BBC ‘forced’ to rely on licence fee

A report published by the UK’s Department for Digital, Culture, Media & Sport select committee says the BBC will be forced to rely on the TV licence fee due to lack of viable alternatives.

Julian Knight

It has also urged an update to the Communications Act to protect PSBs against the onset of streaming platforms.

In The Future of Public Service Broadcasting report, the Commons select committee said the UK government’s “failure to enable a viable and alternative form of funding” for the BBC means the pubcaster has been left with “no option” but to continue operating under a licence fee model.

The committee blamed the government for failing to put in place the necessary broadband infrastructure that would facilitate other funding mechanisms, noting that delays to a full fibre broadband rollout mean a wholly online public service broadcasting system allowing for universal access is not yet viable.

The committee added that its inquiry considered a number of alternatives to the BBC licence fee, including models from Germany, Finland and Switzerland. These models included household or individual fees, state budget funding, advertising, subscription and supplementary taxation, but said none of those options were “sufficiently better” as a whole to recommend as an alternative.

With the BBC’s licence fee model set to continue, the committee added that the government must now act quickly to end “damaging speculation” about decriminalising non-payment of the licence fee, as continuing uncertainty over decriminalisation of non-payment is likely to boost evasion rates and lead to a further drop in funding.

According to the report, the BBC’s target of a 5.9% licence fee evasion rate is likely to be missed by a “significant margin” unless decriminalisation concerns are addressed.

In order to avoid this, the committee is urging the government to provide “a strong alternative” to the BBC licence fee that it can put to parliament, or to “strongly support” the current model for at least the next charter period of 2028-2038 and actively aid the BBC in driving down evasion.

Julian Knight, the Digital, Culture, Media & Sport Committee’s chair, said: “It’s clear that the BBC TV licence fee has a limited shelf life in a digital media landscape. However, the government has missed the boat to reform it. Instead of coming up with a workable alternative, it has sealed its own fate through a failure to develop a broadband infrastructure that would allow serious consideration of other means to fund the BBC.

“Not only that, but the government is effectively allowing the BBC to haemorrhage funds through non-payment of the licence fee as a result of continued speculation over decriminalisation of licence fee evasion, a situation it must bring to an end.”

Also in the report, the committee accused the government of “letting down” public service broadcasters (PSBs) with out-of-date legislation and is calling for a new broadcasting act by the end of 2022 to replace the “outdated” Communications Act 2003, which would enable PSBs to “compete and thrive in a new media age” with a right to prominence on digital platforms that extends beyond the electronic programme guide.

In line with this, the committee is calling on the government to broaden the Digital Markets Unit’s remit to consider whether the dominance of online platforms gives them “undue influence” over the ability of consumers to access PSB content, both online and through streaming.

“To enable public service broadcasters to compete in a digital world, ministers must renew broadcasting laws that are nearly 20 years out of date. It’s a question of prominence – too often public service broadcasters lose out on dominant platforms with content that’s hard to find or isn’t branded,” Knight said.

The committee did stress, however, that the PSBs need to do more themselves to attract digital audiences, rather than wait for action by the government, and recommended they explore options for collaboration on a single VoD platform.

“There is more that public service broadcasters should be doing for themselves and only by pooling resources can they hope to compete with the likes of Netflix and the platforms. The collaboration by the BBC and ITV on BritBox is a striking example of how they can work together to create a ‘one stop shop’ for video-on-demand content –- a model for future work,” Knight said.

ViacomCBS-owned broadcaster Channel 5 said it “welcomes the committee’s strong support for UK PSBs and the Freeview platform”.

“We are particularly pleased to note the committee’s support for a new prominence regime for PSBs, and a mandate for the Digital Markets Unit to evaluate competition in and regulation of the online advertising market,” Channel 5 said.