This year should have seen the pilot launch of a new type of local/regional news service, in advance of fuller rollouts in later years. The aim of the Independently Funded News Consortia (IFNC) was in effect to provide a replacement for ITV's regional news service, after Ofcom decided to accept ITV's assertion that the benefits it received from its public service obligations were considerably lower than the associated costs. However, last Tuesday the FT reported that the Conservatives would scrap the IFNC concept, and force an amendment to the Digital Economy Bill that introduced the idea. The Tories claim that a more market based approach would provide a better solution, and we believe that this view is a welcome, refreshing and timely take on local media.

The whole IFNC circus over the past year has been a pretty unedifying spectacle for anyone not believing in public subsidy as the future of media - and it's worth remembering that with so many organisations pushing for revenue from a top sliced licence fee, the amounts of public money involved could be substantial. The plan was to create a patchwork of IFNC regions, potentially with different consortia operating in each region. This approach seems to have missed any serious critical analysis, possibly due to the sheer number of media organisations and their consultants lining up to try to get access to public money, and partly because commercial organisations are generally too busy running businesses without public subsidy.

The fundamental reason for the IFNCs is hardly compelling. Ofcom has argued that local and regional services are highly valued by viewers, which begs the question why ITV are so keen to get rid of them. The whole experience highlights the lack of any significant analysis on what the real value of local and regional services is, and indeed what the difference is between the two. There is a lot of media angst over the loss of local and regional newspapers, but no real assessment of the impact of loss of local news outlets. Perhaps Ofcom would have recommended a very different tack if, rather than doing ITV's corporate strategy work for them, it had focused on two key questions:

• What is the value of local and regional news, and is there a market failure in the provision of those services that may require some public intervention?
• If there is a market failure, then what is the best means of addressing that failure?

The real nub of the issue may be the distinction between local and regional content. One could argue that local news is of very high value in that it may be most pertinent to peoples' lives, be more useful in practical logistics such as travel and may encourage and enable more genuine community building. Good examples of "hyper-local" news are school newsletters, blogs and emails and parish newsletters. The problem of course is that the cost of traditional news gathering and distribution is comparatively high, and the willingness to pay a high, or in some cases any, price for local news is low - and possibly paradoxically, given the level of targeting that might be possible in a local context, it would appear relatively unattractive to advertisers. While I would value some good information about whether the W7 bus service is actually running during heavy snow, I am not going to regularly pay £10 a week for a hyper-local news service which covers that kind of information. There are examples of higher quality local production - Roger Parry in his insightful policy work for the Conservative Party points to examples in Canada, and recent Westminster Forum debates on the issue have highlighted the work of Universities and voluntary organisations. However, it is difficult to see how a voluntary based model is really going to scale in a consistent way that will fill the gap.

By contrast, regional news can tap into more advertising revenue due to the mass-market economics of TV and newspaper advertising but it is arguable whether it is actually of as much value and relevance as local news. Regional news sits in an area that sub-national, so the stories are not major, but well abstracted from most local issues. I frankly don't care that much about local issues in Peckham (or Chelsea or Luton) unless they have national news significance. The existence of regional news may really only be a function of the lack of any decent local news - or indeed it may be the result of the consolidation of news organisations at a regional level for reasons of cost and required efficiencies, as we have seen with Trinity Mirror in the Midlands. In other words, it is a second best solution to demand for some local news, as it is thought to be more commercially viable than pure local news.

So is the market failure that the current economics of news gathering and production are such that we do not get good local (and hyper local) information, and that regional news has emerged as an inferior substitute? If this were the case then the IFNC will be no more successful than its ITV predecessor. Although some of the early discussions have focused on exciting and innovative use of new technology, one suspects that the reality of IFNCs is that they will really be good old fashioned news telly, and as the providers quickly realise the constraints of their budgets then all of the nice but not entirely well understood social media technology will be pushed aside in a frantic attempt to keep making acceptable TV. And IFNC TV production staff will view it the same way that regional news TV staff historically saw it, namely as a stepping stone to national TV rather than a rewarding career in its own right.

So the market failure will remain unaddressed, and worse still we will be in the position where publicly funded organisations are determining what is relevant rather than commercial organisations who have a more direct and intimate relationship with consumers.

But there is an alternative to consider, and one that relies on relaxation of media ownership controls, something that Ofcom and the current government do appear to be seriously considering. Allowing cross-media ownership at a local level would allow the creation of Local Multi Media Conglomerates (LMMCs). Cross media ownership could enable economies of scale for local news and entertainment organisations - the technology is there that would allow radio stations, newspapers and web-based local information sites to share the most costly element of local news production, namely the news gathering. This could allow market driven commercial organisations to deliver local news, information and entertainment without the need for public monies. A LMMC would also be in a stronger position to offer a locally co-ordinated and cross-promoting multi platform advertising market that would be greater than the sum of the whole. Furthermore with location based targeted marketing and review technologies such as www.weezat.com, this could be enhanced through the re-invention of an old form of local marketing - the use of stamps and vouchers. The weezat.com model is a clever one, focusing on people's preferred locale and enabled highly targeted services aimed at encouraging local trade, precisely the sort of function that would be ideally backed and promoted by a LMMC.

Whether the Conservatives fully kill the idea of IFNC, or even present a viable alternative, the time is surely right for more imaginative and market based ideas on how best to deliver local content for a hungry local audience.