BBC criticizes proposal for license fee

3.5% of fee could go toward funding non-BBC news

LONDON -- The BBC has hit out at government proposals to use up to 3.5% of its annual license fee to fund non-BBC news, saying that it should instead should be returned to viewers.

The proposals, put forward by Communications Minister Stephen Carter in the Digital Britain report published Tuesday, could see broadcasters including ITV as well as local newspapers benefit from BBC funds amounting to about £130 million ($213 million) a year so that they can provide competition to the BBC's own news services. Children's programming also could be subsidized by the fund.

Other plans in the report include the introduction of a target to cut digital piracy in the U.K. by 70% within 12 months and the introduction of a new £6-per-household tax to support broadband infrastructure investment.

The report welcomed a possible tie-up between the BBC's commercial arm BBC Worldwide and Channel 4, but so far the two broadcasters have failed to come up with an agreement.

The report has called for a public consultation on the move to split the BBC's license fee as it would be the first time in its history that BBC income has been used for any other purpose than BBC activities.

Pledging that the decision to use BBC cash would be "contained" and "ring-fenced" under any new legislation so that it could not exceed 3.5% of the BBC's total income Carter said the government wanted to put the proposal forward for discussion because it was "not 100% sure" that the license fee should be shared.

"If we were absolutely sure that contestable funding was the only solution to funding alternative local news, then the report would have said that," Carter told a press conference after the Digital Britain legislative proposal was put before Parliament.

"But, having looked and consulted, we have not yet seen another proposal that provides the level of funding needed."

BBC Trust chair Michael Lyons said that the license fee should not be shared and that the cash returned to the license fee payer could amount to a 6% reduction in the annual £140-per-household license fee tax.

"Research by (media regulator) Ofcom shows that license fee payers would prefer to have switchover money after 2012 returned in the form of a lower license fee than have it used for other purposes," Lyons said.

"The Government will need to make a good case for any other use of this money."

ITV and Channel 4 both welcomed the report. U.K. Film Council chair Stewart Till was positive on plans to put digital switchover for cinemas onto the government's policy agenda, but he warned that the proposed measures against Internet piracy were not strong enough.

"If these targets are to be met, tough deterrence schemes will need to be implemented to ensure that higher broadband speeds do not lead to a colossal increase in illegal file-sharing," he said.