Plans by the BBC to form a joint venture partnership to promote a platform for internet connected television, known as Project Canvas, have been roundly criticised by a number of influential industry stakeholders. Following an initial industry consultation, the BBC Trust is now asking its executives for further information on the proposals, which seem sketchy to some and over ambitious to others.
“A common theme that emerged was that more information was needed from the BBC Executive about the Canvas proposal,” said a representative of the BBC Trust, which is responsible for the governance of the corporation. “So in the interests of making a robust and independent decision we have asked the Executive to look at the issues that stakeholders have raised and report back to us.”
That amounts to an admission that the proposals as originally outlined by the BBC management failed to address the issues raised by a number of respondents to the initial consultation exercise.
Many responses to the consultation expressed concern over a lack of detail in some key areas, including the choice of technical standards, the ways in which the BBC would work with industry bodies, control of the electronic programme guide, governance arrangements for the joint venture and the use of editorial controls.
The Trust has concluded that the BBC needs “to develop further detail and explain its proposal” to enable it to reach a fully informed decision. Any further consultation will be delayed until such information has been provided and shared with stakeholders.
The decision is an embarrassing setback for the BBC initiative. The BBC Trust, anxious to demonstrate its independence from the executive it governs, appears to have been left with little choice but to refer the proposals back for further explanation.
Several respondents suggested that the BBC could be in breach of its own fair trading policy and open to accusations of anticompetitive conduct.
Among the responses to its consultation the BBC Trust received a veiled warning from the communications regulator Ofcom saying that “there may be a future role” for it or the Office of Fair Trading “to assess the arrangement under relevant merger or competition law”.
Pay-television operators go further. They seem to see the Canvas proposals not simply as a competitive threat, but an anticompetitive initiative.
Sky warned “If the Trust does not adopt a suitably impartial and rigorous process to assess the Proposals and to allow full participation by interested parties, the Trust risks reaching an unreasonable and invalid decision based on a set of inchoate proposals whose impact has not been properly gauged.”
Virgin Media suggested that in the form currently envisaged, Canvas “will stifle competition” and in focusing on the Freeview and Freesat platforms risks excluding other platforms and will “fail to deliver a truly open standard”.
Tiscali, the only true IPTV operator in the country, concludes that “the consultation is dangerously lacking in substance”. It advocates that “The BBC and its partners should start again with a commitment to address end-to-end issues and avoid anti-competitive dominance by one brand, platform or network”.
BT, a potential joint venture partner in the initiative, “fully supports” the plans, suggesting that there is no need for a public value test or a market impact assessment by Ofcom, maintaining that the partnership would not quality for investigation by the United Kingdom or European Commission competition authorities as has been argued by some commentators, saying that it has been “impressed by the rigour of the Trust’s assessment so far”.
IP Vision, which has already developed a standards based hybrid platform, backed by the French company Netgem, would appear to disagree with that assessment. It is “concerned that the project conflicts with existing initiatives and standards, which enjoy widespread industry support.” If Canvas were to proceed as planned “it would adversely impact both licence fee payers and existing industry participants, without advancing the BBC’s public purposes” potentially leaving the BBC exposed in a number of areas “including breach of competition law”.
Intel notably endorsed the proposals in a brief submission, saying “Project Canvas will catalyze innovation, and competition within the broadband-enabled CE industry will flourish as companies focus on unique value added differentiators”. It concluded: “Intel fully supports this effort and applauds Project Canvas for endorsing these principles and moving the industry toward a truly converged future.”
However, a number of broadly based groups expressed profound concerns about the plans, suggesting that there had been a lack of engagement with the wider industry.
The DTG or Digital TV Group, the industry association for digital television in the United Kingdom, said the majority of its members that responded “voiced high level concerns over the proposal” regarding the process the project has taken to engage with the industry, confusion over the detailed proposition and precise project definition and specification, and why it is considered as an upgrade to the Freeview and Freesat platforms and not a service launch its own right. Feedback from members suggested that it was “unlikely to be adopted universally by manufacturers and would therefore cause market fragmentation”.
Intellect, the national trade association for the information technology, telecommunications and electronics industries, said it supported the aim of developing an open standard. “However, Canvas is not an open standard,” it said. “As it is currently described we believe it will damage the existing digital TV market, have a negative impact in the longer term and will not realise the public value benefits that are envisaged”. It concludes that project Canvas must immediately start a completely open dialogue with industry and issue a functional specification for what is required, conduct thorough due diligence on current open standards development work in this area and seek to partner with and influence the most suitable existing project.
The BSG or Broadband Stakeholder Group urged the BBC to work through the issues with all stakeholders. It said “there is a real risk that the initial consultative stages of Canvas are done at too rapid a pace to allow for real engagement with all stakeholders on the potential market implications of Canvas”. Should the proposal be left open to regulatory challenge this “could have a detrimental effect on the evolution of the UK communications market as a whole, putting a chill on other market developments, as commercial players await the outcome of that assessment”. It observed that the “proposal points to a number of potential benefits that would contribute to the vision of a vibrant Digital Britain,” but notes that “this outcome will only be achieved through effective cooperation and collaboration across the broadband value chain”.
Pact, which represents the interests of independent producers, proclaimed its support for Canvas in principle but stressed that it must afford open access to a wide range of non BBC services. “Otherwise,” it concluded, “as a significant intervention in a relatively nascent market, Canvas risks having an undue negative market impact by marginalising other services — which would in turn restrict the range of digital services on offer to the licence fee payer.”
The BBC Trust has published over 60 submissions in response to its consultation, including one from informitv. A further 23 unnamed organisations requested that their submissions remain confidential.
Aside from the vested interests of pay-television operators, the critical response from broadly based industry groups is striking and could clearly not be overlooked by the BBC Trust. What is perhaps surprising is that the BBC management does not appear to have anticipated such a negative response or gone very far to engage with the relevant stakeholders.
Given the significance of some of the issues raised, including credible complaints of potentially anticompetitive behaviour, the BBC management will have its work cut out in reshaping the proposals and restoring relationships with industry if it is to develop its ambitions for hybrid broadcast and broadband services.
It appears increasingly unlikely that the Canvas proposals, at least as originally outlined, will receive approval from the BBC Trust, let alone other regulatory authorities, any time soon. Nevertheless, the BBC management should now at least be left in no doubt about what will be required to achieve cross-industry consensus and approval.
Ironically, an initiative originally intended to accelerate innovation in this area could have the unintended consequence of significantly setting back developments. Equally, it could galvanise the industry to come together to develop a genuine open standards based platform, in which case it may yet turn out to be a worthwhile intervention.