Gerald Kaufman: Is Greg Dyke getting too big for his boots?

Licence-payers may object that so much of the tax they have to pay goes on channels they do not watch

Shakespeare, as so often, had the catchline for it: "Why, man, he doth bestride the narrow world like a Colossus." The Colossus in the play of that name was Julius Caesar. The man who today may claim to be the Colossus of British broadcasting is Greg Dyke, the director general of the BBC.

Dyke certainly has a lot to boast about just now. BBC1, his flagship television channel, is appreciably ahead of ITV in the viewership ratings. A consortium led by the BBC has just been handed the franchise to run terrestrial digital TV, in place of the organisation that launched digital terrestrial, that same ITV. Tessa Jowell, the Secretary of State for Culture, Media and Sport, has prophesied that, four years ahead of the expiry in 2006 of the BBC's current royal charter, the charter will be renewed for a further 10 years from 2006 and that the BBC will continue to be funded by the licence fee.

It is anticipated that, as a reward for the BBC rescuing the Government's digital TV strategy after ITV Digital's collapse, Dyke's BBC will be allowed to go ahead with its projected youth-oriented digital channel, BBC3, even though BBC3 would compete, using taxpayers' money, with Rupert Murdoch's digital Sky One and Channel 4's digital E4 channel. And now Channel 4, which like the BBC is a state corporation, but unlike the BBC has to earn its own income, has plunged into deficit and is having to make swingeing staff cuts.

Dyke has every right to be preening himself. Could anything at all go wrong for him? Well, yes.

To start with, BBC1's lead over ITV is not due to huge gains in viewers by BBC1, which is watched by only just over a quarter of the total TV audience and whose audience is the same as it was two years go, to within one-tenth of a percentage point. It is ITV that has fallen away, losing one-fifth of its audience over those same two years.

Again, while the BBC has won the terrestrial digital franchise, most of the not very numerous viewers who watch its digital programmes do so over BSkyB's digital satellite service. How many will now buy the £100 boxes that will enable them to dispense with dishes on their roofs is impossible to forecast – especially since far more people subscribe to BSkyB than watch BBC1, and the range of channels available on Sky subscriptions vastly outnumbers those that will be available on terrestrial digital.

Moreover, the BBC digital channels are, so far, watched in such minuscule numbers that conventional methods of counting cannot track the size of audiences. There is a dispute between those who say that only 7,000 viewers regularly watch the BBC's "culture" digital channel, BBC4, and those who contend that, no, as many as 11,000 habitually tune into it. And, although the BBC has taken to claiming that more people view its round-the-clock digital news channel, BBC News24, than its BSkyB counterpart, Sky News, the BBC's methods of counting viewers are open to question, since those viewers that News24 gains when it takes over BBC1's analogue channel after BBC1 closes down for the night may be added to the solely digital audience.

Sooner or later BBC licence-payers may start to object that so much of the tax they are forced to pay to the BBC is being spent on channels that they do not watch and that they do not want to watch – channels that commercial broadcasters complain compete unfairly with small digital enterprises such as Artsworld, Performance and Digital Classics.

Then there is the fact that the BBC owes its digital terrestrial franchise to a decision within the gift of the Independent Television Commission, soon to be subsumed within the Government's forthcoming regulatory commission, Ofcom.

Although Tessa Jowell goes on insisting that only part of the BBC's activities should come under Ofcom's purview, those of us who argue that the BBC should come wholly under Ofcom will have our arguments supported by this extension of the BBC's range of activities.

Furthermore, even though the BBC's digital terrestrial activities will be funded by £3.5bn of licence-payers' money over the next 12 years, several of the channels available on the BBC's terrestrial network will be financed by advertising, a form of revenue banned for the BBC itself. The boundaries between the BBC as public-service state-owned corporation and as semi-commercial entrepreneur grow ever more hazy; and however protective the Secretary of State for Culture, Media and Sport may be towards the BBC, such a development will have to be taken into account during the forthcoming charter review.

And, let's face it, when I quote Shakespeare in saying that Dyke may at present regard himself as a TV Colossus, the other part of the Shakespeare quote applies too. If he is a Colossus, it is a narrow world that he bestrides – the literally insular world of United Kingdom electronic communications.

In international terms, next to the massive communications conglomerates in the United States such as AOL Time-Warner or Murdoch's Adelaide-based News Corp, the BBC is a pygmy. Sooner or later the BBC will have to decide whether to remain a local hero or try to be an international player. Dyke may yet learn that, as a European offshore Colossus, he is becoming too big for his small-size boots.

The writer is the Labour MP for Manchester Garston and chairman of the Culture, Media and Sport Select Committee of the House of Commons