Ofcom kicks off debate on PSB future

Ofcom has begun a major consultation on the future of public service broadcasting in the UK.

Without new rules and legislation, investment in UK television - particularly for children and the regions - will continue to decline, stated the regulator's PSB Review.

The rapid growth of digital television has pushed down the value of the commercially-funded broadcasters' gifted spectrum and in turn they have reduced their investment in making TV. The viability of major players, particularly Channel 4, is also under threat.

Ofcom's report states new legislation should be in place "by 2011, the point at which some current licences may fall into deficit and Channel 4 will face increasing pressure on delivery of its remit".

In coming months the PSBs - the BBC, the Channel 3 franchise holders, Channel 4, S4C, Five and Teletext - will have to argue their corners as Ofcom and other policymakers consider the solutions.

> Click here to debate the future of PSB on the Digital Spy broadcasting forum

Short and medium term problems to be considered include reductions in children's television, nations and regions becoming "increasingly unsustainable" and a funding gap at Channel 4.

"In the long term, a wider range of options is available at the point of renewal of the existing commercial broadcasting licences," says the report. "It is legitimate to ask whether ITV1 and Five should have any specific ongoing institutional role in delivery of public service broadcasting; likewise Teletext and GMTV.

"If Channel 4s special role were to be maintained, it would need a new remit, a sustainable and proportionate funding model and accountability arrangements."

Ofcom sets out four broad options for the long term:

* Evolution: the current commercial PSBs (ITV, Channel 4, S4C, Five and national and regional broadcasters) retain a designated public service role. Either their public service responsibilities are reduced in line with the declining value of their gifted spectrum, or additional support is provided to retain or expand those responsibilities which remain high public priorities but which can no longer be supported through the value of existing gifted spectrum.
* BBC only: the commercial PSBs do not retain special designated roles and no additional public funding is provided for public service broadcasting beyond the BBC. The BBC becomes the sole UK-wide intervention in public service content, and may need to take on additional roles to meet needs not served by the market. Limited plurality is provided only to the extent possible through content supplied by fully commercial broadcasters.
* BBC/Channel 4 plus limited competitive funding: Channel 4 retains a designated public service role to provide plurality with the BBC but other commercial PSBs lose their public service obligations and benefits. Channel 4s remit is extended across platforms and into new programming areas, supported by new funding. Any remaining public purposes not served by the BBC and Channel 4 potentially for example non-BBC programming for the nations and regions could be delivered through long-term but transferable funding agreements with other providers, awarded competitively through a funding agency.
* Broad competitive funding: the commercial PSBs do not retain special institutional roles. Instead additional funding is made available by government for public service content beyond the BBC. Long-term but transferable contracts for meeting specific public service purposes would be awarded competitively through a funding agency. Those contracts would be open to bids from a wide range of organisations, including the existing PSBs. The BBC would have a core role in areas where the market is unlikely to deliver and where a competitive process would be difficult to specify.

The review also considers possible sources of funding:

* Direct public funding: possible sources of funds include direct taxation; or hypothecated proceeds from spectrum auctions or spectrum charging.
* The licence fee: options include retaining the excess licence fee funding currently ring-fenced for the Digital Switchover Help Scheme and Digital UKs market costs, opening up core licence fee funding to other providers ("top slicing"), or using BBC assets to support other providers.
* Regulatory assets: these could include access to spectrum at below-market prices, revised advertising minutage rules, or public service broadcaster status for additional channels.
* Industry funding: a wide range of industry levies could be considered, similar to the proposals currently under consideration in France.

The consultation, which includes an Ofcom blog to encourage members of the public to have their say, will end on June 19. Ofcom will then lay out more firm options, and have a further consultation, in the autumn.