Living in Cloud Peacock Land
By Damian Tambini (PCMLP, University of Oxford)
And Jamie Cowling (ippr)
Published in Financial Times, Creative Business, 11 March 2003
Television is evolving. But as the Government turns its attention to BBC
Charter renewal, the debate about Public Service Broadcasting is not. We are still fighting the battle of the Peacock Committee, which reviewed BBC
Finance in 1986. Tessa Jowell announced in January’s Oxford Media
Convention that the Government would be taking up the Davies panel’s recommendation for a “root and branch” review of public service broadcasting before Charter renewal. But there is every danger that debate will not get beyond the leaves and twigs.
Since the last licence fee settlement in 1999 the BBC has been reinvigorated by Greg Dyke and is cash rich after the last licence fee settlement guaranteed a real term funding increase of RPI + 1.5% annually to fund its new digital channels and online services. However, storm clouds have been gathering.
Perceived BBC smugness has been particularly unwelcome at a time when its competitors have had to deal with a crisis in advertising revenues and new media investment. Whilst the BBC is used to daily blasts from Associated
Newspapers and from its commercial competitors, criticism has of late come from defenders of public service broadcasting. Most visibly key government advisors Barry Cox and Lord Lipsey have been making the case for a slimmed down BBC, and this has been accompanied by similar furtive off the record discussions in policy circles. Tessa Jowell has applied tough conditions
(not tough enough say the commercial providers) on new services, Richard
Lambert delivered sceptical review of News 24 and now the BBC faces review of BBCi. After this start to the Char ter renewal process perhaps it’s Gavyn
Davies who will be in need of some Comic Relief.
Behind the polemics lie some fundamental policy questions that the
Government, and Ofcom, as it approaches it’s first review of PSB, can no longer duck. The trouble for the Government is that they are the very issues that open ideological wounds at the centre of the entire Government programme. In Broadcasting, as in health, education and even transport the central question is the balance between public provision and private competition. Marketeers argue that that public provision should be focused only on clear “public goods” – such as the rule of law, or the army - that the market would fail to provide. Application of this argument to the broadcasting debate would lead to wholesale reduction of public provision. But broadcasting, we are told in response to the marketeers, is special. Not only does it have many of the characteristics of public goods, it has a crucial democratic and political role that provides robust justification of public funding.
This is essentially where debate has remained since Peacock.
The Government sees Charter renewal as Phase 2 in the process of media reform under Labour, following the Communications Bill. The rhetoric, at least,

suggests that the debate will range widely in Government circles. According to
Tessa Jowell, “Charter renewal gives us the chance to ask whether the BBC can continue to be the driving force behind public service broadcasting, to ask what it should be and do and how it should be accountable. It also gives us a chance to examine the best use of public funding to guarantee the range and vitality of public service broadcasting.”
Back in 1986, opinion was divided between the Peacock Committee itself, packed by the Conservative government with free-market fundamentalists, and a broader establishment view that was wary of weakening the BBC in the face of the harsh winds of competition. In the event a compromise was reached: the more radical suggestions of the Committee – such as BBC funding by advertising, privatisation of Radios 1 and 2, and a gradual move to subscription
– were shelved, but the license fee settlement gradually bled funding away from the Corporation.
Many argue that Peacock was ahead of its time, because the 1986 Peacock report foresaw an age of digital plenty and consumer sovereignty in media markets. Peacock argued that with many of the traditional justifications, such as spectrum scarcity, for public service broadcasting removed public service broadcasting itself would whither away.
In response to the Peacock Report, defenders of public service broadcasting denied that subscription and genuine choice were a reality. They also developed more solid economic justifications for public service broadcasting around the arguments of Gavyn Davies and Andrew Graham. Davies and
Graham argued that broadcasting markets were prone to market failure that justified public intervention. The problem with these arguments in the current climate however, is that technology appears to have caught up: whereas subscription technology remains available to only a minority of viewers, and the new Freeview service is not subscription oriented, we can expect that the majority of homes will have both increased choice and the ability to pay for services envisaged by Peacock. So, as Barry Cox outlined in his recent
Oxford Lectures on Broadcasting, the potential for a genuine marketplace in broadcasting content beckons.
And public broadcasters are no longer simply broadcasting. In the increasingly important new services such as online and new digital channels, consumer control and choice render the traditional justifications for public provision still more problematic. Government is facing increasingly intense lobbying from commercial competitors who argue, with some reason, that the current system for approving new BBC services is unpredictable, opaque and offers no certainty to those who are attempting to develop new commercial services alongside the BBC. Surely, they argue, if the key Government aim for
Ofcom and the new legislation is to create a dynamic communications market, they must turn their attention to the chilling effect that an unpredictable BBC has on investment.
As long as these fundamental ideological divides cleave opinion, policy debate is likely to remain stalled, with a result that the entire communications

market will remain unsure what the BBC will do next. There is a clear need to accept that many of the traditional rationales for market intervention have either been challenged or removed by technological and social change. There remain justifications for intervention in media markets but these need to be clearly expressed without a reliance on outdated dogma.
It is now impossible for the anti-market camp to deny that choice and competition are a reality, however imperfect, in British Broadcasting. The new debate will centre around where competition is likely to benefit the consumer, and where it will cause harm. Some will embrace Barry Cox’s world of homes as audiovisual retail outlets, and some will prefer to stick with Auntie. The choice for Government is likely to be a stark one: if the market failure arguments do not work, they may simply have to build a case for public communications provision based on the traditional values of education, pluralism, culture and citizenship. Whether Associated Newspapers will permit them to do so is another question.