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14|05|08

Westminster Media Forum: public service broadcasting

Peter Phillips

Five weeks ago, we published the first phase of our review of Public Service Broadcasting.

Much of the debate since then has focused on the issues facing broadcasters. That's not just the scale of the public service obligations carried by ITV and Five. It's whether those organisations can - or should - play a central role in the public service broadcasting in the future. What should Channel 4's contribution to public service be, and how should it be funded?

Yet important though those questions are, our perspective on public service broadcasting is unashamedly focused on the interests of citizens and consumers. Of course we must understand the views and incentives of producers and broadcasters, but our starting point is the interests of audiences.

And for audiences the world has in several respects changed for the better since our first PSB Review. A head of digital switchover, 90% of homes have the extra choice of channels offered by digital television. And more than half have broadband access to the 45 billion indexed pages on the web. Despite taking advantage of the internet - increasingly on the move as well as at home or at work, audiences aren't watching much less television. The number of hours they watch every week is broadly unchanged over the last four years

That choice is why we called our document the digital opportunity.

So what is the role of public service broadcasting in this age of plenty?

In our first review we articulated a set of purposes to define Public Service Broadcasting. We did so to try and move beyond the sterile debates about what PSB was for that had bedevilled both us - and others - in the past.

Those four purposes are:

• to inform ourselves and increase our understanding of the world,
• to stimulate our knowledge and learning,
• to reflect our UK cultural identity, and
• to ensure diversity and alternative viewpoints are represented.

I believe this framework is crucial.

Without such purposes, the danger is that we have many different debates about means, but we do so with no idea about ends. And without a framework of this kind, we have no way in which we can compare alternative ways in which to achieve these goals.

Now is the time for us to develop a long term view about how best to deliver these PSB purposes in the future, and then to ask what the right transition path is from where we are today to where we want to be in the future.

For decades our public service broadcasting system has delivered high quality UK produced programming from a number of providers across a range of genres, reflecting the cultural identity both of our country as a whole and of the nations and regions within it.

At the heart of this system has always been the BBC, funded by the licence fee. But critically there've been big contributions from commercially funded broadcasters: first ITV, then Channel 4, and latterly Five and a whole range of broader commercial provision.

But since our first review of public service broadcasting started in 2003:

• The PSB channels' share of viewing has fallen from 78% to 64%.
• More and more programmes are watched online. Since the BBC's iPlayer launched last Christmas, 42m programmes were downloaded in its first three months. Virgin Media reports that the busiest day for its network is now Sunday
• At the same time, the amount of new PSB on television has fallen. ITV now broadcasts five hours of Children's content a week; in 2004, it was 12. Spend on UK originated output has dropped by some £300m

Today's public service broadcasters are now part of a much larger world. That wider market includes not just television, but other kinds of home entertainment like the web and gaming. And mobile technologies may bring further radical change in the future.

Yet despite all this, our research makes it clear that audiences continue to support the four PSB purposes. Three quarters of respondents believe TV should promote understanding of life and culture in the UK. Nearly four fifths, that it should make people interested in subjects like science and history. Every one of the PSB purposes has decisive support from the public.

There's an important corollary of these four purposes. Most of them require UK originated programming. Of course series like Mad Men and The Wire are terrific. And they're very high quality. But to take two PSB purposes, it's hard to see how UK cultural identity - or the diversity in our society - can be reflected by non-UK programming. Or to take a third, informing ourselves and increasing our understanding of the world needs a significant base of UK produced news and current affairs - as well as international perspectives.

There's clearly an important role for overseas material in the fourth purpose: increasing knowledge and learning. But in fulfilling the educational PSB purpose, home-grown programming is central to every topic which has a distinctive UK perspective - which means most subjects outside the hard sciences and mathematics.

Again, audiences agree. Four fifths of viewers thought public service channels should provide programmes that are made in the UK and reflect life here. They believe that high levels of UK origination are absolutely critical to delivering the public service purposes. Of course that doesn't mean every UK made show is a public service programme.

Since the Communications Act five years ago, it's become increasingly clear that the market is providing a wide variety of high quality content both on television and online which meets some of the PSB purposes. Channels like Sky Arts and UK History delivers lots of valuable content. So do alternative language services for ethnic minorities on satellite, cable - and online. This kind of provision will continue to grow - something we should all celebrate.

But - welcome as it is - it doesn't add much to new British programming. UK production is still very much dominated by our existing public service broadcasters. They account for 90% of the investment in UK content outside sport and movies, a number which is remaining stable.

Let me be clear. Commercial public service broadcasters would continue to produce some programmes meeting PSB purposes without intervention from the regulator.

But the public purposes are unlikely to be fulfilled to their current extent without public intervention. This isn't just a theoretical possibility.

In children's television, outside the BBC, the market provides masses of content, but very little UK originated material. It's unevenly spread too. Some areas like pre-school programming are commercially attractive. But British drama and factual programming for older children has largely vanished outside the BBC. Regional programming is under similar pressure.

Looking to the future, our modelling suggests there are likely to be other parts of the PSB purposes which will not delivered to any great extent by the market. British made programmes in current affairs, specialist factual, edgy drama and original scripted comedy are likely to be particularly hard hit because of their inherent riskiness and costs.

However, the future is not fixed. None of us can be certain how audiences will respond to the digital opportunity in the next decade. No-one knows for sure how important IPTV will be; no-one can be sure just how robust the free to air advertising model will look in the face of online competition.

So what is needed is flexibility. How we deliver the purposes may need to look different in ten or even five years time. Some specific elements may change even faster than that. Any solution we put in place will need to be able to deal with many potential outcomes. I am certain it will need to take account of interactive platforms as well as linear television.

The pressure on the existing commercial PSBs is mounting. As a result of increasing competition and choice, the licences that underpin commercial PSBs have already become less valuable.

Take ITV1. Before switchover is complete, it will cost them more to fulfil their obligations than their licenses are worth. At that point, it may well make commercial sense to hand back their licences. For ITV1 in Scotland, costs may outweigh benefits even sooner.

For Channel 4 the commercial pressures are the same. But its public ownership means its response is slightly different. It looks likely to need to dilute its programme mix given its current funding model.

We anticipated these problems in our first review. They are now upon us in Children's and in regional programming. And by 2011, they are likely to have led to the widespread breakdown of the commercial part of the current PSB system.

Does this matter?

The importance of competition for the BBC in the provision of public service content was a major theme of the first PSB Review. It's a very important question for the second PSB Review. The UK - unlike many other countries - has a range of publicly funded, public service content providers and it is a key issue for this review to what extent this should be maintained. Or, to put it another way: is the BBC enough? If it isn't, why and where do we need more intervention in PSB? In some areas, the market will deliver effective competition for the BBC, but there are a number of areas where it is not.

The Chairman of the BBC Trust said last night that “the stress on plurality as a key issue in the PSB debate may be misplaced”. Our research suggests audiences don't agree with him. They continue to show wide support for plural provision of public service content, even in genres where the BBC is strong and highly valued. That's most marked in news and current affairs. But a majority want plural provision in every area of public service content except schools and religious programmes.

But this is an area where we need a wider debate. That's why we commissioned the Reuters Institute to publish a collection of essays on plurality - with a suitably diverse range of views from David Elstein and John Whittingdale to David Puttnam and Richard Tait.

A world which had only one source of public service content would be unlikely to meet the purposes fully, for three reasons:

• First diversity of voice. In many programme areas it is critical to have access to a range of points of view. News needs to be delivered by multiple outlets with different voices and styles. Similarly, current affairs should not be subject to one agenda. For many people, television content is their only access to this material. And audiences trust television news and current affairs more than any other medium.


• Second reach and impact. Different providers are able to reach different audiences in different ways. Combined, multiple providers reach a significantly larger proportion of the audience than the BBC does alone. Take news. Nearly 30% of news viewers choose not to watch BBC news but other PSB providers.
• Finally, innovation and quality through competition. Competition amongst PSB providers keeps them honest, efficient and constantly exploring new ways to attract audiences.

Commercial provision of PSB has been funded largely through subsidised spectrum. But the value of that spectrum is declining rapidly in the run up to digital switchover. At the time of the Communications Act there was a subsidy of £520m which paid for commercial PSB. By last year, that had already fallen in value by a quarter. And by the end of switchover, it will have fallen to two thirds of its value in 2003. Our duty is to maintain and strengthen the quality of PSB. If we want to maintain competition for the BBC across a wide range of UK content, new funding sources will need to be found.

There is a risk that this debate focuses solely on one question - the future use of the licence fee. That's a very restricted way to approach a much wider set of choices. In the consultation we published last month, we set out four broad ways for funding PSB in the future. All of them have pros and cons. All should be considered.

In fact the current system to fund public service broadcasting already uses a complex combination of free spectrum, public ownership, licence fee funding and general taxation to fund the PSB system. The questions we have raised are: what is the right mix of these funding sources in future? And are there are any other sources, currently unused in the UK, which could be considered - such as the industry levies currently being assessed in France?

But the primary questions aren't about the source of funding. More important is what PSB do we want? How much, what kind and by whom? After that, the question becomes how it is delivered. The next session is about the future mechanisms of delivering public service broadcasting. So before I finish I want lay out the four models we have developed to stimulate debate.

They are:

1. Evolution: the current commercial public service broadcasters retain a designated public service role, though probably with reduced obligations, and perhaps enhanced public funding to replace declining spectrum subsidies
2. BBC only: the commercial PSBs do not retain special designated roles and the BBC becomes the sole UK-wide intervention in public service content. It may need to take on additional roles to meet needs not served by the market.


3. BBC /Channel 4 plus limited competitive funding: Channel 4 retains a designated role to provide plurality with the BBC but other commercial PSBs lose their obligations and benefits. As a consequence, Channel 4's remit is extended across platforms and into new programming areas, supported by new funding.
4. Broad competitive funding: additional funding is made available by government for public service content beyond the BBC, but not specified for commercial PSBs. Transferable contracts for meeting specific public service purposes would be awarded competitively through a funding agency

I should stress that these four models are exploratory and have many possible variations. In our next publication in the Autumn, I want to learn from the feedback we get from the consultation, to refine or add to the models as a result, and to assess the ability of each to deliver the audiences' vision for public service content in future.

It's the sign of a healthy debate that forceful views are already being proffered. We've had some commercial broadcasters talking about “so-called public broadcasting”. Other organisations more recently have commented on “so-called contestability”. So this is no longer a “so-called” debate - it's the real thing - and I look forward to it continuing robustly and intelligently.

So in conclusion.

Public service broadcasting is at a crossroads.

The existing model is already visibly struggling to adapt to the rapid changes in the market. It is too focused on linear television, and increasingly out of step with the way younger audiences want to consume public service content. The funding model for commercial PSB is not sustainable for the long term. In fact it will break down before switchover has completed. The system is already becoming increasingly over-reliant on one institution, the BBC.

If we do nothing, by 2012 the level of PSB content will have reduced - and so will competition for the BBC. There is no business as usual model available - and the decision is upon us all now.

Any long term solution must be flexible, complement market provision and embrace a range of platforms. I would argue it must also deliver the benefits of competition for the BBC, high levels of reach and impact, high levels of UK content, and value for money. And it will need the support of Government and the consent of Parliament. Getting that solution in place, in time to meet the challenges of the future, will take extensive and early debate. Today's session I hope will be an important step along that path.

Thank you

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