U.K. Industry Debates BBC License Fee Models for Digital Age

ONE TIME USE - Tony Hall - H 2012
Luke Macgregor/Reuters

The public broadcaster is partly funded by British households that pay $239 per year, but changing viewer habits and opposition to fee increases have led to proposals for new models.

LONDON – U.K. industry insiders and observers have started floating new possible models for the BBC license fee, which British households must pay to help fund the public broadcaster, in the digital age.

The British parliament recently launched an inquiry into the BBC’s future, inviting comments from other TV network operators, including on the fee that brings in nearly $6.6 billion in annual revenue, or $239 (£145.50) per year, from households watching broadcast TV.

The amount of the annual fee is one continuing topic of debate in Britain. When the fee was last set in 2010, its amount was frozen through 2016, which means a drop in real terms given inflation. A recent opinion poll found that only 10 percent of people surveyed would support an increase in the license fee.

British industry players have also discussed the use and focus of the fee.

Commercial broadcaster ITV recently, for example, said the BBC has too aggressively focused on using fee revenue on shows that draw big ratings. "We welcome competition, but what we find difficult are situations where the BBC seems to merely copy the commercial strategies of competitors purely to gain audience share, whilst at the same time enjoying the certainty of a guaranteed license fee income," it said in a submission as part of the parliamentary inquiry.

And some U.K. broadcasters have suggested that they should get a share of the BBC license fee.

The BBC itself has suggested that the license fee rules could be modified to cover those who only watch TV on demand via digital player BBC iPlayer given changing viewer habits in the digital age. “The license fee has always adapted flexibly to technology change,” it said in a submission.

The BBC has estimated that 1 percent -2 percent of U.K. homes watch TV only online, with that figure expected to grow in the coming years.

The Financial Times reported Tuesday that a growing number of households use the BBC iPlayer app on computers or mobile devices without owning a TV set and without paying the license fee. The paper cited a senior BBC executive as saying privately that iPlayer usage could grow  "faster than most people in television think."

The FT also cited proposals to fund the BBC by voluntary subscriptions. That would allow viewers to select whether or not to pay for individual networks. While that would test consumer demand, most observers expect that this would lead to a drop in funding for the BBC.

An alternative model calls for the license fee to be split in two. One would be a standard charge for the basic BBC channels, with the other being a digital fee for people interested in additional services.

E-mail: Georg.Szalai@THR.com
Twitter: @georgszalai