Non-subscribers can download this report in full - alongside all our other coverage of the BBC during the Charter Review process - from the 'BBC Charter Review' page of our site.

The Charter Review of the BBC officially opened with the Culture, Media and Sport Committee’s inquiry into the Future of the BBC asking the question “What should the BBC be for and what should be the purpose of public service broadcasting?” The only obvious answer is that the BBC and public service broadcasting should be for the people of Britain, and the BBC rates highly on different measures of public and audience engagement. The BBC plays an irreplaceable role in the supply of PSB programming that UK audiences appreciate, most importantly news, where the BBC accounts for 70% of TV news time and for 22% of online news time in 2013.

Ofcom has been instructed by the UK government to charge the mobile operators ‘full market value’ for the 2G spectrum they have been using for many years, despite there being no liquid market for the spectrum

Ofcom’s general approach to such an imponderable question is eminently sensible, but we disagree with the detail of their methodology on three key aspects, which makes the current proposed charges over three times too high in our view, effectively charging the industry a one-off tax of £4.5bn

The elevated fee levels are (perhaps) still affordable on their own, but coupled with other recent regulatory decisions the UK is in danger of being seen as a hostile regulatory environment, with negative consequences for future investment levels

The international business (CWI) has been hit by a sharp downturn in tourism, but performance at the UK-based business (Worldwide) remains on course, despite declining revenue

The initial announcement of an intention to demerge Worldwide from CWI will be followed by more details by the end of November

With little prospect of growth at International in the second half, and a successful turnaround phase at Worldwide beginning to draw to a natural conclusion, the demerger may not have the impact some had hoped

Channel 4 has confirmed it will distribute catch-up and archive TV shows via YouTube on a non-exclusive basis starting in November, with the broadcaster responsible for selling advertising around its content

The partnership looks to be a win-win: Channel 4 stands to get a huge lift in its online audience while retaining control over sales, while Google achieves a breakthrough deal with a major broadcaster with the hope of more to come

We expect a rash of similar deals as rights holders, broadcasters and video service providers jostle for position in the nascent internet TV market, but few will benefit from the special synergies offered by Channel 4-YouTube

This report contains the 2009 edition of our annual review of UK mobile user trends, based on a survey of 1,000 adults

We look at handset ownership, replacement trends, handset manufacturer choice, network operator choice, 3G handset ownership, usage of existing services such as photo-messaging and the mobile internet and, finally, interest in new services such as mobile TV, datacardsand femtocells

The UK and international businesses (now ‘Worldwide’ and ‘CWI’) are both continuing to perform well, despite weak revenue growth, thanks to strong cost control. Worldwide is now generating cash organically for the first time in memory

Performance at the newly-acquired Thus has been slightly below expectations, mostly due to increased customer churn. The sale of the ‘mid-market’ part of the business is a possibility

The market was disappointed by guidance for the new financial year. In our view it is both acceptable and achievable

Channel 4 broke even in 2008 despite a 5% fall in total TV NAR (net advertising revenues), through a combination of outperforming the market and £25 million in programme budget cuts. Its annual report also underlined its credentials as the alternative PSB voice, based on market research conducted over the year

The crunch time is likely to come in 2009 and 2010. Although financially better placed in many ways than ITV, and more flexible over committed programme spend, the recession threatens Channel 4 with a cumulative annual net deficit of around £150 million in 2010 without further action

Financial pressures facing Channel 4 highlight the need for urgent government action, in the absence of which much depends on the outcome of Virgin Media’s efforts to sell its content assets and the ultimate willingness of BBC Worldwide to engage in a JV with Channel 4. Consolidation would help even if it did not solve all of Channel 4’s pressing financial concerns

Ofcom’s statement on Next Generation Access (NGA) gives BT the maximum possible incentive to invest by allowing a high degree of pricing freedom and some short cuts to reduce implementation costs

But Ofcom cannot guarantee that BT will make a return from NGA, only the existence of an opportunity to make one

Ofcom’s statement is certainly positive for BT, but we remain sceptical of the business case for BT NGA, particularly given the low price of all-copper based offers and Virgin Media’s roll-out of 50 Mbit/s broadband

Ofcom has come up with a new 900MHz spectrum refarming/redistribution proposal, in which only 5MHz of spectrum is taken from Vodafone and O2, as opposed to the 15MHz it previously proposed

We still think that disrupting the voice and text services of existing customers in order to extend the availability of little-used 3G data services makes little sense, and that rearranging a small amount of intensively used spectrum when a far larger amount of unused spectrum is about to become available makes even less sense

Should Vodafone and O2 continue to oppose having their spectrum taken away, as appears likely, the delays to new spectrum auctions are likely to continue

The essential conclusion of Ofcom’s Second Public Service Broadcasting Review is that the present commercial PSB model is unsustainable in the digital age. The Ofcom solution of fixing on Channel 4 as the “alternative, commercial PSB voice”, while freeing up the Channel 3 and 5 licensees from most of their PSB obligations, still leaves a major funding gap

A particularly attractive solution is some kind of synergy-generating merger/JV/partnership, but difficult to achieve in practice. The attached note examines the main issues that we may expect to arise with the existing proposals