Arqiva, which operates the terrestrial television transmission network in the United Kingdom, has agreed to buy the abandoned remains of the Kangaroo project, with the aim of launching its own online video platform. The joint venture of the BBC, ITV and Channel 4 was previously blocked by the Competition Commission prior to launch. Arqiva hopes to launch a service as an independent operator in a matter of months.

The original partners spent an estimated £30 million developing the Kangaroo project. Company accounts show that the commercial arm of the BBC spent over £9 million, while ITV expected to write off £12 million. The investment from Channel 4 is likely to have been similar.

Arqiva was the only bidder for the assets, after other parties dropped out. The price paid was not disclosed but informitv believes that is likely to have been far less than the original cost. Some sources suggest that it could be in the region of £8-10 million, which seems generous.

The platform assets comprise the hardware and software and “related intellectual property” developed for the planned service. That is likely to comprise servers and software licenses, together with applications and web services developed on them by specialist digital media systems integrator ioko. The other intellectual property could include designs and possibly the consumer brand for the service, which was only codenamed Kangaroo.

The company plans to use the platform to launch a new video-on-demand service to consumers in the United Kingdom “in the coming months”. It says both free and pay programming will be offered.

“We believe that online video-on-demand is an exciting and complementary development, and a natural extension to our traditional broadcast business,” said Steve Holebrook, the managing director for terrestrial broadcast at Arqiva.

The owner and operator of the terrestrial television transmission infrastructure in the United Kingdom, and the holder of two of the six digital terrestrial television multiplex licences, Arqiva already has relationships and long-term transmission contracts worth millions with public service broadcasters.

The original joint venture partners in the Kangaroo project each had to give undertakings to the Competition Commission that they would not acquire control of the video-on-demand activities of the other parties, without the prior consent of the Office of Fair Trading. They were also banned from allowing any director or manager to hold a directorship or managerial position in any company or other undertaking carrying on or having control in any part of such activities without prior approval.

That leaves Arqiva with the potential to own and operate the video-on-demand platform on behalf of the broadcasters, in the same way that it manages their transmission networks.

However, Arqiva has limited experience in operating a consumer facing online video service, or the supporting media management operation, which may require the expertise of additional third parties.

Arqiva will also require significant co-operation from programming providers. The BBC and ITV, and possibly other broadcasters, together with BT, are now pinning their hopes on a new plan, called Canvas, to create a joint venture to develop and promote a platform for broadband video services. The BBC is also suggesting that other broadcasters and programming providers might want to share in its online iPlayer, under a plan called Marquee.

In theory, these or other initiatives could employ the infrastructure acquired by Arqiva. Such an arrangement for a shared video-on-demand platform would reflect the role Arqiva plays in broadcast television as transmission network operator.

Arqiva is owned by a consortium of investors led by Macquarie Communications Infrastructure Group. Its customers include the BBC, ITV, Channel 4, Five, BSkyB and the five mobile network operators in the United Kingdom.