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January 10, 2006

Bidding for Public Broadcasting Service -- A Way of Market Test

Takatoshi ITO (Professor, University of Tokyo)

Broadcasting service is in a big controversy. The problem of a large number of households not paying subscription fees to NHK (Japan Broadcasting Corporation) has taken the method of management and the form of service of NHK, or the public TV broadcasting system in general, into the political arena.

It is apparent that a large portion of the programs NHK puts on the air can be covered by commercial broadcasters. A good example is the live broadcasting of U.S. major league baseball games. Although it is enjoyable to watch athletes like Ichiro and Matsui play in real-time, it is very questionable whether such a program needs to be funded by legally obliged subscriptions collected from all households with TVs. On the other hand, it is the responsibility of NHK to broadcast overseas -- to send out information from Japan. Currently NHK neither supports Japanese business people abroad nor serves as a platform to transmit important business information, intellectual opinions and views out of Japan.

What would be the basic level of "public-ness" required in broadcasting? In cases of emergency such as earthquakes and tsunamis, a public broadcasting system could function to minimize damage and calm social anxieties. But in such cases it is difficult to specify who the receivers are and the levels of benefit they obtained from the programs, which makes it inappropriate to charge the receivers in accordance with the time they tuned in. The existence of a public broadcasting function supported by the government thus may be justified. But even still, it does not seem necessary for the government to own and run broadcasting facilities using tax money. The programs currently offered by NHK far surpass the necessary level of "public-ness" in broadcasting.

Suggestion for Reform

I would like to make the following suggestion. As explained above, there are some types of programs that can clearly be categorized as public service, and as such, should be supported by small fees collected from a broad base. It would make it equitable, then, if certain fees were to be collected from the sales of television sets in the form of a public broadcasting cooperation fee, which would enable it to be collected from a broad scope of beneficiaries.

In 2004, 8.7 million television sets were sold in Japan. Collecting, for example, 15,000 yen per television set (about a year's worth of current NHK subscription fee) would amount to 130 billion yen. Use this money to pay for a public broadcasting service borne by an existing TV station, which would have won the bid to provide it. Terms and conditions such as the level and volume of regular news reports, limits on the amount of commercials transmitted, obligation to televise legal election campaign broadcasts, required quota for educational programs, and the framework of reporting in emergencies would be stipulated as a part of a long-term contract -- for example, a 3 year-contract-- between the government and a TV station. The package would be put to public tender and the winner would utilize fees collected by the government for providing the public broadcasting. NHK would have to compete against other commercial TV stations if it wants to win.

NHK currently receives 640 billion yen through subscription fees. If NHK were to win the bid and continue "public broadcasting," it means that its business would shrink to one-fifth of the current volume.

It seems possible for NHK to maintain the two (general and educational) channels with this budget if costs were cut. Satellite broadcasting would probably be converted to be supported by commercials, or provide scrambled pay-TV programs. NHK should be able to survive by pursuing synergy effects of satellite and surface broadcasts.

At the same time, overseas broadcasting facilities must be strengthened, which should be in the form of opinion and information dissemination originating from Japan that provides 24-hour news in English and Japanese. It should also be put to tender for running such services with respect to what it costs to the government. Sales efforts should be made so that services should be carried by foreign cable TV networks. Such services, with core programs to provide news from Japan and Asia, should aim to function as the "Asian CNN." If not Japan, China is certain to start such a service before long. Providing such service is indeed a project with a supreme level of "public-ness."

(The original Japanese article appeared in the December 24, 2003 issue of Weekly Toyo Keizai)

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