A television channel based in Scotland should be a bigger priority than BBC Three

ONCE UPON A TIME, most of our basic services such as Electricity, Gas and Transportation, were public utilities, owned by the state. The government was able to simply tell them how to behave.

As these services became privatised, that level of control was lost. Many of the resulting privatised companies have a monopoly position over their area of their operations and, if left to their own devices, might use that dominance to squash competitors and milk customers. Government-appointed regulators have been set up to impose controls on these companies and ensure that they behave competitively.

Some time ago, this government decided to reform the various bits of alphabet soup that regulate the telecommunications and broadcasting industries: Oftel, the ITC, the BSC, and so on, are soon to join up to become OfCom. As these two industries continue to converge, it seemed sensible to put the regulation into one body.

It all seems to be moving very slowly, but bits of the picture are beginning to emerge. Last week, for example, it was confirmed that there would be no special recognition of devolution at OfCom. The Scottish and Welsh assemblies would have no special rights to affect OfCom’s actions.

But the main reason for the delay in setting up the operations of OfCom is almost certainly the difficulty of trying to accommodate in some sensible way the anomalous position of the BBC. Under any normal definition, the BBC is a monopoly supplier of broadcasting services in the UK . It supplies around 50% of the total radio and television consumption.

Trouble is, being 'state-owned'; it is not subject to any of the current regulators. It regulates itself, and often uses its monopoly position to squash competition in ways that might even make Bill Gates’ blush.

So, in addition to its normal business – the supply of high quality public service radio and TV broadcasts – it is also a major magazine publisher; the leading supplier of educational materials to schools, and it runs Britain ’s largest news organization. All this is paid for by the 'poll tax' that actually survived – the TV license fee. Scottish households pay around £220m a year of this tax.

The BBC recently decided, all by itself, to spend £140m of license fee money on educational materials to be supplied free to schools over a three year period. As a result, many existing British companies which try to make an honest living out of educational publishing will probably close down.

ITN complains bitterly that when it bids to supply news programming to various outlets, it is usually undercut by the BBC. As a result, the BBC supplies news programmes to various airlines, the Heathrow Express, and to mobile phone operators, free, or at well under market prices.

By far the most visited website in Europe is the free one provided by the BBC. Various British commercial web sites, specialising in sport, lifestyle or financial news, have been unable to compete against the huge online spend deployed by the BBC, thought to be over £80m per year, and have gone out of business.

The latest battle ground is in the deployment of new digital TV channels. The BBC now operates eight television channels paid for by the license fee, and a further nine advertising-supported channels which it jointly owns with Flextech. Every one of these channels is based in west London – the BBC hasn’t quite got the hang of this devolution stuff.

The BBC would now like to launch BBC Three, a channel which would target its (mostly entertainment) programmes at young adults. In the absence of a regulator, the approval has to come from the government, but so far this has been withheld, to the fury of the BBC. The problem is that there are already many channels which address this commercially-attractive part of the population, such as Sky One, E4, Paramount , Bravo, and even large chunks of Channel 4 and Channel 5. In the current advertising drought most of these channels are losing money, and the arrival of BBC Three might kill some of them off, reducing choice for the consumer.

Is it too much to ask that the BBC should be required instead to use our license fee money to provide bits of the public service landscape which the commercial sector will not provide? A television channel based in Scotland, for example.

The £97m earmarked for BBC Three would do nicely

Ian Ritchie is a director of Channel 4