'£300m public service channel to rival BBC'

Media regulator Ofcom today proposed the establishment of a new TV channel to compete with the BBC as a public service provider in the digital age.

The channel would be set up to prevent the BBC from becoming a near monopoly in public service broadcasting after the digital switchover.

ITV, Channel 4, Five and other broadcasters - but not the BBC - would be able to bid to operate the channel, which has been proposed to ensure a plurality of public service broadcasting.

The channel would also commission and distribute content on other digital systems such as broadband and mobile networks, as well as cable, satellite and digital terrestrial broadcasting. The channel would cost ?300 million a year to run, with an average perhour budget of £200,000, at three hours of new content a day.

The proposal was announced today in Ofcom's second report as part of its review of public service broadcasting.

Parliament has asked the body to report every five years on the health of public service broadcasting in television, and today's report addresses how to maintain it when analogue is switched off in 2012.

Ofcom said the existing model of public service broadcasting, in which ITV1, Channel 4 and Five get about ?400million a year in subsidies and the BBC receives funding through the licence fee, would not survive the switchover.

Ofcom chief executive Stephen Carter said: "In this report we conclude that a new model for public service broadcasting needs to be developed now, before the surplus in this historical system disappears and the goodwill between public service broadcasters and the public declines."

The new channel, which has the initial name of Public Service Publisher (PSP) is one of seven proposals announced by Ofcom today. Others include the possibilityof transferring income-generating assets from the BBC to Channel 4. PSP would remain a primarily not-for-profit free-to-air broadcaster able to form partnerships with other organisations.

The transfer of assets from the BBC would be designed to give PSP enough financial muscle to fulfil its public service broadcast remit in a digital age.

A "strong and independent" BBC would be funded through a licence fee model. Its charter would run until December 2016 but there would be a review of its funding in 2011.

There would be a transfer of some non-news regional obligations from ITV to the BBC.