'PC tax' could replace BBC licence fee

The TV licence fee could eventually be axed and replaced by a tax on personal computers, according to a new report from the Department for Culture, Media and Sport.

In announcing the findings of the Whitehall's review of the BBC's Charter, Culture Secretary Tessa Jowell told ministers that the government was content with the traditional licence - but only in the short term.

"Although not perfect, we believe it remains the fairest way to fund the BBC so it will continue throughout the next Charter. In the coming months, we will have to decide on the right level for the fee after 2007 - but beyond that, we have to take account of the rapid advance in technology and media consumption," she said.

"Over the next charter period we expect the BBC to play a substantial part in developing a digital Britain," the Culture Secretary told the Commons.

If alternative funding models get the go ahead, one idea being mooted by the government is a fee payable for each PC purchased.

The green paper on the Charter review, published yesterday, suggests that TV piracy may force the BBC into changing how the licence fee is collected.

"In future, if a large number of people are downloading audio-visual content from the internet, and watching it on their computers or mobile phones, rather than using traditional TV and radio services, it may be difficult to collect and enforce a licence fee based on television ownership."

The green paper continues: "In that world, different funding models may have to be considered. If the licence fee was to be retained, the means of collecting it might have to be changed - so that it because, for example, either a compulsory levy on all households or even on ownership of PCs as well as TVs."

Much of what the government is predicting, however, is already a reality. The UK now accounts for one-fifth of global piracy of television, a recent report found, while O2 is trialling video-over-mobile and several operators are already investing in HSDPA technology, which will facilitate TV-style broadcasts to mobiles.

The BBC, which has recently been forced to prune its web presence, declined to comment on the possibility, saying the issue of funding is solely down to the government.

Nevertheless, the change could prove a lucrative one for the BBC. Currently, there are 24.5 million TV licences in force, according to the TV licensing authority. However, almost nine million PCs were sold in the course of 2004 in the UK, according to analyst house Gartner, and growth rates are rising fast, with a year-on-year increase of nearly 15 per cent.