supporting documents which accompany the main report. These documents are available on our website (at www.ofcom.org.uk ) or on CD, on request.

Supporting documents

Volume 1: The role of television in society

• Introduction and approach
• A conceptual review of public service broadcasting
• Audience opinions and perceptions
• What people watch: television viewing behaviour

Volume 2: The current system

• The current system: a delicate ecology
• The effectiveness of the current system

Looking forward to Phase 2

11. This Phase 1 report takes stock of the current system and identifies the emerging trends, issues and potential areas for action. We have also proposed a conceptual rationale for PSB. We have identified the significant problems that the current model of delivery will face in the medium term and the crucial questions about the future of PSB.

12. Phase 1 has not involved any detailed analysis of S4C, Teletext and the BBC's digital channels. This will follow in Phase 2.

13. Phase 2 will also ask where the market is going; where to strike a balance between market and public service provision; what sort of intervention, if any, is needed; how much that intervention will cost and who should pay; and how broadcasters might be made accountable. That analysis will form the basis for a Phase 2 report, to be published this summer, which will contain a
clear list of policy options for maintaining and strengthening PSB in a digital environment.

14. We welcome views at this stage on all aspects of the report and particularly in relation to the key consultation questions that are summarised
in Section 6. Responses should be sent by 15 June to:

Alex Towers
Ofcom
Riverside House
2a Southwark Bridge Road
London SE1 9HA
Email: alex.towers@ofcom.org.uk

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