DTI review recommends Channel 4 should start paying when current licence expires and BBC in 2006
The BBC and Channel 4 face having to pay 'tens of millions of pounds' to continue broadcasting, as part of a government drive to improve the efficiency of UK digital and analogue spectrum usage, writes Simon Ellery

The recommendation comes as part of a major review commissioned by the Department of Trade & Industry (DTI) and published on Wednesday (6 March). The review, which was conducted by former Brunel University vice-principal Professor Martin Cave, detailed 47 different recommendations which could encourage broadcasters to make better use of their allocated spectrum. 'The review believes that, notwithstanding current constraints, spectrum pricing can play a role in encouraging more efficient spectrum use,' he said.

Cave suggested that C4 should start paying for spectrum when its current licence expires at the beginning of next year, while the BBC should start to pay when its charter runs out in 2006. C4's cost would be in the 'low tens of millions', according to statements by Cave last year (Broadcast, 21.9.01), while the BBC's could be met in part by the government.

Prices would be set in the early stages by the Radiocommunications Agency and Ofcom, but the report said that spectrum trading, by way of auctions, could be introduced further down the line.

The review added that Ofcom should also levy a spectrum price on the non-BBC digital terrestrial broadcasters, including ITV Digital and C4. It also added that rules preventing non-broadcast services being used on broadcast spectrum should be removed to allow broadcasters to make money from a wider range of non-broadcasting concerns such as data services. The review also urged the government to clarify the BBC's charter so that it can make money from such services.

It suggests broadcasters should be able to sell on underutilised spectrum.

Unveiling the review, E-commerce minister Douglas Alexander said: 'Spectrum is an invaluable national asset. But it is a finite resource and we need the right balance of market incentives and regulation to make sure it is used as efficiently as possible.'

Other recommendations include introducing a new pricing structure for the awarding of ITV licences. However, the review added that ITV licensees should continue to benefit from incentives to promote digital TV - the so-called 'digital dividend' - which reduce franchise fees in line with digital take-up.

In conclusion, the review said: 'This package of measures will ensure that all broadcasters face financial incentives and opportunities to economise over time on spectrum, notably by moving to more efficient transmission technologies.'

The government is expected to respond to the recommendations in the summer.