EC approves new BBC fees

Decision means BBC can fund new channel with public funds. Could clear way for digital TV fees.

Commercial providers of digital television programming are concerned that the BBC will continue to launch new channels funded through license fee revenues, following European Commission approval of public funding for BBC News 24.

News 24 is the BBC's 24-hour news cable channel.

BSkyB had made a complaint to the EC that financing the new channel through the license fee constituted illegal state aid. The Commission found that although the funds were to be considered state aid, the BBC was entitled to such aid for "delivery of services of general economic interest".

"The big question is, what is the role of the BBC in the digital age, and can it be allowed to come into the market and distort competition?" said a Sky spokesman.

Commercial television companies such as BSkyB complain that the BBC is offering the news service free to cable companies, thereby undercutting services such as Sky News, for which the cable companies have to pay a fee. "If the BBC were separately funded, we would all be on an equal footing," said a Sky spokesman. "As it is it's coming along and saying that it wants a bite of the commercial pie as well."

The BBC denied that it was acting to undercut commercial channels, but said it was merely following a natural policy of expanding its public service content. "We are here to distort the market -- [in order to] promote competition," said a BBC spokesman. "We are at an interim stage. The BBC wants to enrich consumers' choice ready for the time when everyone has digital television."

David Mercer, Strategic Analytics senior analyst, believes that this was a small example of the wider problem of a lack of a consistent European media: "There will always be spats such as this in any country with government-approved public broadcasters," he said.