Ofcom, the Government's media regulator, today proposed the creation of a completely new "public service publisher" to give the BBC a run for its money after analogue television channels are switched off in 2012.

The proposed channel is not being described as a broadcaster because it will be specifically designed for the digital age - when much programming will be available on demand instead of through a rigid television schedule.

It will be free to distribute its content via digital television, broadband internet, mobile phones or straight to viewers' digital video recorders.

Ofcom calculated that the new station would cost around £300 million a year, which could be funded through income tax, a tax on other broadcasters, or an extension of the BBC licence fee. It could start operating well before the switch-off date.

The proposal is made in Ofcom's Review of Public Service Broadcasting (PSB), published today.

"It's interesting how many big changes and new ideas in broadcasting and PSB have come from newcomers shaking up the market," Ofcom said.

"To refresh PSB for the digital age, and to make sure there are plenty of broadcasters to serve it, we think there are good arguments for creating a new publicly-funded service – we have called this a public service publisher (PSP).

"Just as the early Channel 4 had guaranteed funding and a strong ambition to pursue PSB with new ideas, so a PSP could encourage similar ambitions for the digital age."

It added: "Inevitably, in its early years in the transition to digital, much of the (channel's) digital content would be more likely to resemble traditional TV programmes, but it would not be a TV channel in the traditional sense, nor would it publish books, magazines or newspapers," the regulators said.

Ofcom said it would be seeking ideas for the new digital creative powerhouse in a consultation process over the next three months. But two principles were already clear: it should not be based in London, and could not be run by the BBC.

But all other major broadcasters - ITV, Channel 4, Five and BSkyB - could bid for the licence to run it, as could other media organisations. BSkyB is an associate company of News Corporation, the parent company of The Times.

"Importantly, the organisation that ran the PSP would be the winner of a competition between rival groups, based on the quality of its proposals," Ofcom said.

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