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BBC DG: iPlayer users should pay licence fee

February 27, 2014

By Colin Mann

BBC Director-General Tony Hall has suggested that there is room for modernisation of the BBC licence fee so that it applies to the consumption of BBC TV programmes, whether live on BBC One or on-demand via BBC iPlayer.

In a speech at the Oxford Media Convention, Hall refuted suggestions that the licence fee undermined competition, he pointed to ITV, Sky, BT, Virgin Media, YouTube, Mail Online, Apple, Netflix and Amazon as examples of thriving competitors.

A central part of his argument was that the BBC is just one part of one of the strongest media sectors in the world. “To my mind, Britain has the most vibrant and independent free press in the world. It has ITV and Channel 4. The giants of Sky and BT. One of the strongest independent production sectors anywhere. Talent that reaches around the globe. This is not an accident. The existence of the BBC helps the entire sector, just as the BBC benefits in turn,” he claimed.

In making what he described as a “robust” case for the licence fee, he made three points in support of his contention that the BBC’s case proceeded directly from its achievements.

“First: I strongly believe the BBC is one of the finest broadcasting organisations in the world. It is also great value for money.

Second: that the BBC has done much to make itself more efficient. But it must never – and will never – cease looking for more efficiencies, and demonstrating that to our owners, the British public.

And third that it is the licence fee itself that allows us to do these things. The licence fee is not a compromise, least-bad option. It underpins the success of the BBC.”

He pointed out that no other public service is used quite the way the BBC is. “Our service reaches 96 per cent of the population in the UK every week. Every week. And every day the BBC is actively chosen by the British public close to 150 million times. Every day, the average use of the BBC is over six hours per household. Each hour of that consumption costs each person in the household three pence. I challenge anyone to find better value for money than that for high-quality advertising-free content.”

He noted that twenty years ago, the BBC received nearly 40 per cent of all the revenues in broadcasting. Now the figure is around a quarter – 25 per cent – a much smaller part of the media market. “Twenty years ago, the licence fee was over £147 in today’s money – now it’s a bit lower.

But look what you get. Twenty years ago, we had two TV stations, five national radio stations, and local and Nations radio. Now we deliver four times more television channels, twice as many national radio stations, impressive web services and the iPlayer.”

He suggested that the value the BBC gives the British public is because of the licence fee and not despite it. “The BBC’s mission is to inform, educate and entertain. The licence fee means we must do this for all, not just for some. Universal access and the licence fee support each other. Because nearly everyone in the country uses us every week, we are not asking people who do not use the service to pay for it. I think this is one of the major reasons why people accept the fee, because the BBC is not merely of value to all – it is of value to them.”

In terms of alternative methods of financing the BBC, Hall warned that under a subscription model, the BBC’s incentives would change. “We would become an organisation motivated by maximising profit. Our programming choices would change as a result. We’d make programming for those with the highest willingness to pay. Some audiences would become more important than others. And as payment would cease to be universal, those paying would have to spend more to get the BBC.”

Advertising would narrow the range of content on the BBC,and by taking advertising money away from ITV and Channel 4 it would make public service broadcasting much worse across the board.

Responding to critics who suggest the licence fee is a dinosaur from a pre-digital age, doomed to inevitable extinction in an on-demand world where you don’t watch live TV, Hall said the facts did not bear this out. “Around 90 per cent of all television viewing is still live. Well under two per cent of households consume only on-demand TV content. And this number is growing only slowly. Funding by licence fee therefore remains practical and sustainable,” he asserted.

According to Hall, one of the advantages of the licence fee is that it is flexible and has adapted over the years. “It started as a radio licence. Then TV. Then colour TV. And then the relatively simple change to the regulations in 2004 to cover the consumption of live TV on new devices such as computers. When it’s adapted itself so well over the decades, why would you suddenly give it up,” he asked.

“When and how best to take the next step is, of course, a matter for the Government. Our view is that there is room for modernisation so that the fee applies to the consumption of BBC TV programmes, whether live on BBC One or on-demand via BBC iPlayer,” he said.

He warned that he fragmentation of the licence fee by making the BBC compete with others risked de-stabilising a broadcasting model that works. “A model that is based on competition for quality – but not funding – between public and private broadcasters. Top-slicing means just that – less and less funding for content and services that we know people love. And by weakening the BBC, you also weaken the competitive intensity that underpins the success of UK broadcasting.”

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