The Role and Remit of Public The Role and Remit of Public Service Communicators in the Service Communicators in the Digital Age: Beyond Market Digital Age: Beyond Market

Failure?Failure?

Friday 28th February 2003, 3:30 – 5:30pm

Public Service Broadcasting: Public Service Broadcasting: Too much of a good thing?Too much of a good thing?

Richard Collins.

Professor of Media Studies.

The Open University.

Market Failure?Market Failure?

• Yes. But, how much does the broadcasting market fail?

• McKinsey – UK world’s highest level of public expenditure per head on broadcasting.

• Director General of Fair Trading –BBC funding close to one day’s UK GDP.

• Prima facie – the market fails a lot.

The Problem of The Problem of ProportionalityProportionality

• How much PSB is enough? • UK PSB fills the gap where the market fails. But

what’s missing?• Why is Five (Channel 5) PSB and not

ArtsChannel, History Channel, Discovery?• "Too often the BBC in effect behaves as if public

service broadcasting is everything the BBC chooses to put out" (Davies 1999 p 139).

The Problem of The Problem of DefinitionDefinition

• Is everything public service broadcasters do public service broadcasting?

• 10 years ago. BBC defined itself as: a “complement [to] the enlarged commercial sector” (BBC 1992 p 19).

• 15 years ago – BBC facing break up (majority of Peacock Committee recommended spinning off Radios 1 and 2 and 40% independent production quota.

The Problem of The Problem of DefinitionDefinition

• Now:

• Licence fee rising by RPI + 1.5% to 2006

• DTT franchise.

• Successful refusal of Ofcom’s embrace.

Defining PSB?Defining PSB?

• More than merely a “complement” but what is PSB?• We couldn’t "offer a tight new definition of PSB”

but members were confident they "knew it when we saw it" (Davies 1999 p 10).

• “at such a general level that it is impossible to assess sensibly what Parliament could expect each to contribute” (ITC: 2002b p 8).

• The Financial Times (1.8.02 p 14) claimed that “the biggest threat to diversity is the BBC, which is moving into all sorts of new sectors” .

The Goldilocks QuestionThe Goldilocks Question

• How do we know what’s too much, too little or just right for PSB?

• We need clearer objectives - so we can know how much support is proportionate to PSB’s tasks.

QUIDQUID

• Quality

• Universality

• Independence

• Diversity

ExamplesExamples

• Diversity – how many separate sources of news in each TV home?

• How much representation of different groups and interests to each other?

• How far is PSB contributing to overall programme diversity?

• FCC Herfindahl-Hirschman Index • Relative Entropy and Deviation indices – Swedish

and Finnish research. Can set targets. (see Hellman 2001).

ExamplesExamples

• Quality – consumer driven assessment. Share and viewer appreciation targets.

• Clear distinctions between commercial and PSB are important if Government objectives are to be achieved.

CCompetitionompetition

• BBC caught particularly uncomfortably between two mandates - to be commercial and to be PSB.

• £1.1bn commercial earnings required as part of last licence fee settlement.

• Better that sleeping assets used and current assets sweated.

• But - Danger of unfair competition.

CompetitionCompetition

• For example: predatory pricing; abuse of power as a purchaser; transfer pricing between public and commercial sides; refusal to supply and crowding out.

• Wrong balance between PSB and commercial. Clarity of commercial objectives v fuzzy PSB objectives.

• How can BBC Governors both ensure BBC’s success and ensure BBC’s role in whole broadcasting ecology is positive?

Crowding OutCrowding Out

• Davies Panel foresaw BBC crowding out competition by using “Licence fee money… to make programmes of a type which could perfectly well be left to the private sector” (Davies 1999 p 92).

• Geoff Metzger, MD The History Channel: “anyone entering the market now does so

with knowledge of much greater risk”.

RegulationRegulation• PSB and commercial sides under BBC roof will make

Ofcom’s (the concurrent competition regulator with sectoral expertise) task difficult.

• To regulate effectively Ofcom needs information and expertise.

• Can’t be confident Ofcom will be able to function effectively when has jurisdiction over only one side of BBC house.

• Effective competition regulation is necessary if potential entrants are to be confident they won’t be exposed to anti-competitive exercise of SMP by incumbent PSBs.

RemediesRemedies

• Competition regulation?

Enough?

• Structural separation?

David Liddiment :“Cut the umbilical cord between the BBC and its production arm” (Liddiment 2002, 5).

Remedies - Remedies - Ex Ante RegulationEx Ante Regulation

• Prohibition of cross subsidy.

• Prohibition of undue preference for own subsidiaries.

• Provide information.

• Advance notification of commercial plans.

• No more umbrella authorisations.

New Services - New RemitNew Services - New Remit

Size, Role and Remit

of Public Service Broadcasting

in the Digital Age

Nanne Priebs

New Services - New RemitNew Services - New Remit

• Public Provision in the Broadcasting Market: 3 Policy Environments– UK, Germany, Japan

• Public Provision in the Online Market: Approval Process for New Services

• New Services- New Remit: Compulsory Elements

3 Policy Environments3 Policy Environments

UK Germany Japan

BBC ARD, ZDF, DLR NHK

BBC Charter, BBCAgreement,Communications Bill

Constitutional CourtDecisions, InterstateTreaty

Broadcasting Law,GovernmentGuideline

“programmes ofinformation,education,entertainment”

“basic provision”- reach- content- admin

“abundant and highquality broadcastprograms”

Approval of New ServicesApproval of New Services

• UK: „Ancilliary Services“, DCMS, Secretary of State

• Germany: „legal loophole“, KEF

• Japan: Governmental Guideline: „In the light of the contribution to the development of the IT society, NHK‘s internet use is, in general, socially valuable.“

Modus OperandiModus Operandiof the German Auditing Body KEFof the German Auditing Body KEF

• General information– Est. 1975, current constitution since 1994

– 16 Members

– purpose: to evaluate the financial need of PSBs

– mathematical basis, no interference with PSB‘s programme autonomy

• NB:examination of PSB‘s expenditure strictly according to whether PSB‘s decisions are covered by the remit and principle of economicalness

KEF‘s 3 Step evaluation systemKEF‘s 3 Step evaluation system

• 1st step: calculation of „current costs“– programme, staff, materials, investments

• 2nd step: calculation of „development costs“– on the basis of application for „projects“– projects to date: multimedia/online, DAB, DVB

• 3rd step: verification of economicalness

Remit ElementsRemit Elements

New services –new remit:

Compulsoryelements

Admin

Guarantees:- commission to audit

content with obligation toinvite representatives ofinterest groups

- procedure to audit andcarry out tasks

Content

Provisions referred to in theCommunications BillGeneral PSB Remit:“information, educationand entertainment”

- “basic provision” (neither“minimal” nor “abundant”)

- content limit- “dimension” limit

„TAS“

Technology adaptationscope

Employment of technologicalmeans according to thepublic needs

Here: Approval of newservices, including the actualextent of exploitation of themedium’s technologicalpotential

Reach

- universal reach- “Public” access to PS Provision

NB: link to “depth” (universalreach necessary to justify publicprovision? Internet penetration /Digital Divide)

Nanne PriebsNanne Priebs

nanne.priebs@csls.ox.ac.uknanne.priebs@csls.ox.ac.uk

The Role and Remit of Public The Role and Remit of Public Service Communicators in the Service Communicators in the Digital Age: Beyond Market Digital Age: Beyond Market

Failure?Failure?

Friday 28th February 2003, 3:30 – 5:30pm