BBC 'faces cash cuts to fund Digital Britain'

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The Government's Digital Britain report, outlining wide-ranging plans for the future of the internet and communications industries, will be published today.

The document, compiled by Communications Minister Lord Carter, will tackle issues such as universal broadband and illegal downloading and pave the way to help cash-strapped broadcasters and newspapers.

It was reported at the weekend that the BBC will be forced to give up some of its £3.6 billion public funding in a massive shake-up of the licence fee.

Lord Carter is to propose "top slicing" the corporation's budget by up to £130 million to help under-pressure ITV and other programme makers, according to the Sunday Telegraph.

His White Paper could also call for Channel 4 to receive financial support through a partnership with BBC Worldwide, the corporation's lucrative commercial arm.

Under the reported proposals, up to £100 million of the BBC's funding could be used to pay independent companies to make regional news programmes for ITV.

And another £30 million of licence fee money could be made available for producers to make current affairs documentaries to be viewed either on television or on the internet.

The interim Digital Britain report released in January outlined plans for every home in the UK to be guaranteed access to broadband internet by 2012.

It said everyone should have download speeds of up to two megabits per second - fast enough to watch video online - in time for the London Olympics.

But concerns have been raised that internet providers may not have the inclination or finance needed for an extended access to broadband project, which would need substantial investment in new infrastructure.

Employers' organisation the CBI has called on the Government to make clear how improvements to the broadband network would be paid for.

In an interview with the Daily Telegraph in April, Lord Carter said there will "certainly be 25% to 30% of the country where there will be no economic case for building a next-generation fixed network", adding that the telecoms industry was unlikely to fund the necessary infrastructure to deliver the service in rural areas.

But he said the Government was looking at whether to fund next generation networks through new technologies such as mobile and satellite.

The internet and communications industries are said to contribute £50 billion to the UK.

The interim report also suggested plans to tackle online music and film piracy with a new rights agency.

The agency could be funded via a levy on internet service providers (ISPs) and the music and film industry.

Legislation could force ISPs to take action against people who repeatedly infringe copyright by illegally sharing music and movie files.

But speaking earlier this month while he was still Culture Secretary, Andy Burnham said new rules to tighten up downloading would involve encouraging people to act within the law rather than "criminalising" youngsters.

Mr Burnham said: "Our preferred approach here is that we encourage and incentivise behaviour back within a legal context."

He also talked of plans to try to reach an international consensus on the issue.

Concerns have been raised that beset by other pressing problems and with a recent Cabinet reshuffle, the report's recommendations could end up languishing on the back burner.

But Mr Burnham, who was replaced as Culture Secretary by former BBC employee Ben Bradshaw less than a fortnight ago, said of the Digital Britain report: "The likelihood is that legislation will have to follow in fairly short order."

He said that if Parliament did not act quickly it would do a "serious disservice to the creative industries of this country".

The public service broadcasting sector has been looking at ways of partnering up in a bid to save money.

Commercial broadcasters have been hit by falling advertising revenues as well as an explosion of digital channels.

Mr Burnham has said: "I think that Digital Britain will plant some very powerful ideas and seeds that will have the potential to be further shaped.

"Further discussion, further partnership will emerge."

Mr Burnham described the BBC as an "enabling force in the land" and ITV as a major investor in original British programming.

He also reiterated the importance of having local and regional news beyond the BBC as an "absolutely firm commitment".

Asked whether the licence fee could be used to fund a consortium to do this, Mr Burnham said there were a range of ways in which this could be financed.

A plan to transfer existing FM radio stations to digital broadcasting, known as DAB, was also outlined in the interim report.

Car manufacturers would be encouraged to make DAB radios standard in new vehicles under the plans.

Work will need to be done to ensure everyone in the country had the knowledge and skills to get the best out of the internet.

Age Concern said special efforts should be targeted at older people to help them engage with digital technology.

The Department of Culture, Media and Sport (DCMS) is joint sponsor of the Digital Britain report along with the new Department for Business, Innovation and Skills (BIS).

It was announced on Friday that Lord Carter, a former PR executive and adviser to Gordon Brown, will quit his post and leave the Government next month.