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08|06|05

Ofcom publishes response to Government Green Paper on BBC Royal Charter

Ofcom today publishes its response to the Government’s Green Paper on the Review of the BBC Royal Charter.

The response builds on the conclusions of Ofcom’s statutory Review of Public Service Television Broadcasting, published on 8 February 2005.

Ofcom’s submission is written in the context of the following:

• the importance of ensuring a strong, properly funded, public-service focused and independent BBC remains at the heart of public service programming and content in the future;
• the growth of digital television, now received by 60% of UK households and growing by 50,000 households a week across digital terrestrial, cable and satellite;
• clarity on the timetable for digital switchover in television, as set out in the Government manifesto;
• further clarification on the digital switchover rollout sequence and extent of terrestrial coverage post-switchover;
• the growth of broadband, now used by 30% of UK households with 60,000 new connections a week; and
• increasing average broadband speeds, to the point where within three years, the majority of broadband households will benefit from video-capable connections.

In its submission, Ofcom asks that Government take action now to underpin the future of public service programming and content from the broadest possible range of suppliers. Ofcom believes that the Government must:

• ensure that the BBC remains the cornerstone of the system; strong, independent, properly funded and focused on providing public service programming and content
• ensure that other suppliers of public service programming and content, beyond the BBC, are also able to prosper through the transition to digital, each competing for audiences through innovation.

Ofcom believes that - if the public service system as a whole is to continue to have wide influence and impact in the future - it is essential that the BBC is not allowed to become isolated in a growing - and exclusively commercially-focused - sector.

If the BBC were to become the UK’s sole public service provider, there is a risk that audience tastes would be conditioned by the commercial majority rather than the public service minority; and that producers, writers, editors and other talent would be heavily conditioned by the needs of the commercial sector alone. This would leave the BBC vulnerable to a decline in market share and loss of viewer, industry and political support.

Given this, Ofcom is also recommending to Government that it:

• explore the potential sources of funding - and new models of accountability - that would be needed to finance public service programming and content beyond that provided by the BBC. This could include financing pilot schemes for new forms of content, funded from an enhanced BBC licence fee model;
• bring forward its review of public service funding, to ensure that this is completed by 2010, two years before the completion of digital switchover; and
• take forward the review of options for local television, more detailed work on the Public Service Publisher model and on the review of prospects for Channel 4.

Ofcom welcomes the changes to the BBC’s model of governance and accountability and believes the proposed BBC Trust and the new Executive Board are an improvement on the current system. However, if funding is to be directed beyond the BBC in future, a new model of governance and accountability will be required. Ofcom believes that Government should therefore consider how the Trust could evolve into an independent body, external to the BBC and with responsibilities beyond the BBC, to meet that future requirement.

Gaps in competition law

Ofcom’s submission also asks the Government to seek to establish a more consistent competition framework for the broadcasting sector, setting clear boundaries for all organisations and defining the extent of external scrutiny required.

There are gaps in competition law and, as a result, problems with the effectiveness of its application. Large players - including the BBC - have the potential to distort competition, with an adverse affect on the development of a successful commercial sector. Ofcom believes that to secure a level playing field in a rapidly changing market, all organisations in the sector should be overseen equally, by an independent competition authority able to respond quickly to market distortion or abuse. The document therefore proposes:

• changes to the BBC Fair Trading Commitment, to make this more competition-focused, applying to both licence-fee funded and commercial services and subject to independent approval and oversight;
• changes to the BBC Agreement, to oblige the BBC to have due regard to its effect on competition; and
• changes to market impact assessments - of both new BBC services and significant changes to existing services - to enable these to be carried out by Ofcom.

Ends.

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