Policy Exchange publish their report on PSB broadcasting

"Channel 4 should be privatised in 2012 but retain a PSB licence for at least 10 years. The majority of any proceeds of this privatisation would remain with Channel 4 to strengthen its balance sheet. It should receive extra digital capacity, reallocated from ITV and perhaps some from the BBC. It could choose to use or sublease this but retain the income from it. Channel 4 should also be granted cross promotional and linked access to BBC new media services such as www.bbc.co.uk, the iPlayer and Project Canvas

Channel 4 would be allowed to merge with Five under a more relaxed ownership and competition regime, but should it do so, the combined entity must be required to make a minimum level of investment in new programming in order to prevent consolidation leading to less UK programming investment. 

Channel 4’s PSB licence and allocation of frequencies would be administered by the PSC Trust which through its Public Access Division would control all the currently gifted digital terrestrial spectrum. As a PSB broadcaster, Channel 4 programming would also have a “most favoured nation” status for BBC Co-Funding and PSC Trust public funding. Such funds would still have to be bid for on a contestable basis, but Channel 4’s high reach, PSB licence and access privileges would make it a favoured outlet."

Some interesting thoughts. Full PDF can be downloaded here.