Government ponders TV licence revamp

Minister for Communications Pat Rabbitte (pictured) has announced plans to review the TV licence to reflect more accurately the ways in which people consume audiovisual content. Instead of paying a licence for a TV, the Minister wants to reposition the charge as a household ‘broadcasting charge’.

Right now it’s quite legal to forsake the TV for the PC/tablet/smartphone and with it any contribution to the upkeep of the national broadcaster and independent producers. Thus far we have no timetable for rollout (2014 has been mooted), if there will be any change in the existing fee (though likely not), or to find out how many homes have ditched TV for PC already and will have to be recaptured by the system.

So how much does any revised broadcast charge have to raise be a success? Let’s do a simple exercise based on RTE’s deficit of just under €5 million (based on its most recent report, covering 2010). Using this as a hypothetical benchmark, the State would need to raise less than €10 million to return the broadcaster to profitability.

According to the Minister the current rate of licence avoidance ranges from 14-18%, amounting to up to €25 million in unclaimed revenue per year. Straight away it seems better enforcement would plug the gap in RTE’s finances. So it’s not the fee it’s enforcement that’s the problem.

Making the system more efficient, however, does not address the long-term issue of stopping viewers swapping TVs for monitors and, consequently, leaving broadcasters with smaller budgets to fulfil their commitment to produce informative and entertaining content for a local audience.

From this perspective Government is presented with three strategies to maintain the licence fee footprint: direct taxes, stealth taxes, and ‘recommend’ a charge for ancillary services.

Direct taxes

The least palatable solution is an increase in the licence fee, which is not on the table for now. What is of interest is to how to keep people paying their licence in as painless as manner as possible. The current direct debit system for the licence works well, but in order to maintain the numbers why not combine it with another tax, like the household charge. This would serve to keep tabs on the tax base and save on having to assemble a single, reliable database of households in the country. Jail time for licence dodgers is nonsense, but having to pay a ‘premium rate’ for a few years would be a reasonable deterrent.

Increasing the fee would be political suicide. Talk of a reduction based on improved revenues and lower rates of evasion is a win for all, dodgers aside.

An alternative route would be a tax on broadband connections. By moving the charge from access to the airwaves to access to the Web, with broadband set to become the main way people receive information, a charge on how people consume content would put 99% (after the completion of the Rural Broadband Scheme) of the country into the tax net.

The problem with a flat rate broadband tax is that not all broadband is created equal. Charging the same rate for sub-dialup speeds in rural areas as fibre-connected urban areas is no way a reflection on the quality of service the user will get. Introducing a sliding scale based on the maximum speed of a connection would be a more equitable approach, but would stifle economic innovation as households and businesses look to minimise their outgoings. File under ‘non-runner’.

Stealth taxes

Just as the Wee directive built a nominal fee into the price of consumer electronics and appliances, why not apply a similar logic to devices capable of receiving a broadcast or Web-based service. The cost of such a levy could be worked out as a function of unpaid licence fees – the lower the rate of evasion, the lower the levy. Early adopters who regularly recycle their gadgets would not be impressed with the strategy, but if you can afford an iPad, you can afford an extra €5. It worked with the WEEE directive, it could work here.

Ancillary services

I mentioned above that Government could ‘recommend’ the introduction of paywalls for RTE’s online services. I use parentheses to make the distinction that this decision is not directly in the State’s hands. RTE Player, its association apps and website are handled by RTE Publishing, a division of the Broadcaster that does not receive support from the licence. RTE Publishing is a commercial entity and does not operate under the same public service remit. Such a move would be RTE Publishing’s call.

Right now RTE Player is a service provided gratis, serving 1.8 million streams per month and is supported by pre-roll advertisements. Its associated apps for iPad and iPhone have been downloaded over 200,000 times and don’t have any ad support.

The potential for turning both into subscription services, or free to licence payers only, could be another valuable revenue source. Limiting free access to users within the Republic would be another option that would attract little protest but would have limited appeal.

Minister Rabbitte has admitted there are substantial hurdles involved in reinventing the TV licence that would perhaps be too much for one government to bear.

Niall Kitson

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