Since the BBC's new funding deal was concluded with the government earlier this month, most of the press coverage has been about the cuts the BBC will need to make. What hasn't got so much attention is the little sweetener that the deal prospectively gives to
That deal in brief: From 2017 onwards, the new licence fee settlement will ultimately see the BBC subsidise TV licences for the over-75s – which are currently paid for by the Government. In return for this massive obligation – it will end up costing the BBC over £700million a year, out of current revenues around £3.7billion – the Government has made some financial concessions to the BBC. One of them is that the licence fee – which, it seems, will continue – will be extended, to close the so-called "iPlayer loophole".
At the moment, Brits only need a TV licence if they are going to watch or record live television. Since the BBC iPlayer was launched in 2007, it has been possible never to watch live TV but still see your favourite shows, by watching "catch-up" TV online (using the iPlayer and similar services from other broadcasters, such as
An increasing number of people are getting wise to this loophole – by the end of the current licence fee deal in 2017, the BBC reckons that 1million of them will be no longer paying a licence fee, leaving a £150million-a-year hole in its finances. So the BBC has persuaded the Government to legislate to close the loophole. In George Osborne's budget, it said that "the Government will ensure that the BBC can modernise the licence fee to cover public service broadcast catch-up television".
The devil here is in the detail. "Public service broadcast catch-up television" means the catch-up services offered by the free-to-air TV channels that are licensed as public service broadcasters – the BBC, ITV, Channel 4 and Channel 5. Which, in turn, means that Netflix and Amazon Prime Instant Video will stay out of the licence fee net.
So what? You can watch Netflix and Amazon now without a TV licence (given that neither of them offers a service that is "live" or "television" for the purposes of English law) – their position under the law won't change.
Well, what does change is the competition. At the moment, if you're in Britain and you have an internet connection, you can watch catch-up programmes on the BBC iPlayer, ITV Player, All 4 and 5 On Demand for free. Or you can pay £6 a month for Netflix or Amazon. Or you can pay £12.13 a month for a BBC licence fee, and watch live TV. And on top of that licence fee, you can pay £20 a month or more for traditional pay-TV packages, such as Sky and Virgin.
What the new licence fee deal will do, as of 2017, is remove that free option. As well as the BBC iPlayer, ITV Player, All 4 and Demand 5 will disappear behind the licence fee paywall. Which – if you have an internet connection already – will make Netflix and Amazon the cheapest option, at least as the market currently stands.
When people figure that out, it could mean a big UK payday for Netflix, as skinflints move from one cheapest option to the next. (Sky's NOW TV could benefit in a similar way, but only if it removes or restricts access to live TV channels.)
And, by the way, this whole scenario doesn't seem very fair on poor old ITV, Channel 4 and Channel 5 – whose online catch-up services will disappear behind the BBC licence fee paywall, but who will receive none of the additional licence fee bounty.
