Government To Stop Using BBC Licence Fee To Pay For Superfast Broadband

Steve McCaskill is editor of TechWeekEurope and ChannelBiz. He joined as a reporter in 2011 and covers all areas of IT, with a particular interest in telecommunications, mobile and networking, along with sports technology.

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BBC’s income won’t be top-sliced to pay for superfast broadband but corporation will have to pay for over-75s licence fees

The BBC licence fee will no-longer be ‘top-sliced’ by to pay for government-funded superfast broadband roll-out in rural areas as part of a controversial compromise that will see the broadcaster pay for free licenses for over-75s.

Programmes like Broadband Delivery UK (BDUK) hope to achieve 95 percent fibre coverage by 2017, however the Conservative manifesto had outlined unspecified plans for ‘ultrafast’ 1Gbps rollout and promised to continue the top-slicing of the licence fee.

However it also wants to eliminate the £600 million annual cost of subsidised licence fee as part of a wider welfare cuts, especially since this figure is likely to rise as the UK population ages.

Broadband shakeup

BBC Broadcasting HouseThe BBC will absorb the cost gradually from 2018 before assuming the full cost by 2021. The conservatives had pledged to retain the subsidy in its manifesto and promised it would be honoured during this parliament before the BBC becomes responsible after 2020.

As part of the settlement, the licence fee will also rise according to inflation, while the government has promised to close the current loophole that doesn’t require viewers of catch-up TV services like BBC iPlayer to have a TV licence.

Culture secretary John Whittingdale, a vocal opponent of the licence fee, announced the changes in the House of Commons, where he also revealed the government plans to explore the possibility of decriminalising the failure to pay the fee.

“As part of these new arrangements, the Government will ensure that the BBC can adapt to a changing media landscape,” he said in response to an ‘urgent question’ from shadow culture secretary Chris Bryant. “The Government will therefore bring forward legislation in the next year to modernise the licence fee to cover public service broadcast catch-up TV. In addition, the Government will reduce the broadband ring fence to £80 million in 2017-18, to £20 million in 2018-19, to £10 million in 2019-20 and to zero in 2020-21.

Good deal?

“The Government will consider carefully the case for decriminalisation in the light of the Perry report and the need for the BBC to be funded appropriately. No decision will be taken in advance of charter renewal.”

Earlier this week, BBC Director General Tony Hall announced plans to cut as many as 1,000 middle management jobs at the BBC, claiming the number of people paying the licence fee had fallen faster than expected as viewers exploited the iPlayer loophole and demanded the government ‘modernise’ the licence fee accordingly.

Hall told the BBC the deal was a good one for the corporation’s future, but some have criticised the lack of transparency and suggested the trade-offs would not benefit the BBC.

“This Government have already forced the licence fee payer to fund broadband roll-out and the failed vanity project of local TV, and now they are making the BBC a branch office of the Department for Work and Pensions,” Labour MP Ben Bradshaw told the Commons.

“It’s the second time the government has forced a deal on the BBC,” former BBC Trust Chairman Diane Coyle told BBC Radio 4. “There has been no consultation with the public and it’s a major change in the BBC’s responsibilities. The public who pay for the BBC should have been consulted.

“I don’t think it will balance out in the long run. I welcome getting the inflation link back, but the number of people over 75 is going up all the time and it’s not clear to me in the long time it can avoid service closures to cover it.”

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