The government department responsible for overseeing the broadcasting system in the UK is the Department for Culture, Media and Sport. However, under new proposals it will share responsibility for regulation of the sector with the Department of Trade and Industry from 2003.

Currently, three public bodies - the British Broadcasting Corporation (BBC), the Independent Television Commission (ITC) and the Radio Authority - are responsible for the broadcast or licensing of television and radio services on a day-to-day basis.

The BBC is the main public service broadcaster of television and radio programmes, the ITC licenses and regulates commercial television services (including cable and satellite) and the Radio Authority performs the same function for independent radio Another statutory body, the Broadcasting Standards Council (BSC), considers complaints by viewers and listeners on matters of standards and fairness.

In 2000, the UK Government published plans to overhaul media and communications through new legislation, likely to be introduced in 2003 The details of the proposed changes are being finalised, but a key change will be the creation of a new regulator called Ofcom.

The process of creating Ofcom started in July 2001 when the Office of Communications Bill was presented by the Government to the House of Lords, the UK's second parliamentary chamber This process is separate from the substantive changes planned for the UK media sector, which will be included in the Communications Bill Ofcom will take over the tasks performed by the ITC, BSC and the Radio Authority, as well as regulation of the telecommunications sector Its formation reflects the convergence of media and telecoms business being brought about by the development of digital technologies.

The BBC

Over the last 75 years the BBC has built up a reputation for high quality radio and television services, and continues to be the cornerstone of UK broadcasting Set up as a public corporation in 1927, its constitution, finances and obligations are governed by a Royal Charter and Agreement The content of the Charter is reviewed periodically and will next be debated in 2006 The Corporation is headed by a Board of 12 Governors, including the Chairman, Vice Chairman, a national Governor each for Scotland, Wales and Northern Ireland, and a Governor with special responsibility for the English Regions The Governors are appointed by the Queen on the advice of the Government, and come from all social and professional backgrounds They meet monthly and hold the BBC's managers to account for their performance.

The Governors are responsible for maintaining programme standards, ensuring that the BBC provides a balanced service, and seeing that controversial matters are treated impartially They appoint the Director-General, the Corporation's chief executive officer and editor in chief, who heads the executive committee and board of management that are in charge of the daily running of the Corporation Because of the BBC's strength in the broadcast and online markets, there have been calls by its commercial competitors for some of the Governors' functions to be taken over by new regulator Ofcom This seems unlikely to happen though there may be a code of practice defining the relationship between the BBC and Ofcom.

The current Director-General, Greg Dyke, has introduced a structure that places strong emphasis on programmes and reducing overheads BBC operations are run by the directors of nine programming and broadcasting divisions and six professional services, and by the chief executives of the BBC's two commercial businesses They report to the Director-General and together make up the executive committee.

The BBC's Nations and Regions division is responsible for programmes and services across all media for audiences in Scotland, Wales, Northern Ireland and the English regions There are three English regions, BBC North, BBC Midlands & East and BBC South, and three national regions, BBC Scotland, BBC Wales and BBC Northern Ireland Aside from making programmes for local audiences, these units also contribute to the national network.

The National Broadcasting Councils for Scotland, Wales and Northern Ireland advise on the policy and content of BBC television and radio programmes intended mainly for reception in their areas Ten regional councils in England advise the Governors on the needs and concerns of audiences.

The Charter and Agreement

The BBC will continue as the UK's mam public service broadcaster until 2006 under a Royal Charter that came into force in May 1996 In December of that year, the Charter, which sets out the BBC's public obligations, will be renewed for a further ten years There is an Agreement between the BBC and the Secretary of State for Culture, Media and Sport, running concurrently with the Charter, which confirms the Corporation's editorial independence over programme content, scheduling and management It also maintains the licence fee (see below) as the chief source of finance for the BBC's public service activities until at least 2002.

The Charter and Agreement preserve the BBC's primary objectives of providing broadcasting services of information, education and entertainment, and reinforce the duties placed on the Governors to maintain programme standards and to ensure the Corporation's accountability to its audiences They allow for the development of the BBC's commercial activities, in partnership with the private sector, in the UK and abroad -although these must be separate and distinct from its licence fee funded services.

Funding

The BBC's domestic services are financed predominantly by a licence fee, which generates around £2.4 billion a year.

All households or premises with a television set must buy an annual licence (costing £109 for colour and £36.50 for black and white in 2002). There were 23.4 million licences in force at the end of 2000. Of these, around 23 million are colour licences. However, new rules introduced in 2000 mean people aged over 75 get the licence free (around 3.1 million licences).

In addition to the licence income, the BBC makes money from the worldwide sale of programmes and programme-related material like publications and videos, the hire and sale of educational films, film library sales and exhibitions based on programmes. It also collects advertising and subscription revenue from a portfolio of domestic and international television channels that it has launched with commercial partners. The BBC World Service's broadcasting operations (see page 21) are financed primarily by an £183 million grant-in-aid from the Foreign & Commonwealth Office in 2001/02 (£200 million in 2002/03), while BBC Worldwide Television (see page 26) is self-financing.

Reorganisation

In 2000, when Greg Dyke took over as Director-General of the BBC from Sir John (now Lord) Birt, he announced that he would introduce a radical structural reorganisation -just as Lord Birt had done in 1996. The aim is to reduce the amount of money spent on running the BBC and increase the proportion of its income spent on programmes and services from 76 per cent to 85 per cent.

In July 2000, plans were announced to cut 900 jobs over three years and save £130 million a year; 70 percent of the savings will come from professional services divisions. The technology arm BBC Resources will also be cut. It is being renamed BBC Technology Ltd, with a wider brief to use BBC expertise in research and development to create a new income stream. In terms of editorial management, the lines of control have been streamlined, a move that should speed up programme commissioning and improve genre development across all services.

There have also been adjustments to the basic model introduced by Lord Birt, whose changes centred on the separation of broadcasting from production and the creation of a single national and international news operation. Today, the BBC comprises:

• the News division: responsible for the BBC's news and current affairs programmes on television, radio and online services at home and abroad, including specialist services such as BBC News 24, News Online and BBC World;
• the Television division: responsible for the network television channels (BBC 1, BBC 2, BBC Choice), for commissioning in most genres, for broadcasting and presentation services, and for supporting other channel operations across the BBC;
• the Radio division: responsible for the BBC's network radio stations - Radio 1, Radio 2, Radio 3, Radio 4 and Radio 5 Live - and for music production;
• the New Media division: responsible for new media developments across the BBC, bringing together online
• and interactive television departments;
• the Nations and Regions division: responsible for programmes and services across all media for audiences in Scotland, Wales, Northern Ireland and the English regions;
• the Drama, Entertainment and Children division: responsible for the production of drama, film and entertainment, and for commissioning and producing children's programming and services;
• the Factual and Learning division: responsible for producing specialist factual output and features. It also commissions and produces education programming and runs specialist education services;
• the Sports division: responsible for all sport output and for running specialist services such as Sports Online;
• professional services: responsible for providing expertise in marketing and communications, distribution and technology, public policy, human resources and internal communications, finance, property and business affairs, and strategy;
• BBC Worldwide Limited: operating at arm's length from the rest of the BBC, Worldwide's task is to realise the commercial value of programmes and services,
• selling programmes to overseas broadcasters, operating commercial channels in joint ventures with others and publishing magazines, books, videos and CDs;
• BBC Technology Limited: responsible for providing facilities and other programme resources to the BBC and also operating in the external facilities market;
• (from April 2002) the World Service and Global News division: a single integrated international news and information division responsible for BBC World Service radio, BBC World Television and the BBC's international-facing online news services.

Membership of international bodies

The BBC is a member of the European Broadcasting Union, which co-ordinates joint operations in radio and television. The Corporation also takes part in the work of the International Telecommunication Union (ITU), the United Nations Agency that regulates international telecommunications services. The ITU allocates and registers all radio frequencies, and promotes and co-ordinates the international study of technical problems in broadcasting.

The Independent Television Commission

The Independent Television Commission (ITC) was set up in 1991 under the terms of the Broadcasting Act 1990 (which overhauled the regulation of independent TV and radio), replacing the Independent Broadcasting Authority and the Cable Authority. Currently it operates under powers derived from the Broadcasting Acts of 1990 and 1996. In time, these powers will be transferred to Ofcom.

The ITC's primary function is to license and regulate commercial television services operating in, or from, the UK, whether the services are received by conventional aerials, cable or satellite; and whether delivered by analogue or digital means. Licences are awarded on the basis of competitive tendering.

The ITC regulates these services by monitoring broadcasters' performance against the requirements of the ITC's published licences and codes and guidelines on programme content, advertising and sponsorship, and technical performance. There are penalties for failure to comply with them. These range from a formal warning or a requirement to broadcast an apology or correction, to a fine. In extreme circumstances, a company's licence may be revoked.

The Broadcasting Act 1996 also empowers the ITC to license and regulate commercial digital terrestrial television and BBC commercial television services. The ITC does not make, broadcast or transmit programmes itself.

The Commission must see that a wide range of television services is available throughout the UK and that, taken as a whole, they are of a high quality and appeal to a variety of tastes and interests. It must also ensure fair and effective competition in the provision of these services, and adherence to the rules on media ownership. ITC staff regularly monitor programmes, and take into account comments from viewers and audience research. They are also advised by 10 Viewer Consultative Councils, and by committees on educational broadcasting, religious broadcasting, charitable appeals and advertising.

Media ownership

During the last decade, some issues have been of great significance when framing new media and communications legislation. Among these, the subject of media ownership has been one of the most hotly discussed and debated.

Legislation in 1990 laid down rules enabling the ITC and Radio Authority to keep ownership of the broadcasting media widely spread and to prevent undue concentrations of single and cross-media ownership, in the wider public interest. A government review concluded in 1995 that there was a continuing case for specific regulations beyond those which are applied by the general competition law. But it went on to say that the existing rules needed to be relaxed, both within and across different media sectors, to reflect the needs and aspirations of the industry against the background of accelerating technological change.

Following those recommendations, the Broadcasting Act 1996 allowed greater cross-ownership between newspaper groups, television companies and radio stations, at both national and regional levels. It also introduced a 'public interest' test by which the regulatory authorities could assess and approve (or disallow) mergers or acquisitions between newspapers and television and radio companies.

Among the Act's changes, numerical limits on the holding of television or radio licences were abolished; holdings are instead restricted to 15 per cent of the total television audience, or 15 per cent of the points available under the radio points scheme. (Points are awarded to radio licences according to the number of people over the age of 15 who live in the coverage area of the service, as determined by the Radio Authority.) Ownership controls on cable operators were also removed and a points scheme introduced to limit holdings in programme services for digital terrestrial television.

In addition, national newspaper groups with less than 20 per cent of national circulation can apply to control any broadcasting licences, subject to satisfying a public interest test. Those with 20 per cent or more of national circulation may control cable, satellite or digital licences, but are prevented from having more than a 20 per cent interest in Channel 3 (ITV) services, Channel 5 and national or local radio services. A single proprietor may control up to three local radio licences in the same area subject to satisfying public interest criteria, provided there is at least one service on each of the AM and FM wavebands. Ownership of a third licence is subject to a public interest test.

Local newspaper groups having more than 20 per cent of local circulation in the relevant area may not control a regional Channel 3 television service or a digital programme service for television provided on a local/regional digital television multiplex. Those with less than 20 per cent of local circulation may control such licences subject to a public interest test. Local newspapers with between 20 and 50 per cent of local circulation in the relevant area can control one AM and one FM radio licence, those having more than 50 per cent may control one local radio licence provided there is at least one other commercial local licence serving the same area - also subject to satisfying public interest criteria.

The new Communications Bill will revisit all of these areas in light of changes in the market-place that have occurred since the 1996 Act. In terms of its guidance so far, it has said that it will:

• consider a lighter touch approach for newspaper mergers;
• replace the 15 per cent limit on share of TV audience with a new system for ensuring plurality in television services;
• revoke the rule which prohibits single ownership of the ITV network's two London licences;
• consider devising a simpler, fairer regime for radio ownership to replace the current radio points system, or revoking the scheme completely;
• invite comments on the reform of cross-media ownership rules; and
• amend some of the general disqualifications on the ownership of broadcasting licences, but retain those that provide safeguards.