The article also mentions 'the next communications bill, due before the next general election in 2015'. Given the huge public outcry over Hackgate, this should be a major shakeup of the way our media are regulated. We will discuss likely outcomes of this, something you need to be able to provide an informed opinion on for your exam.
[Read more Guardian articles on PSB here]
ARTICLE SOURCE: http://www.guardian.co.uk/media/2011/sep/02/ofcom-itv-channel-5
The admission came on Friday as Ofcom published its government submission on options for renewing Channel 3 (ITV) and Channel 5 licences, which expire at the end of 2014.
Ofcom said that the three options given to Jeremy Hunt, the culture secretary, give him the "choice between stability and disruption" by either maintaining the status quo and renewing the existing licences or tearing them up and rethinking how, and in what form, public service TV content might be delivered in future.
Ofcom said that the first option, that of renewing the existing licences with the same broadcasters for another decade, is probably the best bet if viewers want to continue to see PSB content on TV.
"In the medium term licence renewal is the approach most likely to ensure the continuing delivery of the key public service objectives of supporting investment in original programming and news provision," Ofcom said in its 36-page submission to Hunt.
However Ofcom notes that there is a "high degree of uncertainty" surrounding the commercial sustainability in a volatile UK broadcasting market of a licence running for 10 years from 2014.
Ofcom's commercial PSB licences give holders benefits which have historically been financially very valuable, primarily reserved access to broadcast on strictly limited terrestrial spectrum and more recently on digital terrestrial TV, or Freeview. Licensees are also guaranteed prominence in the digital TV electronic programme guides.
In return broadcasters have had to guarantee delivery of a range of PSB content, such as national and regional news for ITV licensees, and investing in original UK programming.
However, broadcasters such as ITV have vigorously lobbied, and Ofcom has concurred, that the value of the PSB licences are less than the cost of delivering PSB programming that is often expensive to make and delivers low audiences.
The PSBs have already moved to cut back on some of their obligations – under former executive chairman Michael Grade ITV threatened to pull out of regional news altogether – despite the sanctions at Ofcom's disposal to punish licence breaches.
"It is uncertain whether the regulatory enforcement mechanisms currently in place would be sufficient to prevent licensees from seeking to pare back delivery of public service content in the future in response to unfavourable market conditions," said Ofcom.
The media regulator admitted that "some form of agreement" would have to be reached with broadcasters to make sure PSB content was delivered "until the mid-2020s" – meaning some reduction in obligations agreeable by both sides.
This option might also allow parliament to amend the structure of Ofcom broadcast licences covering the UK to look at options such as the creation of a separate licences for Channel 3 in Wales and Scotland, which is covered currently by three licences (Border, owned by ITV plc, and STV and Grampian, owned by STV).
The second option is to cancel the existing PSB licences and retender to the market for the next period from 2014.
This would give the government a chance to rethink what obligations should be included in the new licences and may also encourage the emergence of new players beyond the traditional PSBs.
"A decision by the secretary of state to block licence renewal would lead to an award process that could lead to the development of new and innovative forms of public service content and drive efficiency," said Ofcom.
Analysts at Citigroup said that such a move could lead to companies including Facebook and Google investigating the potential advantages of PSB provision.
However, Ofcom also notes that it will be difficult for government to change or modify the existing PSB obligations and that it is "unclear" what new bidders would be interested.
Nevertheless Ofcom says that the second option "remains a credible possibility".
The third option is to extend the existing licences to allow for public service broadcasting to be given "full consideration" in the next communications bill, due before the next general election in 2015.
Ofcom said this would allow parliament to assess what the PSB licences should cover in light of the remits of both Channel 4 and the BBC, as well as initiatives such as Hunt's plans for a new network of local TV services.
"For instance, developments in the provision of local TV services in the next few years may lead parliament to reassess the continuing need for English regional programming on Channel 3," Ofcom said.
This option would also allow the government to "clarify and tighten" the regulation around prominence of PSB channels on the EPG "to create additional public service value".
However, Ofcom admits that forcing the existing PSBs to continue delivering on licence obligations they find loss-making may lead them to "consider becoming a fully commercial UK-wide broadcaster". The media regulator admits that ITV for one is set to find the costs of PSB status outweighing the benefits before 2014.
"In those circumstances, it may not be possible to secure a replacement licensee given both the high fixed costs of providing a fully regional service with the existing range of obligations and the short term nature of any licence that Ofcom would be able to offer," said the media regulator.