Should BBC Be Getting Into The ISP Business?

The British Broadcasting Corp. created a roar of protests last week when it launched its free Internet service known as

The action immediately stoked the ire of 10 U.K. media companies, including United News & Media Plc and Emap Plc, which are demanding that its Internet service be scratched.

Officials of BBC Worldwide stressed that no public funds would be pumped into the project and that any profits made from the venture would be plowed back into the BBC.

However, this reassurance by the state-owned broadcast company did little to quell the outrage of some of the U.K.’s private-sector companies. The British Internet Publishers’ alliance also came out against the BBC’s Internet foray — saying it raises serious competition and regulatory issues.

The new service is also raising the eyebrows of companies like Freeserve Plc and AOL Europe’s Netscape Online, which are already providing free online service in Britain.

Being Promoted By Government

Adding petrol to the fire, critics are outraged by the fact that BBC’s new Internet service is being promoted through the British government post office. In addition, various BBC publications are aggressively pitching the new service.

This kind of anger about such an action is to be expected, considering history shows that when the government competes with business, the private sector always loses. Because of the unlimited amount of revenue and power the government has, such seemingly innocent ventures often end up becoming the weapons of the political party in power. Recently, in the United States, at least one public broadcasting station was caught turning over its contributors names to a local Democratic Party.

This is exactly the kind of thing that can happen when public money controlled by politicians is used to finance mass media. It’s just too tempting for them not to use it to their advantage.

Destabilizes Free Market

In addition, even though the BBC claims no public funds will be used to fund the new service, the question becomes how much in public money will ultimately be used to maintain the service? After all, no business operates for free — unless the bureaucrats running it are donating their time. Let’s be real, that’s not happening.

In the end, taxpayers fund such enterprises, which means there’s less money in their pockets to spend on other products. Such government competition also has a demoralizing effect on businesses’ ability to raise capital — often chasing them to greener pastures in other countries.

Bad Idea

This time I find myself in total agreement with those companies shaking their fists at the BBC asking them to get out of the Internet service provider business.

The pity of it is, I doubt that the BBC will listen.

What do you think? Let’s talk about it.

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