Commercial broadcasters have questioned the role that the BBC will play in the digital age, following Monday's rise in TV licences.
The £3 a year rise follows a government investigation into the BBC's finances last summer. At the time, the government-appointed panel -- headed by economist Gavyn Davies -- sparked controversy by proposing an extra £24 for digital viewers. Commercial broadcasters dubbed the rise a "digital poll tax".
Turning his back on the recommendations of the Davies panel, Culture Secretary Chris Smith has decided to impose a 3p per week increase for both analogue and digital TV owners. The increase -- 1.5 percent above inflation -- is necessary to keep the BBC in the vanguard of digital services, according to Smith.
Smith claimed that without the BBC, only half the population will take up digital TV. According to e-Minister Patricia Hewitt, take-up of digital TV is still only around 12 percent. The government needs to encourage more people to go digital since it has pledged to turn off the analogue signal by 2010.
The BBC, which is now expected to find an extra £490m to fund its digital services, was playing down any disappointment. "We will have tough decisions to make on priorities and self-help," said BBC director general, Greg Dyke, in a statement. He sees Smith's speech as an endorsement of the BBC's role in digital broadcasting, claiming he was determined to build strong public services for the multimedia age.
Commercial broadcasters welcomed the government's decision to abandon plans for a digital poll tax, but questioned the role the BBC will play in the digital revolution. "The problem is that nobody wants to define what public broadcasting means in the digital age," said a spokesman for British Sky Broadcasting (BSkyB). He believes the BBC should not be using license fee funding to create channels such as News 24, which "competes unfairly with commercial services and are only watched by a minority of viewers".
BSkyB rival ONdigital is glad the poll tax has been dropped, but called on the government to review the BBC's plans. "We welcome the fact the government decided not to discrimate against digital viewers, but the BBC should not be competing head-on with commercial channels," he said.
The government appears to agree. "We do not expect the license fee to fund strands of the market, such as dedicated film and sport channels, to which the distinctive role of public service broadcasting has little extra to offer," Smith said in his speech to parliament.
It was also announced that free TV licences would be given to people aged 75 or over from 1 November.