Project Canvas could face competition investigation
Media regulator Ofcom has warned that Project Canvas, the joint broadband TV venture between BBC, ITV and BT, could face a competition investigation.
In its submission to the BBC Trust, Ofcom said Canvas could face the same regulatory scrutiny as Project Kangaroo, a VoD venture between BBC Worldwide, ITV and Channel 4, which was subsequently blocked by the Competition Commission (see Competition Commission “stops” Kangaroo).
In February, the Competition Commission concluded that Project Kangaroo “would be too much of a threat to competition in this developing market and has to be stopped”.
However, Project Canvas’ partners are keen to avoid being compared to Kangaroo, claiming that their venture aims to be an open technological platform for all content owners to bring catchup and on-demand TV to services such as Freeview and Freesat.
The BBC Trust has controversially decided that Project Canvas will not require a full public value test by Ofcom, which would involve a market impact review on how the proposal would affect its commercial rivals.
The Trust concluded that Canvas is only subject to its own review as it is an extension of an existing BBC service licence for Freesat.
In a letter to the Trust, Ofcom’s Peter Phillips, said: “We understand that issues relating to the compliance of Canvas with all relevant competition obligations will be considered within the trust’s assessment, including those arising from arrangements specific to the BBC and also those arising as a result of competition, merger and state aid law.
“In that regard we recognise that there may be a future role for the OFT and/or Ofcom to assess the arrangement under relevant merger or competition law.
“We recognise that the trust has determined that Canvas is a non-service activity and has decided not to adopt a full public value test in assessing the application.
“However, at this stage, we thought it might be helpful to highlight a few high-level issues that we believe the trust will wish to consider in detail in delivering its assessment of the proposals.”
The media regulator highlighted five areas of potential concern – technical standards; partnership arrangements with other companies; availability of Project Canvas to TV services other than Freeview or Freesat; navigation; and that quality standards for programmes made available via the online venture are “justifiable, non-discriminatory, transparent and proportionate”.
However, Ofcom also said it recognises that Canvas has the “potential to be an exciting and innovative” service , which could help drive the growth of broadband in the UK and deliver more public service content – a goal of Lord Carter’s Digital Britain review (see Broadband for all by 2012).
“While the benefits of Canvas are potentially significant we would encourage the BBC to continue to ensure its content is made available on a wide range of platforms. In other words, it is important that comercially-led propositions which seek to compete with Canvas should not be unfairly prevented from accessing BBC content,” Ofcom added.
Ofcom’s response comes just days after ISBA backed Project Canvas, saying it would be “an important commercial counterbalance” to the BBC’s iPlayer service (see ISBA endorses BBC’s Project Canvas).
ISBA’s media and advertising manager, Michelle Sherlock, said: “ISBA has responded to the consultation on behalf of advertisers and our submission has reflected the need for an important commercial counterbalance to the BBC’s iPlayer.
“Subject to caveats including economic regulation similar to linear channels and prevention against ‘gatekeeper’ practices, ISBA has endorsed the initiative.”