MUMBAI: The BBC Trust has provisionally approved UK pubcaster the BBC management's proposal to develop and launch a free-to-view satellite platform, "Freesat".
BBC management envisages Freesat being achieved as a joint venture with other public service broadcasters. The Trust believes that the service would create significant public value by offering licence fee payers an additional means to access digital services, including the BBC's digital television channels and radio services, which is subscription free and guaranteed to stay that way. It would be offered on the basis of a one-off initial payment only, to cover the cost of equipment and installation. The service would be future-proofed, through the designing in of high definition and personal video recorder compatibility, and would be marketed through retail outlets and via the internet. BBC management's intention is to establish a joint venture company with other public service broadcasters to manage the marketing and technical aspects of the new platform. Set top boxes would be supplied by third parties working with retailers to a specification agreed with the joint venture company.
The Trust has published its decision, and the evidence and analysis which informed its judgement, and opened a 28 day public consultation prior to making its final decision in April 2007.
BBC chairman Chitra Bharucha said, "The BBC's Royal Charter requires the Corporation to take a leading role in digital switchover which begins next year. From 2008 until 2012, as each UK nation and region switches to digital, all households that haven't done so already will have to choose a new way to access television. One of the benefits arising from digital switchover will be greater choice for viewers. For those seven million homes yet to make the switch, it needs to be clear that the benefits of digital television do not need to equal 'pay television'.
"A new, guaranteed subscription-free satellite service would provide the public another option when deciding which platform to choose. Over half of those yet to switch fall outside the Freeview coverage area. For these homes, the new service would mean being able to access BBC digital services they have already paid for via their licence fee but until now have been unable to receive on a guaranteed subscription-free basis.
"We have considered the market impact and whilst there may be some negative effects, in our view these should be balanced against the potential positive market impact of greater choice. Overall, we believe a "Freesat" service to be in the public interest and we hope that other public service broadcasters would join the BBC in a joint venture. We welcome all responses to our provisional conclusion during the consultation. "
The BBC Trust has decided that Freesat meets the BBC's Charter and Agreement definition of a 'non-service' activity and does not require a Public Value Test. Nonetheless, in reaching its provisional decision the Trust has considered the potential public value and market implications of launching the service.
In particular, the Trust examined the proposition in four key areas:
Whether the proposition would serve the best interests of licence fee payers:
Of the 7 million homes yet to switch to digital, over half fall outside the Freeview coverage area. Inability to access free-to-view digital is an issue frequently raised by the public in its contacts with the BBC. For some, this would remain an issue until the analogue system is switched off entirely in 2012. The Trust considers failure to address this issue to be inconsistent with its public service duties.
What public value the new platform might create:
The Trust has provisionally concluded there is significant public value in the "Freesat" proposition. It believes such a service would have a positive impact by introducing choice to the market and a guaranteed subscription free alternative to Sky's free satellite option. The costs to the BBC are modest and comparable with those of Freeview. Launching the proposition as a joint venture would further increase value for money.
How the proposition fits with the BBC's public service remit:
The Charter and Agreement set out a number of public service duties for the BBC. The Charter includes a Public Purpose to help deliver the benefits of emerging technologies to the public, and to take a leading role in digital switchover. Meanwhile, the Agreement states that the BBC "must do all that is reasonably practicable to ensure that viewers, listeners and other users are able to access the UK public services that are intended for them". The Trust has provisionally concluded that the objectives of the proposition are consistent with, and enhance, the BBC's public service remit.
The competitive impact of the proposals on the wider market:
The Trust’s provisional conclusion is that the proposition would have some negative impact on the wider market but increase choice for consumers. The Trust's view takes account of analysis of the proposition's potential market implications carried out by its own independent advisers within the Trust Unit and external independent economists.
Under the terms of the previous Charter the BBC submitted a proposal, approved by the Governors, to the Department for Culture, Media and Sport in June 2006 to launch a free open standard satellite service. However the Charter expired before the Secretary of State reached a decision and, in line with the terms of the new Charter, the decision now rests with the BBC Trust. The Trust received the open file from the Secretary of State in January. Further to detailed scrutiny at its Finance & Strategy Committee and the provision of further independent advice referred to above, the Trust reached its provisional conclusion at its meeting on 21 February.
