08/05/2015 12:38 EDT | Updated 08/05/2016 05:59 EDT

The BBC Is About to Repeat Canada's Mistake

As the BBC approaches its 100th anniversary, the venerable broadcaster is in a pitched battle for its future. The Canadian experience provides a lesson on how not to fund the BBC. Canada abandoned the licence fee in the 1950s on the premise that TV was too expensive to be funded by individual households.

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LONDON, ENGLAND - JULY 25: The logo for the Broadcasting House, the headquarters of the BBC is displayed outside on July 25, 2015 in London, England. The main Art Deco-style building of the British Broadcasting Corporation was officially opened on 15 May 1932 and has since seen extensive refurbishment with an extension to the main building completed in 2005. (Photo by Carl Court/Getty Images)

As the BBC approaches its 100th anniversary, the venerable broadcaster is in a pitched battle for its future.

The newly-elected Conservative government wants to reduce the financing and the scope of BBC activities; it has just phased out a £750m subsidy that substituted for 'free' TV licence fees for persons aged 75 and over. This is in addition to the elimination of a £245m subsidy that had for decades funded the BBC World Service. Now both must be funded by others' TV licence fees or some other funding source.

The biggest share of BBC revenues comes from the TV licence fee, which a household is required to pay if they watch (live) TV. Much like a driver's licence but there is no exam to pass.

The Canadian experience provides a lesson on how not to fund the BBC. Canada abandoned the licence fee in the 1950s on the premise that TV, which was being introduced, was too expensive to be funded by individual households, especially since only a handful of homes had a TV in the early days. From that day to this the CBC has been subjected to tortuous annual negotiations for direct government funding. Abandoning the licence fee and not replacing it with another mechanism allowing the public to pay directly for public broadcasting was a mistake.

Every year the CBC must plead for government grants and the Corporation is continually on tenterhooks. On several occasions with the onset of a recession governments have made drastic cuts to the CBC budget as part of general austerity programs. There have also been times when funding has been cut ostensibly because of perceived journalistic bias or alleged inefficiencies. The public has no say in these cuts.

Lacking direct public funding and given the vagaries of annual grants from Parliament, CBC has sought out revenues from two other natural sources, advertising and subscriptions. Advertising on CBC TV has made the service indistinguishable from commercial networks and undermined one of the core purposes of public broadcasting, which is to examine all aspects of society, including government, without real or perceived servitude to any interest group. CBC TV has lately even resorted to turning over valuable prime time hours of its schedule to commercial broadcasters (Rogers NHL games and TV series).

CBC has successfully raised limited revenues in recent years from subscriptions but then, desperate for revenue, ran ads on these channels for any interest group or business that would pay. Subscriptions to individual services are increasingly difficult today as TV is becoming platform agnostic and, of course, it is not feasible to collect radio subscriptions.

If subscriptions are the way to fund public broadcasting then it should likely not be for individual services. Just as the current BBC licence fee covers the cost of not only TV but also radio and other BBC services, an overall fee added to the bill of pay TV and internet providers (fixed and mobile) could fund all BBC services. This is a concept being explored in Canada, since the present mechanisms to fund CBC have failed miserably.

British consumers would likely willingly accept this new subscription fee, since it would replace the licence fee. The cost of collection would likely be no more or less than the three to four per cent it costs to collect the licence fee. Canadian consumers would be more reluctant and so a widespread educational campaign would be required.

Only those households without internet access or pay TV (via cable, satellite or IPTV) would be excluded from the new subscription fee. Those who subscribe would be required to pay the fee in order to receive pay TV or internet, thus no need to force payment by legal means. Ofcom estimates that over 80 per cent of British homes had residential internet access in 2014 and over 60 per cent had smartphones. Many of those without fixed or mobile internet would have some form of pay TV and it is probable that less than five per cent of homes have neither, roughly equal to the five per cent of homes who currently evade paying the licence fee. Many are likely to be low income homes and/or with persons aged 75-plus and they would not be required to pay the BBC subscription fee. If the subscription fee was based on a percentage, it would mean those who spend the most on pay TV/Internet, would pay more than those who spend less on these communication services.

With long term stagnation in government funding, fragmentation of the advertising and subscription markets, CBC TV is today but a shell of its former self and commands a fraction of the BBC's audience share. Today, in weeks without a major sporting event on offer CBC TV captures only about one hour of the average Canadian's time. Fortunately, CBC radio fares somewhat better, as do French-language services.

What has befallen Canadian public broadcasting is not what Britain wants for the BBC. BBC released some data that is startling for North Americans: virtually every adult in the UK spends 18 hours per week on average with BBC services. This figure comes from a BBC-commissioned survey and may exaggerate but it is more time spent on any other activity but for sleeping.

The Beeb is not perfect but is important in the lives of most Britons, and, millions around the globe. I think a case can be made that the BBC is not just a national treasure but also Britain's ambassador to the world and largely responsible for maintaining its reputation as a political, economic and cultural bellwether.

Please don't make the Canadian mistake of assuming that the public broadcaster should be funded by annual government grants, which only leads to commercialization of the public broadcaster and ultimately the belief that commercial broadcasters can replace it.


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