The Information Society



An important difference between broadcasting and printed material, such as books and newspapers, has been the physical restriction of the electromagentic spectrum. This is not just a question of technology and our ability to make use of the available frequencies, but also a matter of policy arising from the demand for different applications. Whereas the restriction on the availability of newspapers and magazines is one of the willingness of customers and advertisers to pay. The introduction of new forms of broadcasting, invariably the result of technological advances, has knock-on effects for establised 'media', through the effect on advertising revenues. The possibility of moving towards pay per view and video on demand might end broadcasting in the traditional sense; individuals will be able to select their own programmes to view at the times they wish.

From 2LO to BBC

Almost from the beginning, broadcasting in the UK had an ethos of 'public service', intended to counterbalance the potential effect that radio and later television might have on society. By entering into the majority of homes in a relatively intimate fashion, broadcasting has considerable potential to change our lives. The British Broadcasting Corporation (BBC), granted a Royal Charter in 1927, became the leading exponent of public service broadcasting, with Lord Reith its embodiment, emphasising education and sobriety.

The Broadcasting Research Unit defined eight principles of public service broadcasting:

Since 1922 the BBC has been funded by the licence fee, initially the radio licence, later supplemented by a television licence, split into two levels, one for colour and a much cheaper rate for black and white. The radio licence was abolished in 1971. Despite long debate about the funding of the BBC, it continues to be by the licence fee, though it is clear that this cannot and will not last. In an era of pay per view, it will be more difficult to justify a universal licence fee. Moreover, the BBC has increasingly engaged in commercial activity, in no small measure at the behest of Her Majesty's Government. It has sought to exploit the substantial resources of its tape archives to produce pre-recorded audio and video tapes, for example, an early recording of The Beatles. It has also gone into joint ventures with companies such as Pearson plc to produce a satellite television news services. How the use of archival and other material, paid for by licence fees, can be justified in a commercial venture is unclear, given the need for 'fair' competition. The limits to advertising revenues, mean that any significant change at the BBC from the licence fee to reliance on advertising would have considerable effects on the overall pool of revenues available for programming. The alternative is to rely on subscription fees which can either be for a complete service or for a single programme.

Independent television and radio

From 1954, the UK operated a duopoly in broadcasting, the national BBC and the regional private companies. The Independent Television (ITV) companies operated regional franchises, funded from advertising revenues, memorably described by Lord Thomson of Fleet as "a licence to print money". The ITV companies were regulated by the Independent Television Authority (ITA), later expanded and renamed the Independent Broadcasting Authority (IBA) when it was given responsibility for radio. The Broadcasting Act (1990) replaced the IBA with the Independent Television Commission (ITC). This change was highly contentious, since the round of licences allocated in 1991 placed much greater emphasis on payments to H M Treasury with less regard for quality, provided applicants could pass a very basic test of intended quality. The possibility of fifth channel is being discussed and subject to tenders.

Channel 4 was primarily intended to be a distribution mechanism, rather than a programme maker. In addition to programmes bought from the ITV companies, it opened the way for many more independent producers. In the 1990s, the BBC began to purchase some of its programmes from the same group of independent producers and has encouraged some of its own staff to independent.

From 1971 the BBC monopoly of radio was broken with the introduction of Independent Local Radio (ILR), though it had been challenged by 'pirate' radio operators for some years. In 1985 an experiment began to issue licences for community radio; much smaller areas and populations than ILR stations were expected to serve. Licences have been granted for Independent National Radio (INR), to stations such as Classic FM and on medium wave to Richard Branson.

The source of funding for independent television and radio remains advertising, though sponsorship of programmes is of growing importance. The total volume of advertising is limited, thus terrestrial television must compete with newspapers, magazines, local radio and so on. Any significant increases in the availability of media makes new demands on the limited pool of advertising revenues. Thus, for example, satellite television eats into terrestrial broadcasting.

Broadband cable

In the 1950s and 1960s technology was developed for the distribution of television signals over cable. The principal demand was from locations where conventional reception was poor. Often such systems simply relayed the conventional terrestrial channels on 'narrowband' technology; two and later four channels in the UK.

Subsequent technological developments allowed the transmission of 'broadband' signals, with many channels of television and radio. A typical cable television operator in the USA will offer fifty to one hundred channels. Some systems have the capacity for a 'return' signal, making interactive services possible, such as teleshopping.

Broadband cable systems in the UK were licensed under the Cable and Broadcasting Act (1984), which established the Cable Authority to oversee the issuing of franchises. A typical licence was for fifteen years for a population of around 100,000. HMG was keen to encourage commercial development of cable television, not least to see the growth of the UK consumer electronics industry. Some initial problems were encountered in the lack of enthusiasm of British businesses to invest in cable franchises. This was overcome by the opening of the market to overseas investment, with substantial involvement of North American telephone companies in UK cable franchises. In 1990 the powers of the Cable Authority were transferred to the ITC, OFTEL and DTI.

Since 1991, cable television companies have been installing telephone equipment and cables to allow them to compete with BT and Mercury in the provision of conventional telephone services in the residential market and for small and medium-sized enterprises (see Table 1). Telephone exhange lines are estimated to have broken the half million level in autumn 1994.

Table 1 Cable television and telephony in the United Kingdom

                               1991        1992        1993
Houses passed               1,343,557   1,954,829   2,786,202
Houses connected              268,812     440,162     611,423
Telephone exchange lines       21,225     106,989     314,381
Sources: ITC and OFTEL.

Video cassette recorders

The introduction of the Video Cassette Recorder (VCR) meant two changes for television. In the first place it made it possible to watch television programmes whenever people wanted, rather than at the times when broadcasters chose to transmit them. Secondly, a market opened up in the sale and rental of pre-recorded material, originating from the cinema and from television. Substantial businesses in this pre-recorded video material have been developed by companies such as MGM, Virgin, Blockbusters, the BBC and a host of corner shops. Ownership of televisions and VCRs is now almost universal (see Figure 1).

Figure 1 UK ownership of video cassette recorders

Cute graph

Source: Regional Trends (1994), page 117.

One problem is that consumers use the fast forward button when the advertising interrupts the programmes, devaluing the programme to the broadcasters. The 'watershed' and licensing of films (U, 12, 15, 18 and PG) are both effectively eliminated by the widespread use of VCRs.

Direct broadcasting by satellite

Satellite technology was originally developed for military and commercial telecommunications. It was first used by broadcasters for trans-oceanic and other long-distance links for prestigious events such as the Olympic Games. Initially, the low levels of power available in satellites meant that a substantial 'dish' aerial was necessary to receive a signal. However, advances in satellite technology increased the power available for transmissions and thus reduced the size of the dish required to receive a signal.

In the United States of America cable television operators use large aerials to receive signals from satellites for onward transmission over their networks. The combination of satellite and cable made it possible to cater for 'niche' markets, groups which would not otherwise receive any programming or only an occasional slot in a busy schedule. The two most obvious examples of this are MTV and CNN. Music Television (MTV) began in North America spreading to Europe, Latin America and most recently to Asia. Promotional videos for popular music allowed the creation of a low-cost channel with the capability of attracting massive audiences around the globe. Cable News Network (CNN) did the same for continuous news broadcasts. It emerged victorious from the Gulf War, where it was a primary source of news; it was effectively independent of Iraqi infrastructure. However, CNN is criticised for a tendency to use too much 'raw feed' with too little analysis.

The advent of higher power satellites meant that it was possible to bypass the cable operator and sell services direct to the consumer, either in competition with cable operators or to supply areas not served by cable. The smaller dish antenae were practical for individual households. One key to success was the development of practical encryption technology which broadcasters could use to ensure that only subscribers could watch their programmes, this guaranteed revenues and ensured that filsm could later be sold to terrestrial television stations. Perhaps inevitably, there developed a market in illegal decoders and smart cards to avoid the payment of subscriptions.

One of the most significant firms in satellite television is Star TV, originally a division of Hutchison Whampoa, owned by Li Ka Shing. It was subsequently acquired by News Ltd, run and effectively controlled by Rupert Murdoch. Satellite Television Asia Region (STAR) was devised by Michael Johnson in the late 1980s. It was to be a single satellite, Asiasat at 105.5° E, serving the whole continent, some forty nations and more than half the human race, using three transponders, to beam down its signals. Within one year of operation it was claimed to be received in some ten million homes, many reached by local redistribution over cable in apartment blocks. In some of the remoter locations, consumers have leapt from rather crackly shortwave reception of the BBC World Service, Radio Moscow and All India Radio to the multiple channels offered by Star TV.

Satellite Television plc was formed in the UK in 1981, initially broadcasting from a Eutelsat to some of the smaller countries in Europe. When the initial £4 millions of venture capital ran out, it was bought by Rupert Murdoch who massively expanded its ambitions and operations, changing the name to Sky Television. Sky took transponders on the Astra Satellite. Astra was owned by Société Générale des Satellites based in Luxembourg, a location chosen for its combination of expertise in broadcasting and banking, the latter necessary to finance the expensive operation. Astra was later to broadcast the Disney Channel and CNN.

There was a lack of the advertising revenues needed to match the ambitions for expansion of Sky TV, since their were few customers and fewer companies ready to undertake pan-European campaigns; it was running a loss of £2 million per week in 1989 and 1990. Sky TV was re-packaged and re-launched, with a rental deal for only £4,99 per week to little effect. In April 1990, some fifteen months after the launch of Sky TV, transmissions began from British Satellite Broadcasting (BSB), a consortium of Granada, Pearson, Anglia, Virgin and Amstrad. BSB had even more severe problems and higher costs which meant that it was losing £8 million per week. Sky Television and BSB merged to form BSkyB in late 1990, abandoning the Marco Polo satellite in favour of Astra. Gradually, BSkyB has moved the more popular channels from free availability to subscription in order to increase revenues.

Rupert Murdoch is dismissive of UK media:

Broadcasting in this country has for too long been the preserve of the old Establishment that has been elitist in its thinking and in its approach to programming.

In particular, he denounced the BBC, in whose programmes he claimed:

The socially mobile are portrayed as uncaring; businessmesn as crooks; moneymaking is to be despised … integral part of the British disease, hostile to the sort of culture needed to cure that disease.

None of that could be said of the Sun or of Sky TV.

The position of News Ltd as owner of so much terrestrial television, satellite television and so many newspapers raises important issues of control. In the UK its subsidiary News International owns the Sun, News of the World, Today, The Times and The Sunday Times, together with Sky TV channels. The FCC forced Rupert Murdoch to renounce his Australian citizenship and instead to become a US national in order to own US cable and television licences and to divest his interests in newspapers; their rules forbade ownership of a newspaper and a broadcasting licence in the same town.

Video on demand

Broadcasting can be paid for through a licence fee, through advertising or by subscription. It seems clear that technological and market forces are moving towards Pay Per View (PPV). As the profusion of services grows it is more difficult for advertisers to justify large expenditure on advertising, there are other ways to reach customers more directly. It would be possible to offer the same film at different rates, initially a premium rate then a sharply descending price curve, catching different groups of consumers as the prices fall.

Asymmetrical Digital Subscriber Loop (ADSL) allows a return signal for interactive services such as Video on Demand (VoD) and teleshopping. VoD allows a subscriber to select a film or recording of their choice to play whenever it is required; it emulates a combined VCR and local video rental shop. Games channels are now being operated by or in collaboration with Sega and Nintendo allowing interactivie games. To further complicate matters, games are derived from films and vice versa, thus adding to the media mix.


Peacock, Alan (1986) "Report of the Committee on Financing the BBC" HMSO, London. Cmnd 9824.


"L'ordinateur va-t-il tuer la télévision" L'expansion 5.xii.94.

Shawcross, William (1993) "Murdoch" Simon & Schuster, New York.

George Gilder (1993) "Life beyond television".

Discussions with Professor Tom Carbery and Hans Schoof.