The Government must rein in the BBC

For the broadcasting industry, it was a Bill of two halves. The Government's draft Communications Bill included radical liberalisation of cross-media ownership rules, a streamlined three-tier system of content regulation, and the empowerment of Ofcom as the super-regulator for the entire industry.

The bill's radicalism will have major implications for the UK's commercial broadcasters, and it is this part of the Bill that has dominated the news agenda.

Lifting the ban on non-European companies owning major media assets meant only one thing – "The Yanks are Coming". And an unexpectedly relaxed cross-media ownership regime was allegedly a green light for Rupert Murdoch to snap up Channel 5. But as the dust settles on the most far-reaching piece of media legislation for 20 years, these headlines already look jaded. The maturity of the UK media market and the blood-red balance sheets of many US media giants make a "sale of the century" of UK media assets unlikely.

Those of us operating in the UK's TV, radio and new-media markets were kept waiting for the second half of the Bill. Until the Government published its revised BBC Agreement last week, we had little idea how the Corporation would fit into this new, deregulated media landscape. And to an extent, we still don't.

The final drafting of this Agreement will be a major test of the Government's radicalism in media policy and, in particular, whether it takes seriously the threat posed to diversity and choice in the digital environment by a largely self-regulated BBC.

There are two key issues that need to be addressed in the final Agreement. The first centres on the approval of new licence-fee-funded services, a process still shrouded in secrecy. To address this problem, the new agreement must bind the BBC to a new statutory "transparency clause" that obliges it to publish – in full – exactly what it is asking the Government to approve and how much licence- fee funding each new service will require.

More importantly, the envisaged concentration of expertise in Ofcom should be harnessed to inject accountability and independence into the approvals process for new BBC services. Ofcom should have exclusive responsibility for drafting and executing not just the envisaged "market impact test", but also the wider industry consultation and the viewers consultation. The second issue relates to the BBC's commercial activities, which are supposed to be regulated by the board of governors under the terms of the Fair Trading Commitment. These stipulate that the BBC must charge a fair market price for its commercial activities, yet time and again ITN has discovered that BBC Worldwide – the corporation's commercial arm – has been flouting these rules.

The distribution of BBC World news in the US; in-flight news services for British Airways; on-board news for the Heathrow Express – all are offered by BBC Worldwide either free or at big discounts to squeeze out commercial opponents, even though these practices are forbidden by the Fair Trading Commitment. Unusually in media policy, the solution to all this is simple. The Agreement and the Bill should give Ofcom the sole responsibility for enforcing the Fair Trading Commitment.

In its draft Communications Bill, the Government was fearless in its radicalism across the full range of media public policy, particularly as it affects the commercially funded broadcast industry. It is to be hoped that the same radicalism will inform the final drafting of the new BBC Agreement and that those parts of the Corporation that continue to play fast and loose with the existing self-regulatory regime will be brought to heel.

The full version of this article is in 'New Future or Missed Opportunity – Reaction to the Draft Communications Bill, 2002', published by Westminster Media Forum