BBC bids for big increase in licence fee

The BBC has put in a bid to increase the licence fee paid by British viewers and listeners well above the rate of inflation. The corporation says it needs the extra funds in part to finance the rapid increase in its digital services ranging from the digital channels such as BBC3 and BBC4 and online services like the TV and radio programme download service currently under trial.

The plea for a rise of 2.3 per cent above the rate of inflation was made to John Whittingdale, chairman of the Culture, Media and Sport committee of MPs by BBC chairman Michael Grade and director-general Mark Thompson.

The corporation says it wants to spend £1.2bn on digital services to extend its reach even further, such as showing recent programmes on mobile phones and ‘simulcasts’ of TV shows both via traditional broadcasts and over broadband connections.

The BBC says it also wants to invest in high-definition television (HDTV) broadcast that offer much sharper pictures and sound on large-screen televisions. The BBC bosses said they expect to deliver free-to-air HDTV on all BBC digital platforms by about 2010.

Although the Committee expressed surprise at the size of the BBC bid, both moves should be seen as part of the general horse-trading prior to the licence fee renewal. The BBC is a vital part of the strategy to turn off the analogue TV signal in 2012, which is expected to net the government billions in licence revenues from selling off the spare spectrum. The corporation says it expects to spend around £700 million to encourage more viewers to go digital and will expect much of this to come from a rise in the licence fee.

As part of the strategy, the BBC and ITV also plan to jointly launch a Freesat service, a basic satellite TV package for those who cannot receive Freeview. According to BBC figures some 5.2 million households already watch digital TV through Freeview, but for the switchover to be credible, the government – through the BBC – has to persuade the vast majority of households to switch before the analogue signal is stopped.