Public service broadcasting (PSB) has dominated the airwaves of nearly all countries for the better part of a century. It can best be defined as broadcasting intended for public benefit rather than to serve purely commercial interests, providing universal access to high-quality content, free at the point of use. The BBC, which celebrates its centenary this year, was one of the pioneers of PSB but broadcasters in Japan (NHK, 1924), Denmark (DR, 1925), Switzerland (SRG, 1925) and Finland (Yle, 1926) run it close. Almost every country in the world offers PSB in some form or another – even the US, which has long been a pioneer of free market broadcasting. Germany, for example, has two public broadcasters (ARD and ZDF) which are funded via a licence fee model whilst France has five different entities (only one of which is a television service).
During its long existence, the BBC has established a reputation for free and fair reporting as well as high quality output. At a time when the number of news and entertainment channels has multiplied, questions are increasingly being asked of the BBC, and indeed of other broadcasters around the world, as to whether current funding models are appropriate and whether there is still a role for state-backed media.
Brand recognition is important
In a world where it is becoming increasingly difficult to
differentiate between factual reporting and fake news, the importance of having
a trusted brand in the media space is more important than ever. Public media scores highly for trustworthiness in Germany whilst the BBC
performs well both at home and abroad on this score. According
to a report in 2020: “The 2020 Reuters Digital News Report found the BBC
to be the most trusted news brand in the United States. A full 56% of U.S.
respondents rated the BBC as “trustworthy” … putting BBC News No. 2 only to
“local television news,” and ahead of all major US news brands.” That might
surprise many people in the UK who have been critical of the BBC’s domestic news
coverage in recent years, but it is a reminder that it has a lot of global
credit in the bank.
In the post-Brexit environment where the government extols the virtues of a global Britain it may come as a surprise to many that it does not share this positive view of the national broadcaster. Last month, the Culture Secretary Nadine Dorries called into question the BBC’s funding model with this article citing sources who suggested that “the days of state-run TV are over” and “it’s over for the BBC as they know it.” It is unfortunate that the BBC has now become an unwilling participant in the culture war which rages across social media these days. Much of the debate is fuelled by political considerations which to some extent represent the self-interested pursuit of those who would benefit from its demise. Despite this, and the fact that the BBC is part of the national fabric with a very strong global reputation, there are serious questions about how to fund public service broadcasting in an era of multimedia options.
Assessing the funding options
One of the most common objections to public service broadcasters is that the flat charge used to fund them acts as a regressive tax. Recently, however, a number of European broadcasters have changed the funding model. In 2013, Finland shifted to a progressive ‘tax’ paid by all individuals on a means-tested sliding scale to fund its public service broadcaster. Denmark has abolished the mandatory licence fee and the state broadcaster is now funded directly from central government tax revenues. The BBC is still funded by an annual levy which is device dependent (i.e. all those who consume BBC services must pay the fee). There is no sign that this is as much of a problem as many politicians seem to think. A recent parliamentary report suggested that “support for the principles behind public service broadcasting remains strong.” Moreover, in 2018, the Swiss electorate rejected efforts to cut taxpayer funding to public broadcasters, after a campaign that stirred debate about the media’s role in fostering national unity.
In the UK, the debate is often portrayed as a choice between
maintaining the licence fee or adopting a Netflix-style user subscription. But
there are other choices. Germany, for example, has introduced a household fee
that sits outside of the state budget and is not tied to the ownership of a
specific device or the use of particular media services. As with other public
services, all citizens pay, regardless of their use of public service broadcasting.
This is a similar principle to the Council Tax used to fund local UK services.
Those who oppose the licence fee on the grounds it is regressive will find even
more to object to in this model unless some account is taken of household
income. However, it does have the advantage of eliminating the free-rider
problem and could, in theory, lead to higher revenues. One study[1]
suggested that if such a model were applied in the UK it would, assuming zero
evasion, raise more revenue than the current funding model. But an evasion rate
of 3.6% would produce no significant revenue gain. For the record, the UK evasion rate is currently estimated in excess of 7%.
A subscription-based service is generally not regarded as suitable
for a PSB model since it is only available to those who choose (and
can afford)
to subscribe, thus defeating the objective of public service broadcasting
to provide content for public benefit rather than financial gain. Indeed
the
broadcaster would be under pressure to provide content only for its
subscribers. Against that, one advantage often put forward is that it
reduces the role of the state which in the UK controls the granting of a
Royal Charter every ten years. However, the BBC's editorial
independence is enshrined in the Charter. Changing to a subscription
model runs the risk of undermining the brand.
Ultimately PSB has to be viewed as a ‘merit good’ that creates
positive social externalities, generally acting as a form of
national glue, and which should be provided on this basis rather than ability
and willingness to pay. Watching reporters from around the world covering
events in Ukraine acts as a reminder that they are providing a valuable public
service. Just as during the height of the Covid pandemic, people turn to their
national broadcasters during time of national emergency. We should be thankful
for the job they do and we mess with the way we fund them at our peril.
[1] Ramsey P. and C. Herzog (2018) ‘The End of the Television Licence Fee? Applying the German Household Levy Model to the United Kingdom’, European Journal of Communication, 33, pp 430–444
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