Technology v the BBC: Yesterday’s news; The licence fee is becoming ever harder to justify

Technology v the BBC: Yesterday’s news; The licence fee is becoming ever harder to justify

Feb 8th 2014 | From the print edition

EMILY CHAPMAN keeps her television under the bed. Two years ago the 27-year-old from London cancelled her TV licence in an effort to spend fewer hours in front of the box. Now she and her boyfriend watch DVDs on a laptop and BBC programmes through iPlayer, an online video service. That is more compelling than she expected: “Our screen time has probably gone up.”

Many Britons use online catch-up services to watch television shows they have missed. Yet for a handful of viewers—at present less than 2%—they are replacing live television. That is a problem for the BBC, which is funded mostly through a licence fee on television-watching households. Current laws require people to pay £145.50 ($237) a year to view or record shows as they are broadcast, no matter what technology is used. But for the time being users of iPlayer and other video-on-demand sites need pay nothing at all.

This problem is likely to grow. People aged between 16 and 24 now spend about a quarter of their viewing time watching DVDs, on-demand or online content, according to Toby Syfret of Enders Analysis, a research firm. Mr Syfret thinks youngsters will acquire television sets eventually. But Antonella Mei-Pochtler of the Boston Consulting Group argues that people stick with the viewing habits they acquire in youth. She thinks the growth of internet-connected TVs is bound to accelerate a shift away from old-fangled channel-hopping.

That would be bad news for the BBC, which is already retrenching after its licence fee was frozen until at least 2017. It has had to clarify that people may use TVs for gaming, for video-on-demand services such as Netflix and LoveFilm, or to listen to digital radio, without paying the licence fee. To fulfil its universal mandate, the BBC is creating ever more online-only content to reach the young viewers who are abandoning its broadcasting, even though they need not pay to watch it.

Several European countries are reforming their licence fees. Last year Germany dispensed with its charge in favour of a universal tax of €216 ($292) per household per year. Finland has also introduced a universal levy. In December the BBC told MPs it would welcome discussions about “whether and when” to require a licence for catch-up content.

Yet it will probably not pursue this vigorously for fear that lawmakers will propose more radical changes, thinks Mark Oliver of Oliver & Ohlbaum, a consultancy. Some would like the BBC to levy an additional subscription fee for iPlayer (it already charges expats). But that would suggest, dangerously, that the BBC is like any other optional subscription service. Folding on-demand services into the licence fee could also amplify calls for the BBC to share its cash with other broadcasters, not least because such consumption may be precisely measured.

This means catch-up TV will probably remain free after the BBC’s charter is renewed in 2016, along with its radio stations and its websites. That suits Ms Chapman, even though she would happily pay if required. Her sofa now points towards a window, not a wall: “For the moment I can’t imagine a television in our lives.”


About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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