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By Mark Wallace
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BBC Money FunnelThe BBC has been closed down. 

The furore and shock such a headline would stir up is almost unimaginable. Questions would be yelled in Parliament, Polly Toynbee would sob blue murder in the pages of the Guardian and parts of Twitter would solidify into pitchforks and burning torches.

Far-fetched as it may seem, last week Greeks awoke to their own national equivalent of such news. The state broadcaster, ERT, was closed with immediate effect by the Prime Minister as unaffordable and unviable.

Of course, Greece is Greece – once a byword for classical ruins, now a byword for modern economic ruin. Extreme measures are to be expected in a country in which the outright majority of young people are unemployed and a delegation of European Central Bank officials hold unaccountable control over fiscal policy.

It could never happen here, could it? 

It seems highly unlikely that it would ever happen in Britain for the reasons it happened in Greece (unless Ed Balls gets a really long stretch as Chancellor, in which case all bets on the state of the nation's finances are off). But for deep-rooted reasons, the BBC has serious trouble ahead; we just don't like to admit it.

Turning a blind eye

Human beings – and the British in particular – are naturally small-c conservative creatures. We may gripe and grumble, or wish for various things to be improved, but an institution has to be very obviously flawed and failing before we will accept that its very future is in doubt. 

Ironically, this preference for the comfort of things we know rather than the discomfort of revolutions tends to result in crises. Instead of identifying problems which can be fixed or planned for, we sit in blissful ignorance until they are too large and too immediate to ignore any longer. 

This is the reason why so many disasters seem to spring from nowhere, leaving people wondering why no-one saw them coming. Consider the banks which plunged almost immediately from untrammeled success into total disaster – or the Euro, which some British commentators still refuse to accept is fatally flawed. Anyone who remembers the titanic nationalised industries of the pre-Thatcher period will recall the air of permanence which hung about them for so long – and the remarkable speed with which they were torn down.

So it may be with the BBC.

We all know Auntie. It has become a calendar for our lives. Most of us were raised on a staple diet of Blue Peter, then Grange Hill, growing up to shout at Question Time, choking on our cornflakes out over the Today Programme and eventually find ourselves wondering if listening to the Archers means we are officially old. The BBC News website is one of the most read news sites in the world. Our lives are shot through with the Corporation's output.

But its size belies its growing weakness. 

Outpaced by technology

Technological changes mean that the television licence funding model is swiftly becoming unenforceable and outdated.

Funding the BBC through compulsory licences was first conceived 86 years ago, in the form of the radio licence (later fully replaced by the television licence). It was a simple solution in a simple market. At the time, the Corporation was the only broadcaster in the entire country – if you bought a device to receive broadcasts, you were by definition using its services and you were easy to identify in the shop.

Now, as the BBC's tenth decade approaches, that model is broken. 

The simplicity of the system was first fractured by the advent of commercial TV channels and radio stations. Ever since, the Television Licensing Authority (TVLA) has fought a war to enforce payment. While those of us with TVs are assailed with untrue stories of detection vans which can prove that your aerial is receiving a signal, people who prefer not to own a TV have found themselves bombarded with letters from officials who refuse to believe them.

But it is the advent of the internet which rings the death knell for the licence fee. This week, a Freedom of Information request revealed that there are now more than 400,000 households in Britain who inform the TVLA each year that they do not need to buy a licence – and that's just the number who actually respond to the hectoring letters they receive.

Many may well be people who don't watch TV, but it seems clear that a growing number are watching exclusively through the internet. It's perfectly legal to watch catch-up services, rather than live broadcasts, online without a licence. With the fee rising just as incomes have been squeezed it is unsurprising that many have chosen to do so.

I first noticed this among my friends four or five years ago. A growing number were buying a TV, hooking it up to their laptop or Playstation and watching shows through that, legally and licence-free. And why not? Plenty of others were watching live TV online in outright breach of the rules, and yet the TVLA proved unable to prove they were doing so.

Self-destruction, on-demand

Ironically, it is the BBC itself which has pioneered this way to avoid paying. It is now many years since the Corporation focused solely on broadcasting, and it has expanded into every conceivable form of media.

As part of that policy, along came iPlayer – the incredibly useful, legally free to access, online catch-up service. With broadband connections spread across much of the country, it runs like a dream – and is proving to be a nightmare for the TVLA. In terms of the service it offers, iPlayer is precisely the right response to the digital age – it offers flexibility and choice, rather than fixed schedules, it is easily searchable and browsable. In short, it provides a service completely out of keeping with the compulsory licence fee model.

Technology – and particularly the technology we use to consumer media – is moving swiftly away from top-down, one-size-fits-all paying and consuming. In music, not only has the physical been replaced by the digital, the bulk purchase in the form of an album has been replaced by micro-purchasing, song by song. At a click of a button I can buy any particular episode of any commercially available TV show, or any film, that takes my fancy – or I can rent access to them for the weekend. I can design my own TV package through Sky or Vigrin – choosing not to pay for sport or children's television if I don't intend to use it.

So not only is the television licence now legally unenforceable, it is clunky and out of step with the wider world. As consumers become used to building their own digital radio stations based on personal preference, having access to a thousand times the capacity of an old-fashioned video shop through their laptop, or picking and choosing the form of their cable TV packages, more will start to wonder why they pay £145.50 for the BBC at all.

There are plenty of other arguments to be had about whether the BBC is a good or bad thing.

It does produce much high quality drama – though notably much of that has been made in partnership with American cable companies or to pursue international profits. And the need for it to generate poorer quality products like "Hotter Than My Daughter" or "Snog, Marry, Avoid" is questionable to say the least.

There is also clear evidence of political bias withing its reporting of the EU, green policies, fiscal issues among other topics. I tend towards the cock-up rather than the conspiracy explanation, in that I suspect this is the product of groupthink and the impractical idea that one organisation can represent all views at the same time. Whatever the cause, the impact of unfairly slanted reporting from a state broadcaster is both sizeable and negative.

And we are all aware of the series of scandals which has struck at the BBC's greatest asset – the trust people place in it. From the horrifying facts of the Savile case, through the vast amounts paid to ineffective senior executives, to the disgraceful treatment of Lord McAlpine, the Corporation has lost much of its friendly reputation.

But whatever your view may be on its quality, bias or scandals, none of them poses the greatest threat to the Corporation's future. Many would make a case for the BBC's abolition, while plenty of others would line up to defend it to the death. In reality, either case is irrelevant. It is a simple truth that the BBC as we know it – licence-funded, compulsory, immovable – is unsustainable, a dead Auntie walking. 

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