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Ofcom review of public service television broadcasting - Phase 3 - Competition for quality

Consultation published: 08|02|2005
Consultation closes: 19|04|2005

Foreword

Ofcom embarked on its first statutory review of public service broadcasting just over twelve months ago. We are charged by the Communications Act with assessing the effectiveness of the designated public service broadcasters (BBC, Channel 3, Channel 4, Five, S4C and Teletext), taken together, in delivering the public service purposes set out in the Act. We are also charged with reporting on how the quality of public service broadcasting can be maintained and strengthened in future. This, the third and last of our reports, draws together our findings and recommendations.

Since we began our work, there have been significant management changes at the BBC and Channel 4, the BBC Charter review is now well underway, and the merger of Carlton and Granada has been completed. Digital take-up has grown from 48% to 56% of households, while 21% of households have broadband connections and TV subscription revenues have overtaken advertising revenues for the first time.

The digital and broadband world will bring with it radical changes in the form and delivery of content, and the ways in which people choose to use the services available to them. Our aim has been to set out a new framework for public service broadcasting (PSB), designed for this future and sufficiently adaptable to respond to and reflect changing technologies, markets, and the needs of citizens and consumers.

The starting point for our work was an assessment of what we as a society want from our television. At present, the public think television has immense influence, and therefore television broadcasters should have a special responsibility to deliver more than just what consumers want. Based on extensive research and consultation, we developed a set of purposes and characteristics which we think will help more effectively to define PSB in future and complement the statutory definition. We concluded that there would be under-provision of certain types of programming in a purely commercial world and that there remains a high level of public support for current levels of public funding of PSB - preferably across a range of channels.

We also said we would look at the options for intervention against this background - how best could we secure the type of television and audiovisual content that, as a society, we would like to see over the next few years, especially as we approach digital switchover?

We identified the risks to the current model - including a breakdown in the old regulatory compact which has delivered PSB on commercial TV channels for many years - and have set out a new framework in the final report, based on more explicit funding of PSB, and clarity of roles for each of the main broadcasters. This, we believe, will maintain and strengthen the quality of PSB in the fully digital world.

In this final report, we recap the work carried out in Phases 1 and 2 of our review, and include further thinking and detail on our key proposals, including PSB for the Nations and Regions, and the Public Service Publisher (PSP). We suggest some ideas for a new internal governance, regulatory and accountability framework to support the new system. We make some proposals for PSB in Scotland, Wales and Northern Ireland, which are published here for consultation and will be the subject of a separate report later in 2005.

We also set out proposals for the transitional period between now and the completion of switchover. We strongly believe that action needs to be taken now to establish a clear and settled framework within which the key PSB providers can be sure of their future roles, and can focus on where they can each add most value. In particular, our proposals are designed to secure the provision of regional news and current affairs on ITV1. We will introduce immediate changes to ITV’s non-news regional programming obligations, with a further change at the point at which digital switchover actually begins. This clear, two-stage process will provide certainty in the market, avoid continuing and distracting arguments about the appropriate level of PSB provision each year, and enable ITV1 to concentrate on what it does best - high quality news and original production from around the UK.

On this issue, we have listened to many representations, including the views of Ofcom’s Content Board, where the balance of opinion was in favour of a postponement of the first changes from 2005 to 2006. The Ofcom Board, after careful consideration, on balance, decided that it is preferable to move immediately, to create a settled and sustainable new framework.

The overarching theme of this final report is competition for quality. To us, this means three concrete things: a competitive marketplace, plurality of PSB commissioning and production, and enough flexibility in the system for provision (and providers) of PSB to change over time, as the needs and preferences of citizens change.

First, we believe that a competitive broadcasting marketplace is a good starting point in the quest to ensure that citizens and consumers are able to benefit from a wide range of high quality programming and other content. For the first time, digital TV and broadband offer the prospect of a market that can work more effectively than the traditional analogue system to deliver viewers what they want to watch and are prepared to pay for. There is scope for many new channels to enter the market - last year, Ofcom issued 162 new licences for television channels - for new media to be used, and for payment mechanisms to allow direct relationships between viewers and broadcasters. All our research in this review has shown that consumers are increasingly media literate, prepared to seek out information about what they want to watch, and welcome the choice and convenience provided by multichannel TV.

Secondly, however, as a society, we clearly demand a wider range of high quality UK content than would be provided by the market - even in a more effectively competitive environment. We value trustworthy and independent news, programmes which increase our knowledge of the world, and content which reflects the different parts of the UK, and informs our cultural identity. Although commercial broadcasters will provide some of this content, intervention is needed to ensure that there is sufficient range, volume and quality of programming made in the UK and for UK audiences. The growth of digital television take-up does not alter this need.

But here again, competition for quality is the key. The BBC is at the heart of the UK PSB system, but PSB overall is likely to be most successfully provided if there is a range of different suppliers, with access to different sources of funding, and with different institutional models. Broadcasters and producers can then be set the challenge of identifying the best way of delivering public value. This plurality of provision not only ensures that there is a range of different views and perspectives available to viewers, but also that policy makers and regulators are provided with information about the relative effectiveness of the different organisations delivering PSB. We can then make better decisions about funding and remits than would otherwise be the case.

Finally, competition for quality means that, over time, the preferred means of delivering PSB will change, as some providers prove themselves to be more effective than others, or as new media become more effective than conventional channels. A robust PSB system needs to be flexible enough to adapt to this sort of change. We have proposed a new Public Service Publisher, as a potentially dynamic and innovative new force in the system. By the time of Ofcom’s next statutory review, the UK should be mid-way through the digital switchover process; and more than half of all households are forecast to have broadband at speeds which enable the delivery of rich audiovisual content. Today, the BBC has led the way in creating content for the broadband age. We believe that a Public Service Publisher would help provide greater plurality in the commissioning, and hence in the production, of UK-originated digital and broadband content.

The question of the governance of the BBC is at the heart of the Government’s BBC Charter Review. Many respondents to our Phase 2 consultation suggested that any PSB framework which entirely ignored the question would be incomplete. In this report, therefore, we set out some core principles and criteria; any effective governance framework should support a well-run, strong, independent and properly funded BBC which operates consistently in the public interest. There needs to be greater clarity than now between the distinctive functions of internal governance, the accountability of publicly funded bodies in broadcasting, and of regulation for the broadcasting sector as a whole. We make some proposals for introducing greater clarity between governance and accountability on one hand and regulation on the other. As to distinctions between, and the effectiveness of, governance and accountability, we set out the pros and cons of different models as a contribution to the BBC Charter Review debate.

Overall, we have concluded that the forces of change in content and, therefore, PSB provision will have a significant impact more rapidly than is commonly understood. Our proposals are designed to recognise that change and, in some quarters, to encourage a reassessment of what is sustainable, how it should be funded, and from where it should be sourced.

The rest of this report sets out our final recommendations in detail. We would like to take this opportunity to thank all those who took part in the review and in the consultations. We have received much valuable insight and information from all those who contributed - either in writing, via e-mail, or at the many seminars held around the country. With this review, and the Government’s review of the BBC Charter, we think there is a unique opportunity to identify and implement the steps needed to secure the quality of public service broadcasting for the next 10 years or more. Some of the next steps are in Ofcom’s hands, others are for Government and Parliament to consider. We hope that the research, analysis and arguments in our three reports will help inform the next stage of that process.

David Currie, Stephen A Carter, Richard Hooper



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