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A man leaves the CBC building in Toronto on April 4, 2012.Nathan Denette/The Canadian Press

When the economist Sir Alan Peacock was commissioned by Margaret Thatcher to conduct a review of the financing of the BBC in 1984, it was widely assumed the BBC was in for a radical overhaul.

At the least, surely, he would call for Britain’s public broadcaster to be funded through sales of advertising, as Mrs. Thatcher was thought to prefer, in place of the licence fee – an annual levy on television set owners – on which it had depended for the bulk of its revenues since 1946.

So when the report of the committee Sir Alan headed came out two years later, it surprised a lot of people. Its recommendations, to be sure, were radical. But it did not call for the BBC to sell advertising. Rather, it called for the licence fee to be replaced by a subscription fee.

The difference: Where the licence fee is charged to everyone who owns a television, a subscription fee would only be charged to those who wished specifically to watch the BBC. Licence fees are compulsory. Subscription fees are discretionary: If you don’t want to receive the service, you don’t have to pay them.

This was revolutionary stuff in 1986. Television before then had suffered from a critical technological limitation, namely that it was impossible to charge viewers for what they were watching. The signal could be received by anybody, whether they paid for it or not: a textbook case of market failure.

Advertising was one attempt to solve this dilemma; public funding was another. (The licence fee was a peculiarly British variant.)

The problem with both was that someone other than the viewer was paying for what was broadcast – which meant that programming was made with someone other than the viewer in mind.

Rather than selling programs to audiences, private television channels (what few of them there were) sold audiences to advertisers. The result: a lot of broadly similar programs aimed at boring the broadest possible audience (ratings could tell you what they were watching, but not how much they wanted to watch it). Public television, on the other hand, seemed almost entirely unconcerned with what the audience wanted.

By the early 1980s, however, this had begun to break down. Cable television had already greatly increased the number of channels available; fibre optics promised to eliminate any remaining limit. And in the United States, a few “pay-TV” services, including a movies-and-sports channel called Home Box Office, had begun operating, using an addressable receiver mounted on top of the TV set.

The Peacock committee proposal was to universalize this: build such a receiver into every television, and viewers could pay directly for whatever type of programming they favoured, from a multitude of different providers. At last the market for television could work like any other, without need of either advertising or public funding – or regulation, for that matter.

What the committee was anticipating, of course, was the internet. Television today is increasingly streamed, rather than broadcast, by services such as Apple, Amazon and Netflix, but using the same subscription-based business model pioneered by HBO. The programs on offer, moreover, are among the best that have ever been made. A paying customer, it turns out, is a demanding one.

Now, nearly 40 years afterward, the U.K. may finally be about to apply Sir Alan’s recommendations to the BBC. The licence fee, the government has just announced, is to be frozen for the next two years. Eventually, it looks likely to be scrapped, in favour of – well, no one’s sure, but a subscription fee is the leading contender.

Meanwhile, back in Canada, stirrings of change are also afoot, spurred by the sad state of the CBC, especially English television: hooked on advertising revenues, chasing ratings at the expense of its public-service mission, and failing even at that – CBC TV’s primetime audience share has fallen to just 5 per cent.

The Liberals propose to get the network out of selling advertising – by giving it more public funding. The Conservatives, for their part, promise to “review” the CBC’s mandate (Tory Leader Erin O’Toole called for defunding it in his leadership campaign). Pressed for alternatives, they mention the PBS model (public funding plus begging) or privatization, as if either would solve anything.

Perhaps the changes coming to the BBC will shake us out of our policy inertia. The way to revitalize the CBC is not to spray more and more public funding at it, even as its audience grows smaller and smaller. Rather, the CBC needs to move to a subscription model: first to wean it off of advertising, but in time to replace much of its public subsidy as well.

The CBC already derives a quarter of its revenues from subscription fees on various of its ancillary services. Putting the main network on pay as well would complete the transition. Defunding? Think of it rather as re-funding.

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