In the United States, a receiving-set license fee for the support of broadcasting was considered and rejected very early in radio's infancy. At this time the new medium was considered a public resource, and the idea of support from advertisers was thought inappropriate. The license fee was one of several funding pro­posals, including municipal or state funding and listener contributions, offered by various sources in the 1020s. The first was modeled on the British scheme of taxing the receivers in viewers’ homes. At that time, the British levy was 10 shillings per receiving set. The second approach, proposed by RCA's David Sarnoff, called for a tax (2 percent) on the sale price of receivers. The suc­cess of toll broadcasting (broadcasting paid for by advertisers) near the midpoint of that decade squelched further discussion on the issue.

     In the early days of U.S. television, the idea of a receiving-set license fee was briefly raised again by those who pointed to the failures and inadequacies of radio's commercial nature. Because most early television stations were owned by broadcasters with long experience in AM radio, however, it was almost inevitable that advertising would provide the primary economic support for the new medium.

     This was not the case in Great Britain. The license fee was in place from the earliest days of the British broadcasting service, having been mandated by the 1904 Wireless Telegraphy Act (and reaffirmed for radio and television in the Wireless Telegraphy Act of 1949). The level of the fee is set by Parliament through its Treasury Department. The BBC is allowed to make its recommendation, and, once set, the fee is collected by the Post Office, which is also responsible for identifying and tracking down those who attempt to avoid paying the fee (approximately 6 percent of the audi­ence). The resulting income supports the broadcasting authority (the BBC) and its programming. As a public corporation supported by these fees (none of the income can be distributed elsewhere), the BBC is theoretically insulated from day-to-day influence by Parliament.

     The 10 shilling fee remained in force until the end of World War II. The year 1946 saw a doubling of the radio fee, and when black-and-white television was first introduced, its fee was £2 (double that of radio). The license fee for radio was dropped in 1971, and today, only the color television fee remains, rising periodically, for example from £46 in 1981 to £ I09 20 years later.

     Although the BBC has occasionally toyed with the idea of running commercials to increase revenues in difficult economic periods, the license fee is well entrenched there. Said a BBC spokesperson when testifying on the future of British broadcasting in 1977,

The license fee system involves each member of the viewing public ... in the feeling that he is entitled to a direct say in what he gets for his money. At the same time, the license fee system puts the broadcasters in a more direct relationship with the public than any other system of financing would. It reinforces a frame of mind in the BBC which impels us constantly to ask ourselves the question: "What ought we to be doing to serve the pub­Iic better?"

     Such a system for supporting a nation's broadcast­ can be considered valuable in three respects. First, it assigns the costs for broadcasting directly to its consumers. Second, this tends to create a mutual and reciprocal sense of responsibility between the broadcasters and the audience members, which­ third-frees the broadcasters from control and influence by governments (as might be the case where direct government support exists) or advertisers (as might be the case in commercial systems). Against these benefits is the problem of complacency. An increasing number of nations with license fees also allow limited commercial broadcasting, in part to overcome this tendency.

     Many countries other than Great Britain, including Israel, Malta, France, the Netherlands, and Jordan, have some form of license fees. Some base their fee on color television only (like Great Britain) and some on color television and radio (for example, Denmark). Two-thirds of the countries in Europe, one-half in Africa and Asia, and 10 percent of those in the Americas and Caribbean rely, at least in part, on a license fee to support their television systems. Common among them is a philosophy of broadcasting that sees it as a "public good." A great many countries, however, if not all those reliant on a license-fee structure for funding are now facing a new form of competition. Cable an:i satellite television have become common throughout the world, requiring subscription or payment fees in addition to the television license. These newer forms of distribution have also provided viewers with more programming options and, as audiences for state - supported systems decline in number, government's press the managers of state-supported broadcasting systems more severely to explain why the license fee should remain in place or be raised. In efforts to stain or increase viewership, these circumstances have led to greater attention to numbers of viewers, to the creation of ratings systems to measure them, and to altered programming designed to attract large audiences. In some views, these conditions have led to a severe erosion of the very notion of "public service broadcasting."

     The second definition of license fee is applied most often in U.S. television, though its use is growing throughout television production communities elsewhere. It refers to funding that supports independent television production for broadcast networks or other television distributors such as cable companies. In this context, the license fee is the amount paid by the distributor to support production of commissioned programs and series. In exchange for the license fee, the distributor receives rights to a set number of broadcasts of commissioned programs. Following the broadcasts, the rights to the program revert to the producer. This form of production financing is central to the economic system of commercial television because the distributor's license fee rarely funds the full cost of program production. Producers or studios still must often finance part of their production costs and hope to recoup that amount when a program returns to their control and can be sold into syndication to other distribution venues. Nevertheless, the initial funds, in the form of a license fee, generally enable production lo begin.