This is taken from the Sunday Telegraph:

Trust me
By Andrew Murray-Watson (Filed: 25/06/2006)

As criticism of the BBC's development of digital media mounts, Michael Grade tells Andrew Murray-Watson that the scepticism is unjustified

Michael Grade's career at the BBC has been controversial since 1985, when as controller of BBC1 he took the fateful decision to axe Doctor Who.

Step into the Tardis and travel forward in time 20 years and both Grade and Dr Who are back at the Beeb, with Grade now the chairman of the BBC Trust, the newly formed body that will regulate the way the BBC operates and the services it provides to the licence fee payer.

The trust replaces the old board of governors and is charged with regulating the BBC as it faces up to one of the greatest challenges in its history: that of redefining its role in the digital age.

"I have never seen myself as a revolutionary before," Grade says. "But what is happening with the trust is nothing short of a revolution in the way the BBC is governed."

According to the government white paper that appeared in March, the trust will have a duty to ensure that the BBC is accountable to the licence fee payer and, crucially, is sensitive of the commercial interests of its privately owned rivals.

Grade now faces the task of appeasing a private media sector that is increasingly anxious to put a brake on the corporation's growing ambitions.

Decisions about the launch of new BBC services will have to pass a "public value test", which will be made in the public arena and only after consultation with commercial broadcasters.

In each case Ofcom, the media watchdog, will carry out a market impact assessment to make sure the BBC does not trample over its commercial rivals in a way that unjustifiably distorts the market.

Every BBC channel or website will also be tested against a new service licence agreement to ensure they do not stray into areas where they have no remit.

Grade, as the former chief executive of Channel 4 and the current chairman of Pinewood Studios, knows all about the impact of the BBC, with its £3bn budget, on the domestic media landscape. But now he is batting for the other side.

"Every licence fee payer is consuming media in addition to the BBC and enjoying it," says Grade.

"They like choice and we have to respect that. It is in the licence fee payers' interest that the BBC does absolutely nothing ever to reduce that choice. That is what is at the heart of the trust.

"The BBC in the past had confused [its own] narrow institutional interest with the wider public interest. What is in the interest of the institution is not always in the best interest of the licence fee payer. That would have been heresy a few years ago, but that is the rule now."

The trust's status within this new-look BBC has had more than its fair share of critics. In a submission on the BBC white paper, several media groups, including Associated Newspapers, the owner of the Daily Mail, News International, the parent company of The Times, and the Telegraph Group, which owns The Sunday Telegraph, warned that the white paper and the new BBC charter would give the corporation an unfettered ability to dominate the new digital media environment.

The submission expressed concern over the "extent to which the BBC is being given a public policy directive to build a digital empire" and the "lack of any truly independent safeguards to stop them [the BBC] abusing that position at the expense of the commercial operators".

"I can understand scepticism in the private sector," says Grade. "If you look at the past governance of the BBC, judgments on performance and future plans of the BBC have been based entirely on evidence provided by [BBC] management. That is what has been undone by the trust; that is what has been rendered asunder. It will take time for the private sector to accept how radical this is."

But many of the BBC's rivals want to see a truly independent regulator that is entirely separate from the BBC and not a trust - something that many argue is simply the same old BBC governance system dressed up in fancy new clothes.

But Grade argues that the trust needs to be inside the BBC to be effective.

"We are responsible for £3bn of public money. We have to be inside the organisation to ensure the right outcomes. It is no good coming in after the money has been wasted.

"We have to have the ability to step in at any time to say we are not happy about something. You can't have a detached body that only looks at things post facto.

"Whoever is responsible for the money has to ensure it is going to be spent well. That is the fundamental reason why we are going to have this set-up."

That sentiment will not be nearly enough to satisfy private sector media groups facing unprecedented business challenges.

The media environment is changing dramatically because of the onset of new digital technologies.

Newspaper and traditional TV advertising is under pressure from new internet-based media outlets; the shape of the radio industry is being fractured by new specialist digital stations; and innovations such as blogs and podcasts give an even wider choice to a media-savvy public.

The BBC's request for an increase in the licence fee of inflation plus 2.3 percentage points, which will take the cost of a TV licence to £180 by 2013, has infuriated its opponents, as has its willingness to use that money to award star presenters multi-million pound contracts.

Jonathan Ross, for example, recently bagged a reported £18m three-year TV and radio deal to remain with the BBC. The BBC claims 1.8 per cent of the increase will cover the planned cost of digital switchover.

But it is the fear that the BBC will dominate new services, such as TV on mobile phones, without any requirement to secure a commercial return on the investment, that is of concern to its privately owned rivals.

Grade promises that the new BBC Trust will not side with the corporation's management against the commercial sector.

"The trust will be there to balance and weigh up the public interest; to weigh up the ambitions of the management against the public interest and commercial interests," Grade says.

"The trust will take a detached view on what is in the public interest, and that will not be defined as what is the best interests of the BBC," he says. "This is a massive change.

"I can't imagine anything more different from the old system where anything went. That is the old BBC, which had no regard for the impact on the consumer and the commercial sector."

At the end of the day, Grade argues, it is the views of the licence fee payer that matter most. A recent report for the BBC by Patrick Barwise of the London Business School claimed that 75 per cent of consumers were prepared to pay £150 for their television licence by 2013 for new services.

Grade says: "It has been public policy for 80 years that there should be public intervention in the provision of broadcasting. All the huffing and puffing from the private sector is not going to change that and it has the overwhelming support of the British public.

They value the BBC, they want the BBC to continue and they are passionate about the BBC being independent of the Government.

"Those views have been drowned out by the cries of the vested interest. The most strident voices you hear are out of touch with the licence fee payers."

But Grade admits that the private sector will not accept his assurances at face value until the trust demonstrates that it is willing to balance the concerns of the private sector against the ambitions of the BBC's management.

"In two years' time I think everyone will be a lot more relaxed," says Grade.

The sceptics will need some convincing.