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Tuesday, 25 January 2011

Another Labour screw up

The Digital Economy Act 2010 is an Act of the Parliament regulating digital media, introduced by Peter Mandelson.  Due to the largesse of the last Labour government, the richest commercial radio station in the UK has had its licence renewed automatically - avoiding a competitive auction, and depriving the taxpayer of millions of pounds of cash. Classic FM station has even seen fees cut to a "nominal amount". Talksport's licence was also renewed under similar terms.

The 1990 Act which permitted the creation of Talksport and Classic FM required sealed auction bids for all licence renewals. Classic FM is estimated to gross £20m per year in revenue for its owner, but now needs only pay £10,000 per year. More significantly, the previous requirement to 6% of revenue to Ofcom has been scrapped.
Classic FM was granted the first commercial nationwide radio license in 1990, and started transmissions in 1992. Changes in the 1996 Act saw Classic FM pay over £1.5m a year to the Treasury, but for the next 5 years, the station will pay less than £1,000 a month.

The Digital Economy Act of 2010 changed the 1990 law, permitting stations a cheap renewal. The Carter Report that floated the policy cited uncertainty about the future of radio as the justification for the incumbent-friendly change. Ofcom justified lack of an auction by saying that auction wouldn't attract any bidders - so why should they bother holding one?

Why then should we pay the salaries or pensions of the people who allowed this to happen?

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