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Can NHK justify its huge collection costs?

NHK spends 76.9 billion yen a year on its fee collection system. Trevor Clarke finds out how the money is spent, and asks whether the cost is really necessary

by Tervor Clarke

NHK spends a massive 76.9 billion yen per year on its fee collection system, which equates to some 12.4 percent of the national broadcaster annual operating income.

Satoru Matsubara, the chairman of an advisory panel to Communications Minister Heizo Takenaka and a professor at Toyo University, recently described the amount spent on collection as “abnormal.”

But just how is this money spent, and is it really “abnormal” as Matsubara claims?

In practice, it is public money spent primarily on commissioning various undisclosed companies and collectors to perform the bulk of the operation.

NHK says 17.1 billion yen goes to the salaries of the 1,259 NHK employees involved in the fee collection operation (NHK has 11,642 employees in total). Another 10 million yen is lost to depreciation.

But the vast majority, 59.7 billion yen, is used on commissioning 5700 external “NHK collectors” — who conduct the door to door operations — and various companies to perform the fee collection task. The collectors’ average yearly wage is approximately 5 million yen, although this can vary widely according to individual achievement.

Now, with respect to the hardy souls that perform this task, 5 million yen is an exceptional salary for this type of job.

In fact, it’s more than many jobs that require four-year university degrees.

NHK defends its workforce, and the money it pays them, saying “The 5,700 collectors visit people’s homes not just on weekdays but also on weekends, holidays, early in the morning and at night, asking for understanding of public broadcasting and the receiving-fee system.

“People’s consciousness, interests, lifestyle are diversifying. Company workers on transfer and people living apart from their family are increasing, which makes it harder for the collectors to meet them face to face.

“The circumstances surrounding NHK’s fee collection operation is getting harder year after year.”

For remote and mountainous locations NHK also commissions part of the collecting process to the Japan Post.

In addition, NHK says they also commission “cable TV operators, real-estate companies, etc,” to assist in the operation.

NHK explained the selection process for contracting these companies as follows: “NHK focuses on whether they can provide convenience for the people in concluding contracts with and paying the fee to NHK.”

Despite requests to elaborate on the guidelines directing this process, no further details were forthcoming.

When also asked to provide a list of which companies are contracted and how much each is paid, NHK declined, stating; “As it is not just NHK’s own matter, please allow us to refrain from disclosing the details of the companies commissioned by NHK.”

Essentially, NHK is declining to provide any real explanation for why certain companies receive large sums of public money, or even which companies and why they are most appropriate.

It seems we just have to trust them.

But with so much public money at stake, and in the current climate of distrust, shouldn’t the public be given access to these details to keep NHK accountable and the process transparent?

Without greater transparency doubts will remain and Matsubara’s claim of abnormality appears more warranted.

If we compare NHK’s system to that of the BBC, which also generates revenue through fees and runs in a similar fashion, the picture doesn’t improve.

The BBC’s current collection cost is only 5.2 percent of its license fee income. This is down from 6.2 percent in 1991, when the BBC took over responsibility for the license fee collection from the Home Office.

Unlike NHK, which manages its own operation, the BBC has contracted three private enterprises to do the work for them, with Capita Business Services Ltd, a publicly listed company, shouldering the bulk of the load.

The BBC also offers an online payment service and has recently introduced a text message service to remind people payments are due. In contrast NHK has just started accepting credit card payments.

In NHK’s favor, however, is the fact that there is no penalty for not paying the fees, unlike with the BBC.

NHK says: “This requires NHK to conduct efforts for the fee collection more than any other public broadcasters overseas, which also requires money.

“We could label it is as a necessary expenditure for maintaining the system, but for the future, our challenge would be to operate the fee collection as efficiently and accurately as possible, and hold down expenses.”

NHK has also begun to take steps toward streamlining the system more in line with a BBC-like model.

It is debatable however, as to why a lack of penalty equates to more than double the cost percentage for collecting fees.

In 1991 when the BBC’s collection cost was at 6.2 percent of license income the evasion rate was just below 13 percent of all households owning a television.

The evasion rate is now at a record low of 5 percent.

The advisory panel has said that by reducing the costs of this collection system, in conjunction with other measures, NHK could reduce its fees and in effect decrease the fee evasion rate.

It has been estimated that about 30 percent of households refuse to pay their NHK fees, with the number rising since NHK employees became embroiled in scandals starting in July 2004.

But comparisons aside, Matsubara’s claim of abnormality is not one to be taken lightly and considering the information outlined above might very well ring true.

Despite NHK’s attempts to improve and refine the collection system, whatever way you look at it, 76.9 billion yen is a lot of public money to spend without total transparency.

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