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Outgoing ITV chief executive Charles Allen pulled off something of a coup in his MacTaggart lecture at the Edinburgh TV Festival, deftly moving the spotlight from his own record onto that of Channel 4.

In a forthright attack on the remit and funding of his commercial rival, Allen accused C4 of moving away from its original aim of catering for minority audiences and becoming too populist with shows such as Big Brother and Deal or No Deal.

"When exactly did remit become a four-letter word at Channel 4?" he thundered.

The gist of his ire is that C4 is competing too aggressively with ITV and Five for mass audiences and ad revenue, while, unlike them, it does not have to pay a spectrum licence fee. Allen believes C4 should either be a fully-fledged privatised commercial beast or a public service broadcaster. The status quo is unacceptable.

CRR winner

While many in the industry agree there is a debate to be had about C4's future, some in the industry believe that Allen is only on the attack because ITV is hurting, with C4 the biggest winner from CRR, scooping up £70m in ad revenue from ITV last year.

"PSB remit aside, from an advertisers' perspective, the reason C4 is doing so well is it is delivering what advertisers want," says Carat director of TV, radio and cinema, Azon Howie.

John Overend, OPera joint managing director, agrees: "C4 is a successful commercial broadcaster. ITV is very good at blaming everyone else."

Many concede C4 has become more commercial over recent years and is increasingly taking on ITV1, but that it is only doing so to protect its market share in the face of the digital revolution - something ITV should have done long ago.

Yet TV buyers agree that C4's audience is gradually changing and that is not necessarily a good thing.

"Its audience profile is flattening. You used to be able to get niche audiences much easier on C4 than ITV, but today it is more similar to ITV, with ITV more mass," says Howie.

C4's carving out of a growing 16 to 34-year-old audience has been its greatest recent triumph, with its entire channel portfolio increasing its market share from 23.4% to 25% this year. Some buyers worry that C4 is getting too powerful in this attractive demographic and that some form of CRR mechanism might be needed in Horseferry Road as well.

"C4 has been able to maintain its position while others, like ITV, have gone backwards," says Group M chief operating officer Nick Theakston. "There is a danger it is getting too big and dangerous. At some point in the future somebody might need to put the brakes on C4. Allen has highlighted a debate that needs to happen."

Another of Allen's key criticisms was that C4 was effectively allowed to make up its own rules, launching new commercial ventures such as its recent 4Radio offshoot without any public consultation.

Yet Chrysalis Radio chief executive Phil Riley says he is unconcerned about 4Radio's intention to bid for the second national digital radio multiplex. "I am pretty relaxed about C4 being allowed to attempt to enter radio," he says. "It is the quality it offers that counts."

Under chief executive Andy Duncan, C4 has done a lot to prepare itself for the switch off of the analogue signal in 2012, perfecting its digital strategy by creating a portfolio of free channels and lobbying for help in paying for switch-over costs.

Operational review

However, the channel is still scared that it might become increasingly squeezed come 2012, particularly with production companies now retaining more of their own programme rights. C4, as merely a publisher with no production base of its own, could find it increasingly difficult to hold onto key shows if independent producers such as Endemol set up their own channels and sweep up all the revenues from formats such as Big Brother.

To this end, Ofcom will later this year launch a full review of C4's financial and operational performance and how its contribution to PSB will evolve.

And Allen's lecture, from a man known for his smart lobbying skills, may just have been a bid to lead the debate that could shape the future of C4, and ITV in turn.

C4'S PUBLIC SERVICE REMIT

C4 was established in 1981 as a publicly-owned, commercially-funded broadcaster, providing more alternative and challenging viewing to that on other channels. Its public service remit was last updated in the Communications Act 2003. The key areas are:

- The provision of a broad range of high-quality and diverse programming, which demonstrates innovation and creativity in the form and content of programmes; appeals to the tastes and interests of a culturally diverse society; makes a significant contribution to meeting the need for the licensed public service channels to include programmes of an educational nature and other programmes of educative value; and exhibits a distinctive character

- The provision that C4 must cater for tastes and interests not served by ITV was removed in 2003 because of the explosion of new channels

- C4 has to provide 208 hours of news and 208 hours of current affairs a year. It also has to publish statements of programme policy each year setting out its public service remit and review its performance

- If it wants to make a "significant" change to its programming, then it must consult Ofcom.