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Thursday, August 5, 1999 Published at 12:56 GMT 13:56 UK

ANALYSIS: Public broadcasting funding in the digital age

CUE: The advisory panel appointed by the British government to look at the future funding arrangements for the BBC in the digital age has recommended a "digital levy" to finance the corporation's digital transition and expansion.

Commercial operators, who have invested heavily in the development of digital services, have attacked the decision.

In other European countries public broadcasters are looking at a number of solutions to fund their newly-launched digital services and compete with commercial operators in the multichannel digital environment.

Morand Fachot, of BBC Monitoring's Foreign Media Unit, has the details: The long-awaited report by the commission appointed by the British government to look at the future shape of the funding arrangements for the BBC in the digital age has just been released.

The commission has recommended, amongst other things, the introduction of a "digital licence levy" to finance the BBC's digital transition and expansion, a proposal which was compared to the way colour television financed the BBC's transfer to colour.

Unsurprisingly, the proposal, favoured by the BBC itself, has come under fire from commercial operators, mainly BSkyB and ONdigital, who have spent billions of pounds to launch their own digital services, supplying free receivers to their subscribers, who will now have to finance the BBC's digitization.

They see the extra digital levy as an obstacle to the adoption of digital television.

Digitization presents public and pay-TV broadcasters with distinct problems: - Pay-TV operators can either launch directly in digital mode, like ONdigital, or achieve the digitization of their operations in a relatively short period, by massively transferring all their analogue subscriber base to digital standard, like BSkyB which plans to switch off all its analogue transmissions by the end of 2000.

The short-term costs can be high, if receivers are supplied or replaced free, but the long-term financial rewards (for operators, if not for viewers) are obvious with lower transmission costs and higher subscription fees (to recoup the cost of "free" receivers).

Constraints of the public service remit The BBC, like public broadcasters elsewhere, faces other obligations.

It is bound to provide programming to the whole of the population as part of its public service remit.

Until an eventual analogue switch-off, not announced yet by the government, but not expected before 2006, the BBC must transmit (multicast) at great cost, in both analogue and digital mode.

Furthermore, the BBC, like other public broadcasters, sees its audience share decline in the multichannel environment, a situation which could undermine its very existence if it were to drop below a certain level.

To counter this trend and maximize the use of its services, resources and archives it has launched a number of on-line and broadcasting services, at a total cost of some over five years.

Some services are commercially funded, others financed through the licence fee.

The challenge until now for the BBC, and for most other public broadcasters, is to provide more with stagnant resources.

Other European public broadcasters The financing of public broadcasting services in other European countries is at the centre of a wide debate and different solutions are being adopted in various countries. - France is reducing the share of advertising in the financing of its public television channels (some 42 per cent in 1998), with additional public funding making up the shortfall.

Licence-fee funded channels are not freely available in digital, but exclusively via the pay-TV platform TPS; public service thematic channels - digital or not - are available via subscription services only, such as cable or TPS.

The French government has agreed to a 3-4 per cent increase in the budget of public broadcasters for 2000, coming after a 2.6 per cent rise this year, well above the inflation rate - Germany's public broadcasters, ARD and ZDF, are launching a number of free digital services, on top of their existing 17 channels, via two separate digital platforms.

The share of advertising is in constant decline in the funding of the two public services, with the licence fee currently making up around 95 per cent of their resources. - Italy's public broadcaster Rai, which still gets some 35 per cent of its income from advertising, launched a package of three free digital TV channels in 1997, adding a sport and a news channel later.

It also provided six digital channels for the pay-TV platform Telepiu in July 1999, with five more channels to follow in the next three years.

Rai is also expected to face a partial privatization of some of its services, including a television channel, in coming years. - The Netherlands have recently decided to abandon the licence fee in favour of general taxation to finance the country's public broadcasting services.

A move seen as socially more equitable.

With various solutions to their financing problems and with a wider of programmes which include this mix of free-to-air and pay-TV digital channels as well as on-line services, European public broadcasters are seeking to be better equipped to compete in the multichannel environment of the digital world.

European Commission's role In doing so, they will also come under close scrutiny from the European Commission which is already probing a number of alleged cases of cross-subsidization on the part of some public broadcasters, notably in France, Italy and Spain, after rejecting two cases brought up against Germany's public broadcasters earlier this year.

The Commission has also stressed a number of times that the funding of public broadcasting services "must be in proportion to, and not more than what is needed to discharge the public service remit." The funding of European public broadcasting services will increasingly be in the headlines in years to come as public and private operators battle for audiences and market shares.

Source: BBC Monitoring Caversha, 5 Aug 99 BBC Mon NF mf <<>>

BBC Monitoring (, based in Caversham in southern England, selects and translates information from radio, television, press, news agencies and the Internet from 150 countries in more than 70 languages.

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