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BBC seeks funding boost for new digital services

Posted by iTech - 2005-10-12

The BBC, Britain's publicly funded broadcaster, said on Tuesday it wants more than 1.6 billion pounds ($2.8 billion) in increased funding to pay for a slew of new online services and the switchover to digital TV.
Under the BBC's proposal, the license fee -- a tax on all UK television-owning households, currently worth nearly 3 billion pounds a year -- would be increased annually by 2.3 percentage points above the rate of inflation for the seven-year period from April 2007.

The current license fee was set at 1.5 percentage points above the Retail Price Index in 2000 to fund the launch of the BBC's digital channels.

The world's best-known public broadcaster, home to hits such as "The Office" as well as domestic favourites like "EastEnders," plans to use the extra funds over the next 8 years to roll out "on-demand" television, build infrastructure to support digital television, a free satellite service and high-definition television, as well as creating more original programing with fewer repeats.

In cash terms, assuming inflation remains constant, that would put the license fee at more than 180 pounds by 2013-14, up more than 45 percent from 126.50 pounds this year.

"It's highly controversial and will almost certainly be strongly opposed by the Conservative party and the Lib Dems as well," said David Elstein, former chief executive of Channel 5 and chairman of a panel commissioned by the Conservative party to assess the BBC charter.

The figure does not include a targeted assistance programme to help disadvantaged groups make the switch to digital TV, the cost of which has not yet been calculated by the government. Britain wants to shut off its analog TV signal by 2012.

"We believe the most challenging stage of digital, with the most expensive infrastructure costs, are yet to come," said Director General Mark Thompson. "The BBC's been set quite an ambitious set of goals."

The BBC has identified 5.5 billion pounds in additional costs through 2014. Although some can be offset through job cuts and funds from the its commercial arm, BBC Worldwide, Thompson said there would be a gap of 1.6 billion pounds that would have to come from license fee increases.

He is also considering charging money for BBC online content that is accessed abroad.

"We will look at opportunities for monetising all of our services," he said. "If that means partnering with other players including Apple, we'd be willing to consider that."

Apple is holding a media conference this week, and news reports have said it may introduce a version of its popular iPod music player that can display video. The press conference is being simulcast in the BBC's Television Center.

The BBC is already testing a TV-over-Internet product called iMP, which lets viewers watch the last seven days of BBC programing as a downloaded file on their computers.

The billions in license fee proceeds make the BBC a dominant force in the UK media sector, with about 40 percent of the television viewership and half of radio listenership. Commercial rivals have long complained that the BBC uses its public subsidy to encroach on their territory.

The fee proposals come at the start of negotiations with the government over the broadcaster's next royal charter which begins in 2007.

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