Establishing Public Broadcasting Monopolies: Reappraising the British and Norwegian Cases

Media History Monographs 8:1 (2005-2006) Establishing Public Broadcasting Monopolies: Reappraising the British and Norwegian Cases Asle Rolland The Norwegian School of Management BI Center for Media Economics The Norwegian School of Management BI Nydalsveien 37, N-0442 Oslo, Norway E-mail: [email protected] And Statistics Norway Department of Social Statistics P. O. Box 8131 Dep., N-0033 Oslo, Norway The British Broadcasting Corporation (BBC) pioneered a development that from the 1920s onwards led to the establishment of broadcasting monopolies all over Europe. This essay reviews a comparative study of the origins of the British and Norwegian monopolies, in which their establishment is explained as the result of constraints on the policymakers. Also reviewed is an attempt to justify the Norwegian monopoly - indirectly the broadcasting monopoly institution as such - as economically and legitimately unavoidable. The essay argues that the British and Norwegian policymakers did have freedom of choice. In both countries the unfounded but imperative demand that broadcasting must be nation-wide was used to secure the transfer from private to public broadcasting. Once it had served its purpose, however, and the state monopolies were established, this demand was relegated to the second rank of public service broadcasting principles. The essay further argues that for the policymakers the establishment of state-controlled broadcasting monopolies was a political goal in itself, and not a means to correct market failures as in macroeconomic theory. ©2005 Asle Rolland Media History Monographs 8:1 Rolland: Establishing Public Broadcasting Monopolies Establishing Public Broadcasting Monopolies: Reappraising the British and Norwegian cases 1. Introduction broadcasting monopoly.5 Did Britain have the solution to what all Europeans could see–or hear– Great public institutions have their official was the problem with the American model of historians. The British Broadcasting Corporation radio as unregulated free enterprise: its creation of (BBC) has Lord Briggs,1 the Norwegian complete chaos in the ether, with all stations being Broadcasting Corporation (NRK) Hans Fredrik interrupted and disturbed by the signals of their Dahl.2 The comparison of the two institutions has competitors? Did the chaos appear as the no official historian, but it does have the doctoral American "penalty for taking the lead," and the thesis of Trine Syvertsen,3 professor of media and monopoly as the European "advantage of communication at the University of Oslo. Her backwardness"?6 Or did the Europeans lack the topic is important. The BBC pioneered a freedom of choice that enabled the Americans to development that from the 1920s to the 1950s led continue with private broadcasting and to the establishment of broadcasting monopolies competitive radio markets even after the all over Europe.4 Syvertsen compared the original introduction of public regulation in 1927? Where with one of its copies. Her study therefore has the Europeans somehow compelled to chose the potential to explain, at least partly, why all monopoly? European countries converged to a common Trine Syvertsen argues that the Europeans did broadcasting model distinctly different from the have freedom of choice, but constraints narrowed one already implemented in the USA. down the alternatives. The establishment of Britain has a reputation as inventor and private, competitive, commercial radio markets exporter of institutions. It is therefore proper to was not impossible, but the factors leading to ask whether what happened was the diffusion and public monopolies financed by license-fees subsequent adaptation of another great institution weighed more. The market model required invented by the British, that of the public strenuous efforts uphill, the monopoly model could more easily be established downhill. Hence owned and/or state-controlled broadcasting Britain and Norway, as well as all the other monopoly. Even this question may be answered European countries, chose the monopoly. inductively on the basis of individual cases. An The outcome of the process obviously attempt to explain the Norwegian monopoly from supports her opinion. The arguments in favor of the macro economist's point of view has been monopoly must have made the greatest impact on made by Egil Bakke, former Director of the the decision-makers. Particularly strong was of Norwegian Competition Authority. A macro course the argument that constraints limited the economist in a society with basically a market freedom of choice. However, the argument does economy will obviously consider market not presuppose that freedom really was limited. It competition the normal state of affairs and state is sufficient that influential actors were induced to monopoly the exception to the rule, i.e. the see the options in that way. reverse of the position held by Trine Syvertsen This essay challenges Trine Syvertsen's notion and Hans Fredrik Dahl. Hence for Bakke the that constraints narrowed the alternatives. It purpose of the state monopoly, like any public argues that the broadcasting monopoly was regulation, must be to correct market failures.7 neither a technical necessity nor an economical or However, that position was challenged by Allan political one, but the deliberate choice of Brown8 when he maintained that "the state interested parties preferring the monopoly above intervenes in broadcasting markets not on the market competition, actors with sufficient power basis of economic criteria," but because of the and influence to have it their way. The analysis "perceived social importance of the broadcasting will also pay a visit to Hans Fredrik Dahl, who in media and their potential influence on values, his history of the NRK argued for the attitudes and beliefs." broadcasting monopoly as a necessity according This essay follows Brown up to that point. It to economic theory. does not follow Brown when he later maintained The assertion that the European states had that for this reason the state intervenes "to achieve freedom of choice raises the question of what then social objectives such as the promotion of made them all choose the same solution, the state education, equity, national identity, and social 1 Media History Monographs 8:1 Rolland: Establishing Public Broadcasting Monopolies cohesion." Instead, the essay will argue that the were established in several European countries. main reason for state intervention has been to The Norwegian monopoly of NRK, operating a prevent others from influencing the values, single radio channel, came relatively late, in 1933. attitudes, and beliefs of the citizens. Its thesis is At that time 591 radio stations were operative in that regulation itself has been the goal for the United States.11 European state broadcasting policy, at least in Like the monopoly, the idea of public service Norway, probably in Britain, implying that broadcasting is a British invention. It is unclear whatever has been said about the purpose of how much was known about the BBC when the regulation, has been merely means for the monopoly issue came up in Norway, and the regulatory goal. It argues the thesis of public parliament complained it still did not know choice theory that the state's primary concern is its enough when making the decision in 1933,12 own self-interest.9 The motive for European state which weakens the diffusion of British institutions intervention in broadcasting negated that of the theory. What is clear, however, is that the BBC USA, where the seminal thinking was that the eventually became the ideal model, not least for state should protect the right of others to influence the NRK itself.13 the values, attitudes, and beliefs of the citizens. Syvertsen studied the origin of public Bakke's economic study presupposed that broadcasting both in Great Britain and Norway.14 regulation is a means to broadcasting ends. Hence Her main explanation for the monopolies of BBC his issue was whether the means have been and NRK may "with some justification"15 be necessary because the market would produce subsumed under the assumption of market failure: undesired results, sufficient because regulations "The technical and economic constraints narrowed produce desired results, and adequate because the down the alternatives, and left the policy-makers benefits of regulating are greater than the costs. with the problem of creating an institutional form Bakke asked, that too like in public choice theory, which was both economically viable and more whether state interference to correct market failure legitimate than the private companies." However, result in government failure. only "with some justification" because the This study presupposes that regulation has assumed market failure must be political–the been the aim itself. However, in the language of market producing a result the state would not dialectics we must ask what is the synthesis of like–rather than imperfection, the market regulation as means and goal. The answer is producing less than the welfare optimum due to regulation as both: the product being a public good. • Regulation as means because it has been Syvertsen states that broadcast products are intended to serve a purpose, and public goods in the sense that distribution is non- • Regulation as goal because that purpose excludable and usage non-rival. However, neither has been regulatory. in Britain nor in Norway was it suboptimal The synthesis is regulation with a defensive production of the public good "broadcasting"

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