Plans for local television in the United Kingdom are back on the agenda. The question is how it will be funded and sustained. A report commissioned by the government is due to be published imminently. A consortium is also hoping to use the opportunity to launch a sixth terrestrial television channel, based on a national network and local affiliate model. Meanwhile the main commercial broadcast network is benefiting from a turnaround in advertising revenue and an increase in traditional television viewing.

The culture secretary, Jeremy Hunt, commissioned a report from a group led by investment banker Nicholas Shott to investigate the feasibility of a network of local television stations. The interim report concluded that local television was likely to be most viable in urban areas, led by news, and that terrestrial transmissions remain a significant way of reaching large audiences. In the longer term, broadband will make the vision of local services more viable, through platforms such as YouView.

A consortium led by former Trinity Mirror executive Richard Horwood is proposing to launch Channel 6, a combined national and local network that would compete with existing digital terrestrial television channels, using frequencies vacated once analogue transmissions are finally shut down.

The communications regulator Ofcom has set out how the current system of public service broadcasting might be changed to help deliver local television services. It suggests a new licensing regime for local television could create a clearer regulatory distinction between national and local broadcasters. It also suggests reducing current obligations and quotas on existing public service broadcasters.

Spectrum may be coming available, but whether there is space in the market for a sixth terrestrial television network is another matter, particularly if such services might be more flexibly delivered over broadband.

The irony is that the main commercial television network was originally based on a federation of regional franchises with a strong local identity. Regional news, although never really local, used to help define these rather arbitrary transmission areas. This sense of local identity has been largely lost though commercial consolidation and rationalisation into a single network in the form of ITV.

Having maintained in the past that the provision of local news was an expensive burden that was no longer commercially viable, ITV might be wise to consider the importance of a local view, as multiple channels compete for a share of the limited attention of the television audience.

ITV has seen a dramatic return to form with a traditional costume drama Downton Abbey. The network has also seen audiences return to historic highs for the live 50th anniversary episode of Coronation Street and The X Factor final.

More than 14 million viewers, over half the available audience, watched a special hour-long live edition of the long-running drama serial, with another 2 million watching the repeat.

The X Factor final just failed to reach the 20 million mark, with a peak audience of 19.4 million viewers, or six out of ten of those watching television at the time.

With 30-second spots selling from £200,000 to £250,000, ITV is expected to generate £25 million in advertising revenue during the The X Factor final. That is more than the entire revenues from the ITV web site and online video services for the previous year.

Overall advertising revenues, which fell by 9% last year, have rebounded by 14% and ITV will end the year with an estimated £300 million more than it projected.

ITV and Channel 4 are now joining the BBC in making their programmes available for viewing on a Sony PlayStation 3, of which there are around 4 million in the United Kingdom, with around 80% of them connected to broadband.

Although there have been concerns that broadcast channels will inevitably decline in importance as audiences access media on demand, live broadcasts can still provide a shared experience for more than half the country.

There are indications that we are watching more television and despite the availability of digital video recorders, video on demand and online catch-up services, the vast majority of that is at the time of transmission.

In the first nine months of the year, average television viewing in the United Kingdom rose by nearly two hours a week on the same period the previous year, up to 27 hours 34 minutes. Over 86% of that viewing is at the time of transmission, even in the 44% of households with digital video recorders, according to the research organisation BARB.

As traditional television channels begin to embrace distribution over broadband on demand, it seems that there is still life left in live broadcasting. For ITV, the challenge may be to think global while acting locally.