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This chapter considers where the scarce assets are located in the broadcasting sector and what are the lessons for public interventions to prevent the abuse of market power. It focuses on what makes broadcasting different from other sectors and on the way in which recent technological advances such as digitisation may be changing the nature and distribution of scarcity rents.
It considers two hypotheses in particular: first, that falls in the cost of reproducing and transmitting information have greatly reduced entry barriers in broadcasting, meaning that market power is less of a concern, and second, that rents in broadcasting will increasingly come from control of scarce content rather than from control over means of transmission. Both hypotheses contain elements of truth but the situation is more complex than either implies on its own. The chapter goes on to look at a number of challenges for competition policy, including such issues as market definition, exclusionary practices and bundling, matters that have been brought to the fore in recent antitrust developments. It suggests that the risks attendant on these practices may be somewhat different from those that have traditionally been emphasised and proposes rules of thumb to help identify the circumstances under which they are most likely to lead to a consolidation of market power.
We begin with a summary of technological changes in broadcasting and an assessment of their impact on the nature of competition in broadcasting markets.
The concept of public service broadcasting (PSB) is for many people summed up by the mission given to the BBC by its first Director General, John Reith, in the 1920s: to ‘inform, educate and entertain’. This broad statement encompasses several elements, some clearly appealing to viewers themselves (to entertain), others with wider social purposes (to educate and inform)., The aims of public service broadcasting would therefore appear to encompass two main strands: that television should give people the programmes that they want to watch and that it should also satisfy wider social purposes such as education and the promotion of ‘citizenship’. Reflecting these strands, in this chapter we discuss two broad questions concerning the provision of television broadcasting:
Will the television broadcasting market give people what they want to watch?
Should people be allowed to watch only what they want to watch?
The first question investigates the traditional ‘market failure’ arguments for public intervention in broadcasting. These hold that the commercial broadcasting market will fail to meet viewers' demands in a number of important respects. Advertising-funded broadcasters will produce a bland diet of low-quality programmes, appealing to mass-market tastes and ignoring niche interests. We explore the basis for these arguments by assessing market provision of television broadcasting. Specifically, we consider whether audience numbers will be efficient, whether the level of advertising is appropriate and whether the right mix of programmes, in terms of diversity and quality of content, will be produced.
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