The public service broadcasting licence for ITV, the main commercial television channel in the United Kingdom, expires at the end of 2014. The communications regulator Ofcom has published options for the future of commercial public service television broadcasting, including the possibility of re-auctioning the licence. The key question is what value can be attributed to public service broadcasting over the following ten years. The econometric regulator is leaving that as a matter for politicians.

The definition of public service broadcasting and its value has long been a matter of debate but its role in the future is even more problematic.

In return for meeting public service requirements in relation to areas such as news and current affairs, the commercial public service licences provide access to digital terrestrial television spectrum and appropriate prominence in electronic programme guides.

The channel 3 licence is currently held by ITV, STV and UTV, with that for channel 5 ultimately controlled by Northern & Shell Media.

In response to a previous consultation, the current licensees have argued that the benefits of public service broadcaster status have declined significantly with the move to digital multichannel television, although they suggested that renewing licences on similar terms would remain sustainable.

The current licences for Channel 3 and Channel 5 expire at the end of 2014. The Ofcom report considers whether the existing licence holders will be able to contribute, at a commercially sustainable cost, to public service broadcasting in the following ten years. Ofcom has outlined three possible options for the Secretary of State to consider:

  • Renew the existing licences, for which the current holders have claimed they will be able to sustain their public service obligations.
  • Auction the licences, opening up a competitive process to test whether potential bidders, including the current licensees, could take a fresh approach to public service broadcasting.
  • Extend the current licences for a shorter period to allow for a full review of public service broadcasting as part of a future Communications Bill.

Ofcom says that although the potential value of public service broadcasting licences have declined, it believes these services could make a sustainable public service contribution over the next licensing period, creating a case for renewal.

However, Ofcom suggests that re-auctioning the licences, or extending them for a shorter period remain credible options.

In the multichannel world, prominent positioning in electronic programme guides continues to be critically important to broadcasters, although new navigation models may reduce the significance of this. Also up for debate is whether such prominence should be extended to other distribution platforms, such as video on demand.

There is also the issue of whether public service channels should continue to be available to platforms on a “must offer” principle or instead on “must carry” basis, or whether there will be a move to a retransmission fee model.

One thing seems certain. Commercial broadcasting is no longer a “licence to print money” in exchange for offering public service programming and the value of such licences is significantly diminished.

A key question for ITV and Channel 5 is whether on balance they benefit from the current regime or would be better off without the constraints of public service provisions. However, the risk of change to the status quo is significant for the incumbents.

Ofcom is clearly leaving the outcome as a political decision.