Fears that hidden costs for digital switchover could drive licence

Sunday Herald, The, Mar 12, 2006 by Steven Vass Media Correspondent

ALTHOUGH the last thing Tessa Jowell needs right now is more limelight, she is expected to launch the Department of Culture, Media and Sport's white paper on the future of the BBC this week.

The white paper, which is due as soon as tomorrow, will set out the terms of the BBC's Royal Charter until the end of 2016.

Key changes are expected to include replacing the board of governors with a more detached BBC Trust; new rules making it more difficult for the BBC to compete directly with commercial rivals; and details of the BBC's new role overseeing the switch from analogue to digital television.

But while observers will inevitably pore over the small print, there do not seem to be many great surprises in the offing. The feeling is that Jowell won most of the big policy arguments last year, and that much of the white paper will restate what was in the green paper.

In departmental parlance, the green paper was in many ways quite white.

Instead, the big debate right now surrounds the licence fee, which will not be settled until some time this summer.

The main hot potato is digital switchover, and the BBC's role as overseer will ensure it is at the centre of any policy battles ahead.

The white paper will say that the BBC is expected to pay to build out the digital terrestrial network nationwide; set up a free satellite service; finance its switchover partner, Digital UK; and ensure that over 75s and other vulnerable people make the switch.

The latter effort, dubbed the Targeted Help Scheme, has to be financed out of the licence fee. Everybody knows it will not come cheap. When the BBC made its licence fee bid last October for annual increases in line with inflation plus 2.3-per cent, nearly one percentage point or about pounds-800 million over seven years was for switchover costs (the current annual increase is inflation plus 1.5-per cent).

But while this already had the BBC bashers thumping their tubs, it was not even the full monty. It left out the cost of helping the vulnerable, which will potentially pay for everything from new aerials to demonstrations. It will not be estimated until current research in Bolton into the needs of such people comes to an end in the coming months.

Ball-park figures being touted, however, are pounds-400m to pounds-800m.

There remain mounting concerns that the costs could be far higher than that. Even without the targeted help scheme, the BBC's bid asks for the licence fee to rise from pounds-126.50 per household to more than pounds-180 by 2014.

If the costs for switching the vulnerable turn out to be very high, the licence fee could easily end up doubling.

One source of concern was a report from Dr Hugh Mackay of the Open University, presented to a conference hosted by consumer group Voice of the Listener and Viewer (VLV ) at the Scottish parliament last month.

The report considered the findings of a four-month government trial held last year in South Wales. The 460 households in the villages of Llansteffan and Ferryside had their analogue signal switched off and were given all the equipment needed to switch to digital and unlimited access to technical experts.

But it was found that the number of households needing aerials upgraded or repaired was far higher than the UKwide estimate for switchover. It also emerged that households with elderly residents were still reporting problems with procedures such as operating the remote control and electronic programming by the end of the trial. A fair number of households asked the experts to visit to sort out problems on several occasions.

Although the study sample was small and not specifically about how vulnerable people deal with switchover, VLV fears there may be trouble ahead.

"It is an unquantified liability and we don't know how much it could run to, " says Jocelyn Hay, chairman of VLV.

She added that the anecdotal news coming out of the trial in Bolton is not much better.

The VLV also has concerns that there will be a substantial number of late adopters left with no signal when analogue is switched off, but Jowell's department is making it clear that no money will be made available to them to subsidise digital equipment.

A government spokesman played down concerns that they would end up in this position. She said: "When people start making the switch nationally, they will have had years of information.

"Digital UK is about to launch a huge publicity campaign which is going to be starting in May, to tie in with the World Cup, which is something that the people in the Welsh trial did not have."

Consumer groups are not the only ones worried about digital switchover.

When the House of Lords' BBC Charter Review Select Committee published its second report several weeks ago, it repeated its call for the government not to finance switchover through the licence fee, noting that the costs for the vulnerable had not been worked out.

Committee chairman Lord Fowler said: "The substantial cost of helping the elderly and disabled with digital switchover should not be a cost picked up by the licence fee-payer. The government rightly takes on the responsibility for providing free licences for the over75s and funds it from general taxation.