Taxing times for digital players

Poor old Gavyn Davies. He was damned if he did and damned if he didn’t recommend a supplementary BBC digital licence fee. As it happens, he got the worst of both worlds. His panel went for the ‘tax on innovation’ so roundly condemned by an improbable axis stretching from BSkyB to Gerald Kaufmann. But he also managed to alienate the pro-BBC lobby by having the temerity to suggest that the august corporation should be more financially accountable and expose a part of its operations to private investment.

Not that Davies, who is well connected to Gordon Brown and Tony Blair, need care a damn what people think of his proposals – so long as they are sensible. And on the whole, they are.

After all, what are we talking about here? A temporary digital supplement of &£1.99 a month, which would halve after five years and disappear after ten (at a time incidentally, when the main licence fee would be going down in real terms). Sure, this will create a mild drag on the uptake of digital TV services in the short term, which is what understandably vexes big investors in digital such as Granada, Carlton and BSkyB.

But all this talk by the commercial lobby of a breakdown in the licence fee consensus and a threat to the ‘whole ecology of broadcasting in this country’ is no more than tendentious cant. As freely avowed subscribers to this fragile ‘consensus’, they must admit the BBC is in need of extra funding. How else can it keep abreast of its commitment to effective public broadcasting in an age of rapidly changing technology, if it is denied investment while all around it are able to exploit the opportunities?

The alternatives to a digital levy are subscription TV – which is limited in application and more or less unacceptable for a public service broadcaster – and advertising. While this latter prospect delights advertisers, because it would drive down costs, for the self-same reason it horrifies most of the commercial lobby, particularly the terrestrial TV fraternity.

Luckily for them, Davies has ruled advertising out as a mainstream solution (the interesting exception is his panel’s recommendation for BBC Online, a proposal which is itself causing consternation in new media circles).

In the event, all parties have some interest in maintaining the licence fee consensus for the foreseeable future and they will therefore back, albeit grudgingly, the Davies proposals. For all that the BBC may bemoan the assault on its dignity and independence that submitting to our democratically elected representatives entails, the alternative – fund starvation – is infinitely worse.

The real issue is what happens when – inevitably, some time in the next century – BBC viewing figures tumble to an as yet indefinable low and that delicate public consensus finally snaps. Over to you, Greg.