Speaking in the Seanad on 7 February 2001, on the 2nd Stage of the Broadcasting Bill, 1999, I said:

This Bill has challenged me because when I looked at it I had to remove the commercial deregulation hat that I normally wear. I had not thought through the benefits, success and objectives of public service broadcasting. With the arrival of digital broadcasting, the way we structure our broadcasting faces radical challenges.

The nature of competition in broadcasting has radically changed. We are approaching a situation where it will be possible for the customer not simply to receive a few channels, but scores or even hundreds. This change will end the era of massive audiences for any one programme, even "Who Wants To Be A Millionaire?" which the whole country seems to watch as it once watched "The Late Late Show." The days when the whole country switched on the same television or radio programme are numbered. Viewing in the future may become an individual activity rather than a collective one.

A second change is that the scale of costs of setting up the technology for digital broadcasting puts it outside the public sector, especially when commercial forces will be ready to provide this investment. We need a structure like the one in this Bill. I have no problems with the route the Minister proposes. I leave it to others to examine the Bill in detail.

My concern - and I know it is shared by the Minister - is that in the new digital era, public service broadcasting should not only survive but thrive. There is no doubt that digitalisation of television will also bring increased commercialisation. The vast number of channels on offer will be commercial, supported by advertising or sponsorship, and underpinned by the basic commercial objective of selling goods or services.

The State can impose basic rules of behaviour and the Bill provides for codes for programming which will be laid down by the Broadcasting Commission. However, this activity is essentially negative. The codes will, rightly, only tell broadcasters what they may not do. They will not tell them what they must or should do. The codes will put reasonable boundaries on commercial activity.

That is not the end of the story. In addition to commercial broadcasters we must always have public service broadcasting. If it is to survive we must recognise that it faces new conditions. Section 28 of the Bill defines public service broadcasting from a legal point of view.

It is a simple matter of why broadcasting takes place at all. Commercial broadcasting may inform, entertain and educate but the basic reason underlying its activity is to make money through selling goods or services. All else is a means to this end. In public service broadcasting, these means are ends in themselves. A public service broadcaster sets out to inform, entertain and educate for its own sake.

This a profound and very worthwhile difference. There should be room for both and we must create a structure for this.

If we consider the history of broadcasting, we appreciate the enormity of the change public service broadcasting faces. Radio began here as a public service. The BBC was the world leader. In America it was the other way. Broadcasting was commercial in its rationale and ethos and is still so. Public service broadcasting is small. In Europe public service broadcasting was dominant, but in more recent years it has existed side by side with commercial. Public service broadcasting remained a giant while being part of a duopoly or a triopoly but was still a big player.

In the digital era, it is important to realise that public service broadcasting will be a much smaller player. Its national importance will not be reduced but its relative size will. Therefore we should make it as important as possible. It must not go down the slippery slope of trying to compete in size terms.

For the public service ethos to survive and thrive in the digital era, we must accept the distinction between importance and size. We should seek to divest our public service broadcasting of anything which interferes with its basic ethos and focus on what only it can do. We must replace an emphasis on quantity with an emphasis on quality.

I want to see something happen that is very difficult to achieve. It is the opposite of empire building. We have such an exaggerated respect for growth that we fail to realise that growing an organisation is what the Americans call a "no-brainer". In order to grow an organisation, just stand back - it will grow of its own accord. With each passing year it will extend its tentacles into every place they can reach. All of a sudden there is an empire.

In the commercial world there is a limit to it because there is a corrective mechanism which stops that. It is called the market. Failure in the marketplace often forces companies to retrench - to retreat to what they are good at - otherwise they do not survive. Failure often compels them to rediscover the reason they came into existence in the first place. This applies to a commercial organisation in any business anywhere in the world.

Public service broadcasting does not have that corrective mechanism. It just continues to grow. Public service broadcasters, here and elsewhere, are notorious empire builders. It happens almost everywhere. The further they reach out their tentacles, the looser their grip becomes on the reason they are there in the first place.

For many years I have known people who have worked at RTE at many levels. The bigger the RTE empire became, the unhappier its people became; the bigger the empire became the more the organisation spent its energy looking inwards on itself rather than outwards towards its customers. This is the first time I have used the word customer on this occasion. I am not talking about commercial customers but rather public service broadcasting customer.

The bigger the empire became, the less central became the focus on its ultimate reason for being in existence - the making of programmes. Programmes became just an element in a wider corporate web. We have often heard that hospitals would be great if it were not for those patients. The same is true in my own business. What a great business it would be if it were not for all those customers. That seems to happen in every organisation as it gets bigger.

The arrival of the digital era offers our public service broadcasting a rare chance - perhaps its very last chance - to reinvent itself and rediscover its roots. Will it take this opportunity? I do not know. However, it will be influenced by the legislative framework that we provide and this will affect the outcome.

There are two connected items that may point us in the right direction. The digital era removes from public service broadcasting the need to be all things to all men. It also removes the need to deliver massive audiences. The very nature of digital broadcasting means that those monolithic audiences will become a thing of the past. Each broadcaster is not one of a handful but one of scores or maybe hundreds eventually, which will compete for audiences.

Leading on from that is a further conclusion that I believe is inescapable. Public service broadcasting in the new era must turn its back on advertising and commercial sponsorship. It cannot serve two masters and market forces always win out in the end. When there was only one television service it was an acceptable solution to mix public service and commercial broadcasting in one channel. Even with two perhaps it was possible. When there are hundreds, it will be fatal to undermine the basic public service rationale by contaminating it with commercial factors.

I am arguing that RTE should stop taking advertisements and rely for its revenue only on its licence fee. I note that the EU Competition Commissioner believes it is unacceptable for publicly funded broadcasters to compete for advertising with broadcasters who do not get anything from the licence fee. We might find ourselves forced into this approach by Europe, whether we like it or not. I believe it would be a good thing.

What of RTE's argument that it would need to more than double the licence if it were to forgo its revenue from advertising? The answer is very simple: roll back the empire. Forget about being all things to all men. Focus on producing a small number of high quality programmes. There are many talented people who could provide excellent public service broadcasting on a budget far smaller than the yield from the licence fee.

I welcome the Bill and I wish the Minister well. I ask her and the House to bear in mind that the structure we create in this legislation will largely determine the quality of our public service broadcasting in the future, or whether indeed the concept will survive at all.