Licence to view

How and where we watch television broadcasts is changing fast – laptops, smartphones and tablet computers are pulling viewers away from their television screens and pushing broadcasters into uncharted waters. So, in the absence of a TV set, should we have to pay a TV licence at all, asks MICK HEANEY

AS LONG as there has been a television licence, people have been looking for a way around paying it. In the 1980s, one woman charged with evading the fee claimed that she refused to buy a licence on principle, because RTÉ did not screen enough programmes in Irish. Her defence crumbled when she admitted that she did not speak the language. Such ruses have always been a given when collecting the fee that enables RTÉ to function as a public service broadcaster. To this day, the airwaves carry ads reminding us of “something else you won’t want to forget”, namely paying our television licence.

Recently, however, the licence system has been facing a new and growing challenge from computer users, which is all the more serious for being legal.

In an era when laptops, smartphones and tablet computers are used to view television content yet are exempt from the licence fee, taxing people who own a television set seems not only inequitable but also unsustainable.

The announcement earlier this month by Pat Rabbitte, Minister for Communications, Energy and Natural Resources, that he may consider replacing the television licence with a new universal household charge was the most obvious sign to date that the old system, in place for the past 50 years, is increasingly obsolete.

"Every country in Europe is grappling with this, for the licence fee is anachronistic and dated," says former head of RTÉ radio, Helen Shaw, author of Irish Broadcasting Landscape, a wide-ranging economic and environmental report for the Broadcasting Authority of Ireland (BAI). "To young people used to TV on demand, the television licence fee increasingly seems a mismatch. In a digital environment, the trend is against receiver-based taxes."

But designing a new system to fund public broadcasting, no easy task at the best of times, is fraught with difficulty in the digital age. As well as objections from competing broadcasters about how RTÉ uses its public funding – €200 million in 2009 – to bolster its position in the commercial market, there are complaints from other media providers that the network has used its position to build up an unfair online presence.

Beyond such squabbles, there is a wider issue for Rabbitte to mull over, namely what role RTÉ should play in a changing Irish media landscape, where non-traditional content providers are becoming ever more important.

It is a question exercising the deficit-ridden broadcaster, as signalled by the wide-ranging review of structures and costs announced recently by Noel Curran, RTÉ's director-general. The network's plight is unlikely to cause much schadenfreudeamong competitors. As the biggest player in the Irish media, when RTÉ sneezes, everyone catches a cold.

A stable national broadcaster is crucial for a healthy indigenous Irish media, particularly in a changing online world which has upended traditional models across the world. Any new public system for funding such a broadcaster is no longer about catching rogue evaders: the stakes are much higher.

The review of the licence fee is in an early phase; a spokesman for the Department of Communications says it will be a year, at least, before completion, when a final list of options will be presented to the minister.

There are, on the face of it, pressing reasons for such a review. The decision of broadband provider Magnet.ie to offer domestic channels free to subscribers’ computers highlighted the anomaly in the current system: Magnet’s customers would not be liable for the licence fee.

Meanwhile, the current collection system, managed by An Post, has its inefficiencies: thanks to evasion and cost, the total take falls short of its full potential by between €30 million and €40 million. For all that, RTÉ does “not particularly” feel a new funding model is needed, according to Clare Duignan, its head of radio and a member of the network’s executive.

“We don’t have a knee-jerk opposition to the government move,” says Duignan. “The issue is not what it’s called, the big concern would be that there has been a move to top-slice the fee under successive governments and the worry is we will get to a tipping point where we cannot provide the services, content and the very specific obligations we have under the broadcasting act because we don’t have the funds.”

Europe provides several options to consider. The licence could be abolished outright, as happened in the Netherlands, where the state broadcaster, NOS, is funded by a direct income tax. In Ireland, where RTÉ is meant to be firewalled from political interference, the notion of the Dáil directly controlling the network’s funds may prove problematic.

Alternatively, the fee could be collected via utility bills, as is the case in countries such as Greece and Romania. That approach would make evasion more difficult.

The Irish system is more likely to be tweaked than shaken up. In the UK, the TV licence is a misnomer: it is required for any device on which television can be watched. Similarly, in Denmark, households that own a television, a laptop or even a 3G phone have to buy a media licence to fund the state broadcaster, DR. The latter example provides other lessons in responding to the challenges of the digital era because the Danish network now runs a single production centre to create content across television and online platforms.

But RTÉ has distinctive characteristics that throw up further complications. According to Shaw’s report for the BAI, the network is unusual among its European peers in being strongly dependent on commercial revenue, with the station generating €174 million of such income in 2009. “This is a once-off opportunity to repair a market which has failed,” says David McRedmond, the chief executive of TV3, who sees two potential solutions.

The first is a public service publishing model, where no single broadcasting body gets the fee but it is divided among applicants.

TV3, for example, could seek funding for its news services. This would effectively expand the current Sound and Vision Scheme, which puts aside 7 per cent of the licence fee for public service content. (Economist Colm McCarthy’s report on semi-state industries recommends increasing the amount going into the fund.) But with more than 77 per cent of the existing television fund having gone to RTÉ and TG4, the commercial sector may have reservations about such a model.

The second option – “slightly preferred” by McRedmond — would give RTÉ secure funding but force it to drop its commercial operation, which competitors say has undermined the market by underpricing ads. (A similar approach has been taken in France, where state channels have been ad-free during prime time since 2009.) Unsurprisingly, such an approach would find a cool reception in RTÉ, already grappling with a €65 million drop in commercial revenue.

“The question we have to ask is do we want to have a strong domestic broadcaster like RTÉ,” says Duignan. “If people do, you have to look at scale. There are 60 million people in the UK, but only around five million in Ireland. There isn’t the population to support a high quality public service broadcaster by the licence fee alone.”

The differences between RTÉ and its commercial broadcasting rivals are mirrored in the digital arena. Though RTÉ may be losing television licence fees as content is consumed online, the network has become the dominant Irish media website.

This development has alarmed the newspaper industry which, having lost paying customers in the free environment of the web, also claims that RTÉ has used its public funding to consolidate its position and dominate online advertising. The National Newspapers of Ireland, an industry lobby group, last year told the Oireachtas communications committee that RTÉ enjoyed an unfair online advantage through its funding and its ability to promote its own products.

And if one thing seems certain in the changing media landscape, it is that the online market will only get bigger, as broadband access grows and more material is accessed through mobile devices. With the latest figures showing that web advertising grew by 13.5 per cent last year to €110 million, or more than 10 per cent of the total market, Shaw says that “the safe prediction is that online revenue will continue to grow”.

The online dominance of state broadcasters is not confined to Ireland. Similar objections have been made about the BBC, but the British corporation recently announced that it is to cut back its web operations by 25 per cent by 2013.

In this context, RTÉ’s decision to share news content with other Irish media websites can be seen as a recognition of its public service remit or a sop to mollify rivals as new funding arrangements are evaluated. McRedmond is wary about the move further distorting the online arena. “I don’t want RTÉ to go messing up another sector, the online one, by giving away more content for free,” he says.

Newspapers may balk at RTÉ getting even more of the digital pie through a universal household charge, which after all taxes computer users. But increasingly, there is a sense that local competition should not blur the bigger picture. For all RTÉ’s dominance in terms of visitors, transnational entities have a far bigger impact that was once the case, with search engines and social network sites earning the lion’s share – 44 per cent – of advertising.

“All of the Irish media is sitting on top of a moving plate and that plate is the shifting landscape of the internet,” says Shaw. “If the Irish media landscape is shifting, Facebook and Google are big winners so far.”

Given Ireland’s small size, there is a growing recognition that Irish media companies need to co-operate in the face of immense global pressures. In his memo to RTÉ staff, Noel Curran talked about forging “strategic partnerships” with other domestic media organisations.

For all its fiscal troubles, RTÉ is in a less parlous state than many of its competitors, particularly in the newspaper industry: so long as it controls the content it creates, the future of television seems more secure, if uncertain in shape. “TV is not going to be wiped out,” says Shaw. “But the share of the money online has been growing and the response of broadcasters to this will be key to how they survive.”

Micropayments, banner ads and subscription are all potential routes. But it would be foolhardy for RTÉ – or indeed, its various rivals – to think they can go it alone.

“I think it’s important that the media here stops eating itself,” says Duignan. “All this rowing is a refection of the financial pressure everyone is now under. I think it’s in everyone’s interest to have a strong public-service broadcaster, but it’s in RTÉ’s interest to have competition from strong domestic commercial broadcasters.”

Shaw adds: “As citizens, where we agree is we want all the Irish media as a whole to survive. The challenge is we have to rethink the model of content and its economic base. But we cannot assume what worked in the past will continue to work.”