Switching to a Netflix-style monthly subscription won’t be possible with current broadband speeds
Government proposals to scrap the BBC TV Licence fee and replace it with a Netflix-style monthly subscription from 2027 onwards have been rubbished in a new report from the Department for Digital, Culture, Media and Sport (DCMS) Select Committee. According to the report, the UK Government has “left itself with no option on the licence fee” because it has “failed to put in place the necessary broadband infrastructure that would facilitate other funding mechanisms”.
Prime Minister Boris Johnson quietly walked-back his General Election pledge to “level up” home internet infrastructure across the country with future-proofed gigabit broadband to every home by 2025. As millions of us worked, studied and socialised from home over the internet last year, the Government quietly reduced its commitment to bring speedy broadband to every home… down to 85 percent of premises within the next five years.
Critics have pointed out that the final 15 percent will be the most rural areas, where it might not be financially viable for companies to install broadband. That’s something Boris Johnson had initially pledged to solve with his £5 billion war chest broadband. Unfortunately, those homes will likely now be left without the upgrade.
Worse still, broadband speeds across the UK right now are not in a good place. According to research from Cable.co.uk published last year, the average home internet connection in the UK is 37.82Mbps. At that rate, it should take roughly 15 minutes to download a feature-length movie in High Definition (HD). That puts the UK – the sixth biggest economy on the planet – behind 46 other nations globally in the speed league, including 21 in Western Europe.
And it’s these abysmal speeds that DCMS has singled-out as the reason plans to replace the existing TV Licence model cannot go ahead as planned in time for the next review.
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In its report, the DCMS Select Committee warned delays to the Government’s “full fibre broadband rollout” were to blame for the fact that a “wholly online public service broadcasting system allowing for universal access is not yet viable.” If everything the TV Licence pays for moved online right now, a lack of access to broadband and lack of digital literacy would result in “1.8 million households losing television and public service broadcasting services,” the report warns.
Streaming services, like Netflix, Disney+ and Amazon Prime, rely entirely on the internet to distribute content – with no terrestrial channels.
In its damning conclusion, the latest report states that a monthly subscription service like those popularised by Netflix and Prime Video will not work with the current state of UK broadband speeds. As such, the DCMS Select Committee scolds the Government to either dream-up a “strong alternative to the licence fee” to put to Parliament, or “strongly support the current model for at least the next Charter period” and aid the BBC in cracking down on TV Licence evasion.
The next Charter period runs from 2028 to 2038, by which time (fingers crossed) the UK broadband network will be looking a little healthier.
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Julian Knight MP, DCMS Committee Chair, said: “It’s clear that the BBC TV licence fee has a limited shelf life in a digital media landscape. However, the Government has missed the boat to reform it. Instead of coming up with a workable alternative, it has sealed its own fate through a failure to develop a broadband infrastructure that would allow serious consideration of other means to fund the BBC.
The Government is effectively allowing the BBC to haemorrhage funds through non-payment of the licence fee as a result of continued speculation over decriminalisation of licence fee evasion, a situation it must bring to an end
“Not only that, but the Government is effectively allowing the BBC to haemorrhage funds through non-payment of the licence fee as a result of continued speculation over decriminalisation of licence fee evasion, a situation it must bring to an end. To enable public service broadcasters to compete in a digital world, Ministers must renew broadcasting laws that are nearly 20 years out of date.
“It’s a question of prominence – too often public service broadcasters lose out on dominant platforms with content that’s hard to find or isn’t branded. However, there is more that public service broadcasters should be doing for themselves and only by pooling resources can they hope to compete with the likes of Netflix and the platforms. The collaboration by the BBC and ITV on ‘BritBox’ is a striking example of how they can work together to create a ‘one stop shop’ for video on demand content – a model for future work.”
Netflix recommends speeds of at least 5Mbps to stream its content in High Definition (HD). You’ll need at least 25Mbps to watch in Ultra HD 4K quality. The report from DCMS acknowledges that around 10Mbps should be enough to watch online television streams, however, it adds that 190,000 premises across the UK can’t even manage that right now.
While 5Mbps for HD content from Netflix might not sound like a lot – you’ve got to remember that your home broadband connection is rarely only handling a single stream. Children could be watching another show upstairs, laptops could be backing up, friends could be making a FaceTime video call, or someone could be online shopping while watching telly. And that’s not even considering updates to your smartphone apps, video game updates and purchases, collaborating on work documents, and more.
Broadband companies have warned that moving television channels to broadband cables could also create a surge in demand – putting existing networks under even more strain.
And that’s not taking into account the 2.7 million adults living in the UK right now who are unable or unwilling to use the internet at all.
Given the huge popularity of streaming services and the contract-free monthly subscription service that pays for them, the TV Licence is likely living on borrowed time. However, these issues will need to be solved – as the DCMS report highlights – before the current funding model can be replaced wholesale. Given the amount of time left before the next Charter period begins, it seems unlikely that Boris Johnson and his teams will be able to solve in the next six years.
As it stands, the TV licence costs £157.50 a year, although that’s set to increase to £159 next month. The cost of an annual black-and-white TV licence is also set to rise, from £53 to £53.50 a year. Anyone who watches live broadcasts – including those airing on streaming services, like Amazon Prime Video, ITV Hub, and NOW TV – needs to be covered by a TV licence. However, you won’t need a TV licence to watch on-demand or catch-up shows, like those found on Netflix.
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The one exception to this rule is BBC iPlayer, which requires a TV licence regardless of whether you’re watching on-demand boxsets, films or live channels.
The cost of the TV licence is determined by the UK Government. Back in 2016, it confirmed the price would rise in line with inflation for five years, starting from April 2017. The latest increase, which was announced earlier this year, was calculated using an inflation figure of 1.075 percent. This was the average Consumer Prices Index (CPI) inflation in the year ending September 2020. BT and EE use the same CPI to adjust their television, broadband and mobile phone plans each year too.
The Government is currently conducting a mid-term review of the Royal Charter, investigating whether to change how the cost of the TV licence will change between 2022 and 2027.
For its part, the BBC has suggested alternate funding models. Last year, it outlined plans to drop the TV licence in favour of a new levy or tax on broadband bills – as this is increasingly the delivery method for viewers to watch shows, live sporting fixtures, Hollywood blockbusters, and more.