In Focus: The Case for Privatising the BBC

Abstract

In the past, the use of a compulsory levy on television sets (a licence fee) to finance the BBC could be justified given the problem of spectrum scarcity and the fact that television signals were a public good (i.e. there was effectively a zero marginal cost of an additional user receiving the signal and no effective mechanism of exclusion). Furthermore, the fact that television sets were bulky, and had no practical use other than watching television programmes, made the collection and enforcement of the licence fee practically viable. In recent years, these justifications for the licence fee have evaporated. It is technically straightforward to exclude non-payers from receiving television signals and spectrum scarcity is no longer a practical problem. Furthermore, there is no clear relationship between owning a television set and watching ‘television’ programmes. The BBC – and to a more limited extent other independent groups and economists – have tried, increasingly desperately, to find other justifications for retaining the licence fee. The state should uncouple itself from the BBC and remove compulsory sources of funding. Commercial and non-commercial news media can then compete together as they do in print and online media: for example, the Guardian is one of the most successful online journalism sources while being supported by a charitable trust.

Keywords: UK, Britain, BBC, entertainment, television, media, fiscal policy, government intervention, regulation

JEL Classification: L51, L82, L88, E62