Extending the Funding Base for PSB
PSB broadcasters should go to the PSC for reinvestment in PSB content. It should also be considered whether the PSC should retain any fees paid to ITV and Five, even if they opt out of the PSB system, in return for allowing them access to the higher reach slots on digital terrestrial as a set price (i.e. not putting the capacity out to competitive auction). Ofcom should arbitrate on the correct level of these retransmission fees. For reference, US local stations earn about $6 (c£4) per cable/satellite household per year in retransmission fees. A similar fee in the UK would raise about £50m a year in 2012, rising to about £60m by 2020.
Allocated but uncharged spectrum At the moment the UK Government charges broadcasters and those that control the multiplex capacity on digital terrestrial (an Arquiva led consortium and SDN) nothing for the spectrum used. Free spectrum for commercial PSB networks and their spin-off channels was one of the privileges underpinning the enforceability of commercial PSB undertakings. Free spectrum for the BBC was really more about tradition and practicality, the BBC having not been charged for access to analogue spectrum and the impracticality of charging a public body for spectrum only to have to up its licence fee to pay for it. Free spectrum for SDN and the Arquiva was a result of the initial “beauty contest” for digital terrestrial frequency when no one was sure it would be of any value at all. As the Freeview platform has grown SDN and Arquiva have both been able to sell broadcast slots for £8 million to £10 million per slot, way above the incremental technical and administrative costs of transmission. Spectrum charges to the main ITV1 and FIVE would be likely to be higher than the other users due to better coverage of the UK. This policy might raise about £30m to £35m a year from ITV and FIVE and a further £15m to £20m a year from other capacity owners. Recommendation – Introduce spectrum charges for digital terrestrial spectrum to all providers but Channel 4 and the BBC It has already been suggested in Chapter 3 that ITV1 and Five would be required to pay an administered/arbitrated price for their currently gifted slots on digital terrestrial. SDN and the Arquiva led consortium – (Arquiva/Sky/BBC) – should also start to pay an administered price from 2014 onwards for their digital terrestrial capacity. Prices should be set by Ofcom and income from the set prices should go to the PSC for reallocation to PSB content across a number of channels and PSB operators.
TV platform re-Use fees Looking forward most pay TV homes in the UK will have Personal Video Recorder (PVR) functionality in the next few years (PVRs are already in 25% of TV homes in the UK). Pay TV systems are not only benefiting from the retransmission of the main networks and the spin-off channels, they are also offering their subscribers the ability to save and replay 80 to 100 hours of the best network programming – which is still the most popular programming on TV – at their leisure. The same
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