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January 1, 2005

Intellectual Arbitrage - What makes differences so fascinating?

Pt1207

Arbitrage is taking advantage of simultaneously different prices for the same thing, then buying and selling both at the same time, keeping the the price difference as profit.

Done on a large enough scale, it can make one wealthy, beyond comprehension in some cases.

This, though, is about an entirely different form of arbitrage, which I've arbitrarily named.

Often, we read about practices in other countries and can't imagine why they exist.

I'm sure that in Japan, for example, where it is all but impossible for a civilian to possess a firearm legally, they cannot for the life of them understand how it is that almost anyone can own a gun in the U.S.

And we have difficulty with seeming oppressive Danish laws on permissible names for children.

Thus, Sarah Lyall's New York Times story from last Tuesday, about the annual BBC license fee of $233 for each television owned in Britain, seemed to illuminate a somewhat Draconian streak in that country's approach to use of the media.

Reading on, when I found that anyone found illegally harboring a television can be fined $1,923 or wind up in jail, I really sat up and took notice.

Turns out even if you own a TV and don't watch it you still have to pay the fee.

Fee-evasion cases make up 12% of the caseloads in magistrates' courts.

Last year, 20 people were imprisoned for nonpayment.

Read the fascinating story.

    No Telly in the House? Expect an Official Warning

    In Paul Oldham's bathroom is a cartoon that sums up his attitude toward the role of television in modern life.

    It shows a couple slumped together in their living room, staring at a beaten-up old supermarket carton.

    The caption reads: "Let's stay in and watch the box tonight."

    A 44-year-old Web site designer, Mr. Oldham is not now and never plans to be a member of the television-owning public, having given it up in exasperation when "Inspector Morse" went into reruns.

    But for more than a decade he has been enmeshed in a bizarre pas de deux with the agency that polices television ownership in Britain, and that seems intent on proving him a liar.

    No matter how much Mr. Oldham protests, he said, stern letters come inexorably in the mail, informing him (in case he has forgotten) that he has not paid the £121 BBC license fee (that's $233) required annually of every owner of a "telly."

    If indeed he is found to be harboring a television illegally at his home in Milton, just north of Cambridge, the letters remind him, he could be fined £1,000 ($1,923) or wind up in jail.

    "They really are quite odious letters," Mr. Oldham said. "They work on the assumption that you are a criminal."

    Each time, Mr. Oldham writes back to declare that he has no TV.

    But in its most recent notice, the agency told him that he should be prepared to prove it to the enforcement division, whose officers planned to drop by for a little television-hunting expedition at his house.

    While not commenting on Mr. Oldham's case, Chris Reed, a spokesman for the agency, called TV Licensing, outlined its general policy.

    "We wish we could believe everyone who tells us they have no TV," he said.

    "But unfortunately, last year just under half the people who claimed not to have one were found to be using one, and therefore needed a license, when we checked the premises."

    License fees date from the 1920's, when the British Broadcasting Corporation charged its first customers 50 pence a year for the privilege of owning a radio.

    For decades, the BBC was a monopoly and the fee - expanded to include television in 1946 - was easy to justify.

    But the broadcasting landscape has expanded beyond all expectation.

    BBC television has now been joined by hundreds of commercial stations that compete for advertising and viewers but do not receive a share of the license fee.

    The government has pledged to keep the current system in place when the BBC's charter is renewed in 2006.

    The fee is very much a part of British life.

    It is a criminal offense for anyone with a television set not to pay it, whether they watch the BBC or not.

    Fee-evasion cases make up 12 percent of the caseload in magistrates' courts.

    Although most evaders are fined, 20 people were imprisoned for nonpayment last year.

    The BBC took in £3.9 billion ($7.5 billion) from the fee in 1993, but 5.7 percent of television owners still failed to pay.

    TV Licensing regularly carries out campaigns to warn them about the consequences of inaction that say, for instance, "Get one or get done" - "getting done" being slang for getting caught.

    Enforcement officers visit homes and businesses about three million times a year.

    They have a variety of weapons at hand, including a law that requires retailers to notify the government whenever someone buys a television; a database with TV-owning information about 28 million Britons; and specially equipped vans and hand-held devices that can detect unlawful television-watching.

    The final step is a home visit, whose purpose, Mr. Reed said, is "to identify genuine non-users of television so that we can minimize future contact with them."

    Homeowners are not obliged to let the agents in, but the agents can get search warrants if there is sufficient evidence of television viewing.

    Every day, more than 1,000 people - 380,000 in 2003 - are caught watching television without a license.

    But in its enthusiastic execution of its appointed task, the agency can sometimes be overzealous.

    It often seems unable to recognize the distinction between shirkers and non-television-watchers, like 28-year-old Graham Smith, from Southampton.

    Like Roald Dahl's Matilda, Mr. Smith was traumatized by a childhood in which the television was never off; his family had four people and five televisions.

    "We used to joke that one of the TV's was like a dog," he said.

    But Mr. Smith's decision some years ago to renounce television ("At first it was like a withdrawal from drugs," he said) did not persuade the licensing agency, which began exhorting him to pay the fee shortly after he moved into his house several years ago.

    At one point, he was getting a letter every couple of weeks - up to 30 in 10 months, he said.

    "After about four or five months, my partner caved in a bit and sent four of the notices back, saying that we didn't have a TV," Mr. Smith said.

    "But strangely enough, they kept coming and coming."

    He began throwing the letters in the garbage, only to receive an "official warning" of a home visit in a much sterner tone, containing alarming allusions to legal activity and potential prosecution.

    When he complained, the licensing authority apologized - then sent him another warning a few days later.

    "I can understand why they want to ensure the maximum number of people possible have a license," Mr. Smith said, "but I don't see why I should be essentially persecuted for not having a television."



January 1, 2005 at 11:01 AM | Permalink


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Comments

Until a few years ago, we had this very situation in The Netherlands as well (although from the sixties on, it's been a mix between ad income and a license fee. Now the money necessary to keep our 3 public TV channels and 5 public radio channels on the air comes from a combination of public funds (simply through taxes) and ad income. No license fee, no unnecessary bureaucracy, no additional burden on the judicial system.

I would hate to have only PBS operating in the margins of a commercial system that's getting more and more monopolized, or the British system of gathering revenue, that seems quaint and antiquated. Go for a combo of tax and free market, make sure the content providers on the channels are diverse and reflect society (you need members to start a public network in The Netherlands, and lots of them).

Sorry if this post sounds a little like "we've got the best system" over here. Even here there are forces that want to scale back public broadcasting. I for my part hope we'll have our diverse and balanced system for many years to come.

(b.t.w. We do have several commercial braodcasting companies operating next to the public ones).

Oh, and the unfairness of being taxed while not owning a radio or a TV? Well, you will get taxed for the school system whilst not having kids, for roads whilst not driving a car, and for a war, which perhaps you never would have chosen to enter. So in what way is paying for public broadcasting different?

Posted by: Allerbe | Jan 2, 2005 12:32:47 PM

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