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BBC Trust reaches provisional decision on "Freesat"

27 February 2007

The BBC Trust has provisionally approved BBC management's proposal to develop and launch a free-to-view satellite platform, "Freesat".

BBC management envisages "Freesat" being achieved as a joint venture with other public service broadcasters. The Trust believes the service would create significant public value by offering licence fee payers an additional means to access digital services, including the BBC's digital television channels and radio services, which is subscription free and guaranteed to stay that way.

The Trust has today published its decision, and the evidence and analysis which informed its judgement, and opened a 28 day public consultation prior to making its final decision in April 2007. 

Acting BBC Chairman Chitra Bharucha said: "The BBC's Royal Charter requires the Corporation to take a leading role in digital switchover which begins next year. From 2008 until 2012, as each UK nation and region switches to digital, all households that haven't done so already will have to choose a new way to access television. One of the benefits arising from digital switchover will be greater choice for viewers. For those 7 million homes yet to make the switch, it needs to be clear that the benefits of digital television do not need to equal "pay television". 

"A new, guaranteed subscription-free satellite service would provide the public another option when deciding which platform to choose. Over half of those yet to switch fall outside the Freeview coverage area. For these homes, the new service would mean being able to access BBC digital services they have already paid for via their licence fee but until now have been unable to receive on a guaranteed subscription-free basis.

"We have considered the market impact and whilst there may be some negative effects, in our view these should be balanced against the potential positive market impact of greater choice. Overall, we believe a "Freesat" service to be in the public interest and we hope that other public service broadcasters would join the BBC in a joint venture. We welcome all responses to our provisional conclusion during the consultation. " 

The BBC Trust has decided that "Freesat" meets the BBC's Charter and Agreement definition of a "non-service" activity and does not require a Public Value Test. Nonetheless, in reaching its provisional decision the Trust has considered the potential public value and market implications of launching the service.

In particular, the Trust examined the proposition in four key areas:

Ends
27 February 2007

Notes to Editors

  1. BBC management’s proposition is to launch a national free-to-view satellite platform currently referred to as "Freesat". "Freesat" would provide guaranteed subscription-free access for licence fee payers to digital services, including the BBC's digital television channels and radio services. It would be offered on the basis of a one-off initial payment only, to cover the cost of equipment and installation. The service would be future-proofed, through the designing in of high definition and personal video recorder compatibility, and would be marketed through retail outlets and via the internet. BBC management's intention is to establish a joint venture company with other public service broadcasters to manage the marketing and technical aspects of the new platform. Set top boxes would be supplied by third parties working with retailers to a specification agreed with the joint venture company.

  2.  
  3. Under the terms of the previous Charter the BBC submitted a proposal, approved by the Governors, to the Department for Culture, Media and Sport in June 2006 to launch a free open standard satellite service. However the Charter expired before the Secretary of State reached a decision and, in line with the terms of the new Charter, the decision now rests with the BBC Trust. The Trust received the open file from the Secretary of State in January. Further to detailed scrutiny at its Finance & Strategy Committee and the provision of further independent advice referred to above, the Trust reached its provisional conclusion at its meeting on 21 February.

  4.  
  5. The new Charter and Agreement sets out a range of approval processes designed to create a "tiered" approach to decisions.

    The most demanding of these is the Public Value Test (PVT), reserved for the most important decisions about new or significantly changed public services.

    Where the decision does not concern new or significantly changed public services, the Charter and Agreement provides a flexible framework in which the Trust can apply its judgement to other forms of approval taking into consideration its general duties and functions.

    Where the publicly-funded BBC is making a significant investment, but not in a new service that commissions its own content (ie, BBC One, Radio 3 etc), the new Agreement defines this as a non-service. "Freesat" falls into this category. When considering non-service applications from BBC management, it is for the Trust to decide how it will consider the public interest and market impact issues.

  6.  
  7. Alongside its provisional conclusions, the Trust has also published today:
    • BBC Trust provisional conclusions document
    • Trust Unit review of market impact (January 2007)
    • BBC Governance Unit report on market impact (November 2006)
    • Fathom Partners and Indepen independent review of market implications commissioned by DCMS (December 2006)
    • Frontier Economics independent review of the Governance Unit and Fathom/Indepen market impact reports commissioned by the BBC Trust (February 2007)

These documents can be found at bbc.co.uk/bbctrust

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