Funding Public Broadcasting: Should Households Pay a Fee for Owning a Television?

While a foreign concept here in the United States, a requirement that anyone who owns a television (or even just a radio) pay a “license fee” to help fund public broadcasting exists in a number of countries around the world. Such fees can be controversial and a number of countries have repealed them over the past few decades, reflecting a shift to greater reliance on advertising revenue and decisions to provide government funding from general taxation. In this post, three of the Law Library’s foreign law specialists examine the history and current status of license fees for public broadcasting in Germany, Japan, and New Zealand.

Germany (by Jenny Gesley)

Funding public broadcasting in Germany has to be seen within the context of the constitutional guarantee of freedom of broadcasting and the relevant decisions of the German Federal Constitutional Court. The German Basic Law, the country’s constitution, provides that “freedom of reporting by means of broadcasts and films shall be guaranteed.” In a series of decisions, the Federal Constitutional Court has defined the meaning of this constitutional guarantee and the role of the state. The Court held that enacting broadcasting legislation falls within the jurisdiction of the individual German states. It is mostly regulated in the Interstate Broadcasting Treaty. The power to regulate broadcasting includes making decisions on the financing of public broadcasting corporations. Broadcasting fees are meant to ensure that public broadcasters are able to “meet the public’s essential needs.” The Federal Constitutional Court stated that the state has to remain neutral which means that broadcasting fees may not be spent to influence the content of the programs in any way or to engage in media policy.

The public has always resisted the funding of public broadcasting through broadcasting fees, and public support has only declined over the years. A poll conducted in 2016 showed that 70% of Germans are no longer willing to pay a mandatory broadcasting fee; many have already stopped paying, or are even willing to go to jail.

In the 1980s, the German states opted for a “dual broadcasting system”  and allowed private broadcasters to offer their services alongside public broadcasters. The two systems differ in the way they are funded. Private broadcasters are funded by advertising revenue, whereas public broadcasters are mainly funded through broadcasting fees. Originally, everyone who owned a serviceable TV or radio set had to register these devices with the agency collecting the fees (Gebühreneinzugszentrale, GEZ) and pay a flat fee (Rundfunkgebühr), irrespective of whether the person actually used the TV/radio or watched the public broadcasting channels. In 2007, the fee system was expanded to include internet-enabled computers, which drew massive protests from the public and media alike. The flat fee system was criticized as essentially being a tax. The German Basic Law, however, does not authorize the German states to levy such taxes.

In 2013, after criticism and court challenges had been mounting—although to no avail—the states changed the fee structure and introduced a “broadcasting contribution fee” per household (Rundfunkbeitrag). Every household currently pays a monthly fee of €17.50 (around US$21) no matter how many TVs, radios, or internet-enabled computers exist. The fee also covers private-use vehicles. Different rules exist for businesses and their premises. Hotels for example pay €5.83 per month per room with the exception of the first room.

The court challenges continue, and it seems like the courts might be changing their opinion on the constitutionality of the fee system. In September 2017, the Federal Administrative Court ruled in favor of a hotel owner and held that the broadcasting fee only has to be paid if the rooms are actually equipped with a receiver or offer internet access. In addition, there are currently four constitutional complaints against the new fee system pending at the Federal Constitutional Court. The Court has sent out a questionnaire to all the state legislatures inquiring about the legal qualification of the current fee and the justification of the states for levying it. Furthermore, in August 2017, a judge from the Regional Court of Tübingen (Landgericht Tübingen) requested a preliminary ruling from the European Court of Justice on the question of whether the state law on the application of the interstate treaty on the broadcasting contribution fee represents preferential state aid that infringes EU law for the exclusive benefit of public broadcasters compared to private broadcasters. The results of these court challenges are highly anticipated.

Japan (by Sayuri Umeda)

Japan has a public broadcaster, Nippon Hoso Kyokai (NHK, Japan Broadcasting Corporation). Under the Broadcasting Act (Act No. 132 of 1950), any household that owns a television must pay NHK reception fees of 1,310 yen (US$11.70) per month for terrestrial broadcasting and 2,280 yen (US$20.30) per month for satellite and terrestrial broadcasting.

In a December 2017 decision, Japan’s Supreme Court ruled that the obligation for people to have broadcasting reception contracts with NHK was constitutional. However, the Court emphasized that a fundamental aspect of the establishment of a contract is the agreement of the parties. Therefore, if a person who has installed broadcast-reception equipment refuses to enter into a contract and pay reception fees, NHK must obtain a court order that substitutes the person’s consent.

The Supreme Court also stated that forcing people to have contracts with NHK does not violate the Constitution of Japan (1946). The Court reached this decision having determined that the establishment of a system that gives financial autonomy to NHK by imposing fees on people who own televisions is within the discretion of the government.

There are arguments regarding the practical effects of the judgment. Although the mandatory contract provision was upheld, NHK must sue people who refuse to pay fees. Given the relatively small amount of the fees, it is not likely to be cost effective to sue many people to recover the money. In addition, the number of households that own TVs is decreasing. More and more young people do not have TVs because they can get information and various programs using the internet. NHK is planning simultaneous broadcasting over the internet in the near future. Whether NHK will charge fees to people who own computers, tablets and/or smartphones could therefore be the next issue that arises.

New Zealand (by Kelly Buchanan)

The history of public television broadcasting in New Zealand is relatively short compared to other countries. Television broadcasting in New Zealand did not start until 1960, with broadcasts of just a few hours each evening that were initially only available in some cities. The first live national news broadcast did not air until 1969. Since the 1960s, the sector has gone through a number of interesting changes with regard to legislation, structures, and funding.

In terms of funding in the early years, according to the New Zealand History website:

Television licences, which cost £4 each year (equivalent to around $170 today [about US$124]), were introduced in August 1960. By 1965 more than 300,000 licences had been issued. Operating costs were also partly offset by the introduction in 1961 of what many see as the scourge of modern TV – advertising. Initially advertisements were allowed only on Tuesday, Wednesday, Thursday and Saturday. More revenue was raised from television licences than from advertising.

In 1975, the New Zealand Broadcasting Corporation, which had been established in 1962, was replaced by three separate services: Radio New Zealand, Television One, and Television Two. The two channels would later merge  in 1980 to become Television New Zealand (TVNZ). The amount of the license fee was not increased for a number of years during the 1970s and 1980s, which meant that TVNZ needed to further increase its reliance on advertising. The Encyclopedia of New Zealand states:

Within a year of the first official broadcast, advertising was introduced. Advertising revenue and the proceeds of a fee paid by each household with a television receiver funded broadcasting. Public networks in many other countries were funded by a broadcasting fee, but the New Zealand equivalent was permitted to gradually decline, leaving TVNZ around 85% reliant on advertising revenue by 1988.

In 1989, the Broadcasting Act 1989 was passed, establishing the Broadcasting Commission (known as “New Zealand On Air” or just NZ On Air). Its role included collecting the broadcasting fee and distributing it to support the development of local content based on its funding objectives. At that time, the annual fee was set at NZ$110 (about US$80). Also during the mid to late 1980s, the government undertook a program of deregulation and privatization in various sectors, which included converting TVNZ and Radio New Zealand to state-owned enterprises in 1989, a status that required them to have a purely commercial focus.

The broadcasting fee became increasingly unpopular during the 1990s. A number of people just did not pay the fee  and the fee was also subject to various court challenges. The fight against the fee was documented in a book by Ian Wishart titled Beating Big Brother: How People Power Turned Off the T.V. Tax. In July 1999, the Court of Appeal  upheld the legality of the fee. A couple of months earlier, however, the government had announced its decision to abolish the fee. It was subsequently officially abolished, effective July 1, 2000, by the Broadcasting Amendment Act 1999. Those who had not paid the fee for that year, though, were still required to pay. At that time, the annual fee was still NZ$110 per household. Once the fee was abolished, NZ On Air received increased direct government funding.

In 2003, TVNZ became a Crown entity company and a Charter was introduced, which set out how it should serve the interests of New Zealanders. The Charter was subsequently repealed in 2011. The amended Television New Zealand Act 2003 now states that the functions of TVNZ are to be “a successful television and digital media company providing a range of content and services on a choice of delivery platforms and maintain its commercial performance.” Furthermore, the Act requires that:

Today, “the main funding for New Zealand’s free-to-air channels (i.e. its non-subscription, non-pay channels) comes from advertising.” NZ On Air remains an autonomous Crown entity responsible for distributing appropriated funds  for the development of local content across different broadcasting platforms.