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27|07|06

Public Service Broadcasting post digital switchover

Ofcom today published proposals to introduce pricing for spectrum used for digital terrestrial radio and digital terrestrial television from 2012 and 2014 respectively.

Known as Administered Incentive Pricing (AIP), the proposals will bring radio and television spectrum users into line with most other spectrum users, who already pay AIP.

These proposals further develop the Government’s response to the Cave Review which said that AIP should be extended - but that digital television broadcasters would not have to pay it until the end of their initial licence periods, between 2010 and 2014. For simplicity, Ofcom proposes to introduce AIP on the same date for all licensees, from 2012 for digital radio multiplexes and 2014 for digital television multiplexes.

The cost of spectrum in a digital world is, however, only one of a number of questions relating to the provision of public service broadcasting post digital switchover. Of the broader questions, many relate to the BBC; the new BBC Charter and Agreement provides a framework for the BBC in that digital world.

However, the BBC is not the only provider of public service broadcasting today, nor will it be in the future. The BBC is one - important - part of the overall provision of public service broadcasting provided by a variety of broadcasters.

DIGITAL PUBLIC SERVICE BROADCASTING

Ofcom is today therefore also publishing its work programme for 2006/7 to help sustain PSB as a whole through the transition to the fully digital world; and in preparation for the Government's review of funding for PSB which will take place before digital switchover is completed.

The three issues Ofcom will address this year were identified in Ofcom's statutory review of public service television broadcasting in 2004/5, namely:

• the financial review of Channel 4;
• the future provision of news in the digital world; and
• the public service publisher (PSP).

The financial review of Channel 4: For nearly 25 years Channel 4 has played a key role in providing plurality in the public service broadcasting system with its remit to provide a broad range of high quality and diverse programming with a particular focus on innovation, distinctiveness and cultural diversity. Over the next five years, television audience fragmentation and the shift to new media will test how far Channel 4, commercially funded but publicly owned, can sustain its public service remit. Ofcom's Financial Review will examine in depth Channel 4's financial and operational performance and efficiencies and how Channel 4's contribution to PSB will evolve.

The future of news: News has been identified as the most valued programme genre on UK television. All PSB providers are obliged to carry news as part of their services. But, as the privileged value of licence and spectrum scarcity erodes for the commercial PSBs as they move into a fully digital world, so the ability to enforce these obligations becomes more uncertain. Changes to the commercial environment for non-PSB news providers may also have implications for the provision of news, including regional news.

Public Service Publisher (PSP): In its statutory review, Ofcom asked whether there was a case for institutional innovation in public service broadcasting beyond the BBC and Channel 4, with a new media focus. Ofcom's work will develop more detailed proposals on the PSP's creative remit and how it would work in practice.

The consultation on future pricing of terrestrial broadcasting spectrum runs until 27 October 2006. The consultation document and Ofcom's paper on Digital PSB can be found in the Related Items.

Ends.

NOTE FOR EDITORS AND CSEs

1. Spectrum is a finite and valuable national resource, estimated to account for 2 to 3 per cent of UK GDP. Ofcom's proposals to introduce pricing for terrestrial digital broadcasting are designed to ensure that spectrum is used efficiently. AIP reflects the value of spectrum to other potential users, the so-called opportunity cost to society. Ofcom believes that making users take proper account of the opportunity cost, by paying AIP, promotes better decisions, leading to more efficient use of the spectrum.

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