What is the meaning of this unleashed anarchy of market forces for the BBC? The question is not new, because-as we have seen-the technological shifts have been under way for decades. It was realised in the late 1990s that they amounted to a veritable "digital revolution", with digital logical circuits being widely incorporated in equipment and creating far more technical options than analogue signals. In 1999 Gavyn Davies, then the chief economist for Goldman Sachs in London, chaired a committee to review the financing of the BBC in the digital era. The review argued that the licence fee should not only remain, but be increased by 20 per cent to help to pay for the BBC's move into the new technologies. Soon dubbed the "digital poll tax", it encountered vigorous opposition from the UK's commercial media interests, and was quickly rejected by the Culture, Media and Sport Select Committee of the House of Commons. The government did grant a real terms increase in the licence fee in 2001, but it was much less than the Davies Committee had recommended. 

The larger problem was that the Davies Committee pointed policy in entirely the wrong direction. Certainly, the case for a licence fee was compelling in the early days of broadcasting. But that was 70 years ago. By the late 1990s it was easy to conjecture that within one or, at most, two decades technology would have progressed so fast that a competitive broadcasting market had to emerge. That is indeed what has happened. In an aggressively competitive market government subsidies are difficult to defend. Even worse for BBC traditionalists, the licence fee has become a silly way to collect money in a digital economy. 

Opponents of the Davies Committee conclusions pointed out that TV programmes could be transmitted over the internet by sufficiently powerful personal computers. That may seem obvious in 2013, but it was less obvious at the turn of the century because most households did not have a computer loaded with enough gigabytes. But a committee of the great, the good and the well-informed ought to have recognised that, once the nation's stock of PCs had been replaced two or three times, all suitably enabled computers would be able to receive TV broadcasts (as well as blogs, porn stations, price comparison websites and so on). In future the licence fee would therefore to be levied not just on TV sets, but also on computers. Did it have to be pointed out that, in a nation supposedly embracing the digital era, a tax on computers would be mad?

In the last few years the proposal for a digital enhancement to the licence fee has become even more ridiculous, for two main reasons. First, the miniaturisation associated with the digital revolution has made it possible to receive broadcasts over small devices, such as smartphones and tablets. Incredibly, the Blair government did decide in the 2004 Communications Regulations that the licence fee should be imposed on households with computers that might be construed as televisions. But no one has yet been barmy enough to advocate that the licence fee be extended to smartphones and tablets, because logically officialdom would then have to check the reception ability of everyone's mobile phone and indeed landline connection. The notion of including phones in the licence fee "tax base" is clearly untenable. 

Furthermore, broadcasting is being globalised. In the 1950s old-fashioned transmission from masts and towers was specific to a particular locality, but nowadays satellites can be positioned for any country and the internet is in principle wholly international. In the new circumstances broadcasts transmitted from one nation can be received in many nations, smudging the borders of the specific jurisdictions in which a tax or fee can be collected. Further, media giants targeting the global market are now emerging and the concept of cross-border "trade" in broadcasting has become valid. In a world of this kind broadcasting will increasingly be subject to the prohibitions on state subsidy found in the World Trade Organisation's rules, and that means prohibitions on such relics of national broadcasting as the BBC licence fee.