The BBC has announced that by next year it faces a shortfall of £150 million. In order to save £50million initially, cuts of 1000 jobs have been announced. The BBC relies on the annual TV licence fee for its main income. This has been fixed at £145.50 since 2010 however the funds have been raided to pay for the roll-out of "fast" broadband to the whole country, including remote rural areas of at least 2Mbps which ironically has increased the funding crisis. The BBC now has to pay for the World Service from the licence fee income rather than the block grants it used to receive from the government.
Each household with a television is required to pay the annual licence fee however there is an increasing problem over avoidance. There are legal ways to avoid or reduce the amount you pay. Those over 75 years get a free licence so having an elderly relative stay is one way. Some 13,000 households still have only a black and white television for which there is a "monochrome" licence of £49. The easiest and fastest growing way is to use a loophole currently in the legislation. That is to not watch or record TV as it is transmitted, you do not need a licence if you only use your set as a display to view DVDs, on line movie services or catch-up television. It's this last which is the reason for the surprise losses.
All the main terrestrial TV broadcasters in the UK have extensive "catch-up" services. The most well known is the BBC's own iPlayer. This allows you to watch at least the last week's programming (apart from where they do not have the rights like imported shows or movies). The minimum speed to access SD quality is around 2Mbps (deliberately the same as the target for national broadband roll-out). Ideally for their HD quality streaming (720p/25 for the geeks) you need about 5Mbps which allows a bit for receiving emails or browsing.
So many people use it that the BBC had already agreed to stop transmitting its "youth" channel BBC Three to make it on-line only to save money. This may now also happen to its high brow arts and documentary channel BBC Four which they have to pay Arqiva (a private transmitter running company) for bandwidth on one of their multiplexes to transmit BBC Four HD. [Currently HD and some SD channels use DVB-T2 whereas the main SD transmissions use the earlier digital system DVB-T which is not "forward compatible"]
The remaining "analog" networks have their own catchup services: ITV Player (for the main commercial network's programming); All4 (Channel 4) and Demand 5 (Five). In addition there is a dedicated service for children from Five and catchup from UKTV, a joint venture involving BBC Worldwide that shows repeats from BBC and ITV on channels with branding like History, Drama and Dave. All of these get round the rule of needing a licence to watch TV "live".
The BBC operates under a 10 year Royal Charter:
The BBC’s constitution is set out in a Royal Charter, while the rules under which it operates, including its editorial independence and the details of its public obligations, are described in an Agreement between the BBC and the Culture Secretary.
The current Royal Charter and Agreement came into force in 2006 and are due to expire in December 2016.
The renewal of the Charter and Agreement provides a rare opportunity for Government, Parliament and the public to influence how the BBC is financed and operated. The previous Government put the consultation process on hold until the General Election, but it will be a priority for the next administration.
The job loss announcement can be seen in the context of the start of the process to renew the Charter. This could go hand in hand with a review of the amount. It is quite probable that pressure will mean not having a TV licence becomes a civil matter rather than a criminal offence. It's also likely that the licencing regulations will change to require a licence if used for a catch-up service. Longer term, possibly at the next renewal in 2026, the UK may well move to a tax based system rather than the annual fee. You may also note that the £150 million estimated reduction in income is the same amount the fee is "top sliced" by to pay for rural broadband.
Also it is very likely that during the 2016-2026 Royal Charter, the first generation digital system will be closed down. While this will mean savings for the BBC - only "one and a bit" frequency will be needed to carry the current services without the duplication needed for the two systems. There is however the prospect that a second round of assistance will be needed for the poor, infirm and elderly to switch. When analog TV was turned off (by region), the "Digital Switchover" service was funded by (guess what) top-slicing the licence fee. Many people already have a means of receiving HD transmissions so will not need an extra tuner or box - the main satellite provider, Sky and the main cable company Virginmedia supply boxes that output HD. They also sell "quad play" of TV, broadband, phone and cellphone packages. With or without the cellphone element; BT, TalkTalk and Plusnet supply a Youview box which combines a PVR with built in catchup and additional internet TV channels. They are also available retail. Another cellphone company, EE does a similar box but with more limited catchup.
Because of this multiplicity of set-top boxes, sales of DVB-T2 enabled sets have been limited however with more countries adopting DVB-T2 (the UK was the first) and costs coming down, the addition of a T2 tuner should be at marginal cost and the price of a set top box pretty low. With any luck that should reduce the amount that needs to be "top sliced" from the BBC.
[A note here for those in North America. You are not going to be immune from having to upgrade your digital TV receiver. ATSC 2.0 is being rolled out. For new receivers, this adds facilities like those I described for Youview boxes:
ATSC 2.0 will be backwards compatible and feature a slate of new capabilities including Internet-related features, advanced video coding, conditional access and enhanced service guides for TV broadcasters.
ATSC 2.0 also will include the capabilities of the recently approved ATSC A/103 “NonReal-Time” (NRT) standard that allows broadcasters to deliver file-based content, including programs and clips to both fixed location and Mobile DTV receivers. NRT includes the ability to deliver content on demand.
“The overarching goal of ATSC 2.0 is to create new value for viewers, consumer electronics manufacturers, and broadcasters. To that end the ATSC 2.0 Implementation Team provides a venue for industry discussions of issues related to commercialization of the emerging ATSC 2.0 Standard. The 2.0 Implementation Team may address business and operational requirements for the successful roll-out of ATSC 2.0, which is nearing final standardization,” Richer explained.
The manufacturer's club that is the ATSC are also in the process of formulating ATSC 3.0 which will use a different broadcast method so ATSC 1.0 and 2.0 receivers will not be forward compatible with it. Your existing setup should work with 2.0 but without the "bells and whistles" and will not be able to receive ATSC 3.0 transmissions. ]