BECTU decries Ofcom’s light touch

BECTU has challenged Ofcom to develop a “strong and coherent regulatory ideology” to meet its obligations to UK broadcasting.

The union’s formal response to Phase Two of the regulator’s current review into public service broadcasting (PSB) asks some fundamental questions about Ofcom’s approach to its remit.

BECTU has long criticised Ofcom for weakness in the face of commercial pressure and for being less than emphatic in its delivery of support for PSB.

BECTU’s submission, delivered to Ofcom last week, urges the regulator to consider its own role in the future of quality PSB:

Ofcom’s preference for a default position of light touch regulation and market-oriented solutions is as inappropriate in broadcasting as it has proved to be in the global financial system.

Support for market-influenced solutions is a sign, not of intellectual rigour, but of intellectual weakness.

BECTU goes on to highlight the primary weaknesses in Ofcom’s assessment of the current state of play in PSB. The union accuses Ofcom of:

• Underestimating the strong non-economic social, cultural and democratic benefits of PSB;
• Adopting a position of excessive deference to commercial interests;
• Underestimating the damaging consequences of market failure and corporate greed; and
• Failing to recognise that strong regulation, not market forces, underlies the success and popularity of PSB.

With thousands of jobs being lost at the BBC, and hundreds more at risk in ITV and C4, BECTU is calling on the regulator to be true to its responsiblities and to open itself up to new ways of bridging the identified funding gaps.

BECTU’s submission, compiled by research officer, Andy Egan, reiterates and expands upon positions set out in the union’s first response to the Review delivered in June 2008.

Highlights of BECTU’s Phase Two submission

BECTU on the BBC

BECTU says in its submission:

We strongly believe that public service provision and funding beyond the BBC is vital for the future of our broadcasting system. This entails the need for PSB pluralism and thus for PSB providers beyond the BBC.

We equally strongly believe that the BBC should remain the ‘cornerstone’ of our PSB system - but this in itself implies a broader structure to support. The BBC-only model could in the long term (as we indicated in our Phase 1 response) lead to the Corporation evolving into a niche broadcaster such as PBS in the US, with the market providing all other programming. But the market is incapable of providing programming of the range and quality offered in a PSB system.

Future public service responsibilities

BECTU has underlined its support for evolution as the best way to address necessary change to PSB; with Ofcom accepting as a non-starter any notion that the BBC should be the sole provider of PSB in the UK, BECTU is urging the regulator to rule that ITV1, Five and Teletext should continue to have public service obligations after 2014.

On the prospect of further change to Channel 3 licensing BECTU continues:

In respect of Ofcom’s proposals on the C3 licensing structure we consider that the detailed case for such changes has not yet been made and that further and better information is required, including the issue of how viewers would gain from this, as compared to the current structure.

PSB funding

BECTU warns against the introduction of competitive funding for PSB, arguing that such a model would destabilise a system which works, add more cost at a time when funds are under ever-increasing pressure and, arguably, put at risk the volume and range of future PSB content.

BECTU says:

We have set out …. our view on the dangerous implications of adopting a competitive funding model.

Underpinning this, we believe that Ofcom appears in many ways predisposed to the consideration of market-influenced models rather than strong regulatory models for the future of PSB. This, in our view, is not a sign of rigorous thinking but of intellectual weakness on the part of the regulator - which raises questions as to the extent to which Ofcom is fit for the purposes of maintaining and strengthening PSB.

Support for news for the nations and regions

BECTU has reminded Ofcom about the results of its own research which registers strong support for quality and diverse news content, from a number a providers.

We note the overwhelmingly supportive evidence from Ofcom’s own audience research.’ 88% ‘thought it important that the main TV channels provide nations and regions news’. There were high levels of agreement that ‘it was important for ITV1 as well as the BBC to provide nations and regions news programmes’. ‘Respondents in each English region and devolved nation believe that nations and regions news provision cannot be left solely to the BBC’.

Future funding options

Ofcom invited the industry to comment on a number of possible options to address the PSB funding gap identified by a number of organisations, including C4 and ITV. The possible options are the gifting of regulatory assets; top-slicing of the licence fee; the introduction of new industry levies; and direct government funding.

BECTU has responded saying:

We favour regulatory assets and industry levies as sources of funding. We fundamentally oppose using the licence fee and direct government funding.

Independent producers

That said, BECTU has invited Ofcom to give specific consideration to a levy on independent producers who “hold a lucrative and privileged position as suppliers to PSB with fixed terms of trade (arguably heavily loaded in independents’ favour) and a protected quota.”

Independent production has long ceased to be characterised by small, innovative, creative production houses and is now dominated by large highly profitable corporations. Most of the ‘fat cats’ of British broadcasting sit not in ITV but in the boardrooms of the large independents - and a number of whom have rewarded themselves with notoriously large levels of remuneration. Why has Ofcom failed to even consider intervention in this area?

BBC licence fee

BECTU’s submission states:

In respect of the licence fee, we are fundamentally opposed to opening up licence fee funding to other PSB providers. The BBC licence fee settlement is already inadequate - as evidenced by large consequent job losses at the Corporation - and in our view should be renegotiated upwards. It should not be reduced even further by siphoning off essential BBC resources to other institutions - especially when there are alternative means of providing funding for commercial PSBs.

Top-slicing the licence fee will weaken the BBC (thereby running contrary to Ofcom’s own view of the BBC as the cornerstone of our PSB system); redirect public resources to private profit (including the subsidisation of programmes that might have been made anyway); impose a chaotic and wasteful system of competitive funding with high transaction costs; and, we believe, lead to a net overall reduction in original PSB production.

The same arguments apply to top-slicing the so-called digital excess licence fee. There is no excess in the system. Siphoning off this amount to commercial PSBs would dilute the connection between licence fee payer and BBC; erode public support for the basic licence fee; and set a precedent for future top-slicing of the core licence fee. The proposal fails to acknowledge the BBC’s vital and ongoing digital role, which will continue beyond 2012, and will be required in additional areas such as extending broadband connectedness and building the DAB network.

The loudest arguments for top-slicing the licence fee come from commercial interests and free market fundamentalists who are deeply opposed to such a successful non-commercial broadcaster. Ofcom should not collaborate with these views.

Sharing ideas and expertise

In contrast, we note that the BBC have set out a series of proposals for sharing ideas and expertise with other PSBs - as in the areas of digital technical standards, regional news, an enhanced Freeview platform, R&D and online availability of PSB. We believe, with Ofcom, that these partnership proposals should be explored further.

We believe that constructive collaboration of this kind rather than top-slicing the licence fee is the best long-term model for relations between BBC and other PSBs. However, we believe such proposals - which have resources implications for the BBC - are only feasible if the Corporation retains the licence fee in its entirety.

Industry levies

In respect of industry levies, we strongly support the exploration of this significant potential funding source.

We note, with Ofcom, that a principal justification would be ‘that content distributors and aggregators were benefiting from access to high quality UK content for which they were not paying’.

We believe this is indeed the case and is borne out by the pitifully low level of UK original content relative to overall revenue that characterises non-PSB content providers.

In summary, we strongly favour exploring the options of industry levies (especially on non-PSB broadcasters and new media) and of regulatory assets (especially gifted spectrum for PSB-HD and possible auction proceeds). We completely oppose the use of licence fee income outside the BBC and we do not favour direct government funding.

Channel 4

Commenting on how best to address the projected shortfall in Channel 4’s income, BECTU says:

We favour, and again for the reasons set out above, use of an industry levy and indeed of regulatory assets such as privileged spectrum access and increased advertising minutage.

On Ofcom’s plans to lighten PSB requirements for some broadcasters

BECTU says:

We note ITV’s unilateral announcement of cuts of £40m in its regional news budget and its further proposals for cuts in other areas - with its consequence of reduced output, merged regions and severe proposed job losses. We note Ofcom’s collaboration in this process by approving - with minimal amendments - this fait accompli.

BECTU’s view, as already publicly expressed, is one of active opposition to these proposals which undermine ITV’s previous PSB commitments and Ofcom’s previous indication that it would not make further concessions to ITV in the current licence period.

This is a fundamental - potentially terminal - erosion of ITV’s distinctive characteristic of a strong regional structure. It will result in a regional news structure which is meaningless to viewers (with regions extending, for example, from Penzance to Worcester and Dumfries to Yorkshire).

Ofcom makes ITV takeover easier

BECTU states:

It [Ofcom's proposal] flies in the face of consistently and strongly expressed audience preferences - as indicated in Ofcom’s own research - for a high value on regional news output and a plurality of supply of that output. In the long term, this ‘encumbrance-free’ model for ITV makes a takeover all the more likely - by new owners positively attracted to a stripping out of PSB obligations.

This whole process is ultimately a comment on Ofcom’s failure to act as a strong regulator committed to ‘maintaining and strengthening’ PSB. Ofcom facilitated the original creation of ITV plc and is now facilitating the erosion of its regional character. Light regulation has in effect become deregulation.

There has been no attempt to hold ITV to its PSB commitments - pending the provision of additional funding from the sources outlined earlier in this paper. ITV is still fundamentally a profitable and viable company. We strongly believe that it should be required to maintain its existing regional commitments - with the promise of additional funding prior to any point at which its PSB licence is no longer commercially viable. That point has not yet been reached. The regional cuts are therefore in our view completely unjustified.

No to cuts in STV and UTV output

BECTU says:

On a similar basis, we do not agree with the proposed permanent reduction in the programming obligations of STV and UTV. We accept these companies face an impending PSB funding gap. But this should be remedied by measures to provide funding not by the permanent weakening of PSB obligations.

We note Ofcom’s contrasting approach to Channel 4, where ‘new long-term funding arrangements’ are linked to an increase in C4’s out-of-London production quota.

Positive signals for Childrens TV

This is one area where Ofcom’s Review holds out hope for better and stronger provision.

BECTU states:

“We welcome the strengthened commitment to children’s programming indicated by BBC, Channel 4, S4C and Five.”

Read BECTU’s full submission.