The ABCs of the BBC

The BBC is the United Kingdom's biggest broadcaster by far, with a budget of more than ?3 billion ($5.48 billion), according to the 2002/2003 Annual Report (PDF), with ?2.6 billion ($4.75 billion) coming directly from consumers through the TV license. As a result, the BBC is advertising-free.

It comprises eight national channels, 10 radio stations and the World Service, and more than 50 of regional radio and TV services. BBC 1 is the most watched television channel, Radio 2 is the most listened to radio station. Overall, according to the 2002/2003 Annual Report, the BBC captured 39.1 percent of TV viewers, 50.1 percent of radio listeners.

The BBC World Service, the U.K.'s Voice of Britain to the rest of the world, broadcasts in 43 languages, reaching 150 million listeners, which makes it probably the single most influential and recognisable voice across the globe.

BBC Online also hosts Internet radio streams from the World Service, offering news in those 43 languages. The World Service, funded in large part by the U.K. government's Foreign Office, reaches 150 million people in some of the most isolated regions of the world and it broadcasts via FM in 150 capital cities, in addition to its global short- and medium-wave services. Its Web content on BBC Online receives 180 million unique visitors a month. While both the World Service's management and funding are separate from BBC Online, to the international audience, the BBC presents a unified whole under the bbc.co.uk banner.

The Public Service Mission

The justification for the BBC, and its right to receive the license fee from TV-set owners, is public service broadcasting, and that mission has been extended by BBC Online to the online publishing sphere. "We have a public service duty, to provide something of value to every single individual currently online in the U.K.," Ashley Highfield, director of New Media and Technology at the BBC, said in a speech to the Westminster Media Forum last November.

But what is public service? Normally it relates to the failure of a market to provide goods and services, such as free or affordable health care, or where private enterprise would be undesirable, such as the military. In the BBC's case it refers to universal TV & radio access, an independent, impartial media, and the supply of genre programming, such as the arts, politics, education, or programs aimed at minorities. Beyond that, the definition of public service becomes vague.

A review of the BBC's funding was conducted in 1999 by Gavyn Davies and it sought to clarify the definition. (Davies subsequently became chairman of the BBC's Board of Governors, but resigned recently over the Hutton Report.)

"In that review they gathered together the wisest heads in broadcasting, in the U.K. and internationally, and concluded 'We can't come up with a tight new definition of public service broadcasting, but we know it when we see it,'" said Jamie Cowling, research fellow at a left-leaning think tank, the Institute for Public Policy Research and co-editor of the recently published book "From Public Service Broadcasting to Public Service Communications".

The BBC takes the broadest view of its public service obligations: to inform, to educate and to entertain. Would-be competitors take a narrower view, especially when it comes to electronic publishing. "Public service broadcasting is meant to be about market failure. Where is the market failure in the Internet market?" said David Meadows-Klue, CEO of the Interactive Advertising Bureau.

Perhaps no one can define public service broadcasting, but it is hard to imagine Fox developing a high-risk show like "The Office", as the BBC did, and it would be even harder to predict that show's critical and popular success. It won two Golden Globes in January.

The newly formed super-regulator of communications, Ofcom, is preparing a report on what is, exactly, public service broadcasting and how it can be achieved. This will undoubtedly feed into any decisions on the public service role of BBC Online.

The term public service has taken on added significance because it is a chief justification for the BBC pursuing its aggressive Internet strategy.

"This review (by Graf) is about what is the role of public service in an online sphere, and whether the BBC are the right people to provide it," said Simon Waldman, director of digital publishing at Guardian Unlimited, and a critic of BBC's online policy.

And while the BBC is quite happy that millions of Americans and others visit its Web sites for news, this isn't part of BBC Online's original mission, which was to forge a new relationship with license-fee payers in the U.K. Indeed, some BBC Online critics are calling for either subscriptions or advertising-supported Web pages for users outside the U.K.. This is because of the tricky issue of license-fee funding. Value for money is one of the fundamental criteria to justify the license fee. So, ask the British citizens who pay the fee, why should we pay for usage by the international audience? One of the recommendations of the Graf Report may be to exclude the international audience from part of the online service or charge that audience a fee.

The Problems of Governance

Many criticisms of the BBC essentially stem from how the corporation is governed -- how decisions are taken about budget, service priorities and the corporation's overall role. The public side of the business has essentially three mechanisms for control of the corporation. Every 10 years, the charter review and agreement is negotiated between the BBC and the government and sets out the terms of service. Each year, the BBC has to make a submission of accounts to the Parliament's Culture, Media and Sport select committee. "But if that qualifies as governance, then I'm a monkey's uncle," said Cowling.

For day-to-day governance, it's the BBC Board of Governors that matters. "One of the problems is that the BBC Board of Governors combines executive functions and regulatory functions," said Cowling.

On the one hand, the Board is meant to ensure the BBC carries out its functions correctly. On the other, it's meant to guarantee the BBC's independence and freedom from political interference. "There is a large debate whether they can exercise sufficient scrutiny. We don't think so," said Cowling.

One of the lessons of the recent Hutton Enquiry is that doubts have arisen that the BBC Board of Governors is sufficiently removed from the day-to-day running of the corporation to exercise impartial control.

"Governance of the BBC will be one of the key questions of 2004," said Chris Anders, partner with Enders Analysis, an independent financial research company.

In fact, many people are poking through the BBC to see what other issues they can find. In addition to the Graf review and Ofcom's anticipated report, the government launched the Charter Review negotiations in December 2003. The Charter, last negotiated in 1996 and to be renewed by 2006, will set out the mandate of the entire corporation until 2016.

The proliferation of reviews indicates that both the government and public feel something needs to be done to ensure the BBC can run freely, as well as fairly. But these pending changes stir fears that vested political or commercial interests will take advantage of the BBC's current troubles to re-write the rules in their favour and a valuable national asset could be irreparably damaged.