Digital BBC seen as threat by other TV broadcasters

THE BBC'S digital services are costing commercial broadcasters hundreds of thousands of pounds, according to industry sources. Heated debate on the issue arose as the corporation outlined its digital expansion at the biennial Royal Television Society meeting of senior broadcasters in Cambridge this week.

Janie Grace, managing director of Nickelodeon UK, said that children loved her services, which include a new pre-school channel, but that she would not be able to invest in good, original programming if the BBC undercut her with a free children's channel as announced.

"If you offer a cable operator a substantial service for nothing, why are they going to pay me?" she said.

Ray Gallagher, of BSkyB, said Sky News had lost hundreds of thousands of pounds when the BBC's free channel, News 24, was taken by the cable firms.

Chris Hopson, of Granada Television, added: "We believe the BBC cannot stretch the licence fee to fund an unlimited number of new services."

But in response to the calls from the commercial sector for the BBC to keep out of digital TV, the corporation stressed its need to be involved.

Alan Yentob, the BBC's director of television, said the corporation would be destroyed if it was starved of funds for expansion in to the digital age. "Put the BBC in a box and that box will soon become a coffin, and the BBC will wither and die," he claimed.

Matthew Bannister, the BBC's production chief executive, said that if the BBC had been told it could not expand from radio when television was introduced in the 1930s, British broadcasting would have been the poorer.

From an informal vote on the Royal Television Society's motion - that "the BBC should be funded sufficiently to remain a full public service broadcaster across the UK's rapidly developing broadcasting market - the BBC won by 142 to 89, though commercial broadcasters outnumbered corporation staff.

At the moment, the Government is considering a report on BBC funding, by the economist Gavyn Davies. Mr Davies's panel recommended an annual pounds 24 levy on existing digital users, on top of the BBC licence fee. But the commercial sector believes levies would deter more people from turning to a digital service.

The Government though is keen to encourage take-up, and a sale of the analogue frequencies, for mobile communication use, will bring the Treasury a bonanza. On Friday, Chris Smith, the Secretary of State for Culture, proposed switching off analogue services in the UK within 10 years.