The Davies report on the future of BBC funding which has caused such convulsions in virtually every sector of the media is only the tip of the iceberg. But it has concentrated minds, focused all the prejudices, assembled the opposing armies of public sector broadcasting v. commercial enterprise et al, and, inevitably, produced an interesting mix of the two groups with various "Third Way" voices trying hard to find a bridge between the two extremes.

What is abundantly clear is that the whole question of public service broadcasting is now on trial as never before. The digital revolution – the cliché, no doubt, is heavily overdone but it does promise to be a crucial watershed for all electronic communication – has provided another golden opportunity for those who would happily ditch the whole tradition of the BBC. The mealy-mouthed are full of mock praise for Old Auntie. Yet behind their dishonest facade it is pretty plain that they sniff the moment of real danger for public service broadcasting and a good opportunity to put the boot in for the jolly old BBC. Some of the more open and unashamed critics of the BBC have sharpened their axes since they reckon the time is fast approaching when this [as they see it] "outdated relic of a past age of elitist broadcasting" can be fed to the wolves. Fortunately for the incoming Greg Dyke the Blair Government is aware of the dangers though, to be sure, it will need to strengthen its resolve if the Barbarians are to be beaten back. The most interesting, and possibly most significant, sign of Blair Government awareness came in a somewhat under-publicised lecture given in July by Peter Mandelson MP, just a few days before the Gavyn Davies report was published. Mr Mandelson delivered the 1999 ITN lecture to the European Media Forum on July 26. It was a broad and sweepingly strong defence of public service broadcasting. He used this rather prestigious platform with considerable shrewdness – a skill for which he is rightly renowned. In it he reminded an audience drawn largely from commercial television that they cannot duck their responsibilities as public service broadcasters. They he recommended, should start now to discuss with Government the future role of ITV as "a public service broadcaster" in the digital age. Mandelson cited the example of European measures to regulate satellite broadcasters from the country of transmission and he added:

"While I do not believe that in future regulation should try to dictate to broadcasters what programmes they show, and why, all broadcasters should still be required to satisfy basic quality thresholds."

None of this was particularly pleasant listening for the commercial TV hierarchy. And it was in this context that Mr Mandelson came out with his proposal that the BBC be allowed to increase its licence fee by £35 a year for digital users – considerably more than the Davies report later proposed. The extra cash, Mandelson argued, would enable the BBC to have high quality digital channels – "indeed, force them to" – and to make the new system accessible to the whole population. "High quality BBC channels, which I admit have been absent so far because of lack of funds, are the one thing that will attract to digital many of the two-thirds of British viewers who have not yet been tempted by multi-channel television."

The important thing about the Mandelson lecture is the source from whence it came. There can be little doubt that he was voicing not only his own views but almost certainly opinions held inside Downing Street, probably by the Prime Minister himself. If that is the case then this must be encouraging. It is certainly encouraging for the future of the BBC and, still more encouraging for future quality on our television screens and for the journalists and producers who remain deeply worried about the populist trend which has driven so much quality television reporting and top class documentary work off our screens. Despite all the many denials everyone knows that the standard of BBC television programmes has been in decline for some years.

You only have to scrape the surface of the BBC television and radio systems to realise the depth of anxiety that exists among young journalists and producers about the way their own senior management have succumbed to the ratings’ rat race.

The idea that an initial and quite modest digital licence increase for the BBC would somehow constitute "unfair competition" and weaken the commercial networks is laughable. As Gavyn Davies has pointed out the whole digital industry has been subsidised by the taxpayer from the outset – to the tune of something like £10 per family per year. Of course the licence fee is a form of poll tax. To be sure it would be preferable if we could devise a more equitable system of financing the BBC. Yet the truth is that despite its disadvantages the licence fee remains the least objectionable way to finance what is, for all its failings, the finest broadcasting system in the world.

Sir John Birt is quite justified in claiming that the BBC "is the world’s most successful cultural institution, one of Britian’s great contributions to the 20th century". If there is any problem with this assertion it is, in truth, that he himself as Director General has too frequently missed the opportunity to bang that drum with real conviction. All too often he has allowed some of his senior managerial team to have their gaze deflected toward the populism of the commercial networks. The absence of imaginative, campaigning and inspired leadership at the BBC is obviously one of the reasons for the recent exodus of so much talent. Nor will the Davies Report proposal to sell off various BBC resources and enterprises, like BBC Worldwide, help to revive the corporation.

Quite the contrary. The fact remains that this great debate about the digital future, new technology and all that is largely a cover for the real issue – and that is the future of the BBC and indeed its very existence as a beacon of public service broadcasting. This is the real fight and this, clearly, was what Peter Mandelson was referring to in his lecture. Beware the Barbarians at the gate...