Virgin Media is calling on the communications regulator Ofcom and the Office of Fair Trading to investigate Project Canvas on the grounds that it is anti-competitive, restricts consumer choice and jeopardizes the future development of television in the United Kingdom. The cable company is keen to dispel a number of inaccurate assumptions about the proposed broadcast and broadband platform and has stated its concerns in a formal complaint.

Far from their stated objectives of creating a set of open standards for the delivery of next generation television which anyone can adopt, Virgin Media says the joint venture partners are creating a proprietary closed platform which they control.

Virgin Media says the collaboration between the three most prominent public service broadcasters in the country, the two largest internet service providers and a major broadcast transmissions provider will stifle future innovation and irreparably harm the television sector as customers lose out on the greater quality and choice that a competitive and open market creates.

By unnecessarily prescribing every aspect of the look and viewer experience, Virgin Media contends that the joint venture partners are creating a single shop window which they control. This will effectively dictate how viewers access, watch and search for television programmes.

Collectively the BBC, ITV and Channel 4 account for around two-thirds of all television viewing in the UK while BT and TalkTalk control over half of the national broadband market with approximately 10 million customers between them.

By co-ordinating in this joint venture, the partners are establishing a single new television platform of their own with a considerable incentive to favour this over other television services, Virgin Media submits.

“We have not taken the decision to file this complaint lightly,” Virgin Media said in a statement, pointing out that it had worked with the BBC and their joint venture partners in the past to bring new services to customers. “The Canvas partners have significantly exceeded their original claims to be creating a common set of open standards which could have been improved upon by others and are now intent on controlling every aspect of how people watch TV.”

“The BBC Trust has already acknowledged, but then completely ignored, the impact that Canvas will have on so many different organisations; from consumer electronics firms to software developers and enterprising new technology manufacturers to independent programme makers. We strongly urge Ofcom, supported by the OFT, to thoroughly examine Project Canvas and its clear anti-competitive behaviour.”

Virgin Media has outlined what it calls seven myths, claiming that Project Canvas is not:

  • going to provide free TV
  • an open platform
  • just like Freeview+
  • already approved by regulators
  • going to encourage broadband take-up
  • good for the UK content and creative industries
  • only opposed by pay TV operators

Virgin Media suggests that every viewer is already paying through their television licence fee for the involvement of the BBC in Project Canvas and will have to pay again for distribution through their broadband subscription.

Despite claiming to be an open platform, Virgin Media says it is not, either in terms of technical standards or control over content.

Canvas is not simply an extension of the Freeview digital terrestrial television platform, which owes its success to competing manufacturers and operators being able to innovate, argues Virgin Media. By dictating the user interface and experience it will restrict the competitive television retail market.

The Office of Fair Trading has not approved Project Canvas. It concluded that it did not qualify for investigation under the merger provisions of the Enterprise Act but expressly stated that this decision does not preclude the application of other provisions of Competition law and other relevant legislation.

Virgin Media suggests that the Canvas proposition will not encourage broadband adoption, arguing that it is uncertain how far it will convince the estimated ten million people in the United Kingdom who have never used the internet to subscribe to broadband.

Rather than benefiting the content and creative industries, Virgin Media submits that the mandated user interface and experience will limit new entrants, while impact of Project Canvas the on entrepreneurial start-up platforms will also inhibit further development opportunities.

The cable company denies that Project Canvas is only opposed by pay-television operators, citing reservations raised by industry bodies that represent hundreds of businesses, large and small, including the Digital TV Group and technology trade association Intellect.

Project Canvas plans to launch in 2011, possibly under the name YouView. The launch has been delayed, partly while the BBC awaited approval from its Trust to participate in the joint venture, and partly because the standards that it sought to specify have yet to be completed.

Virgin Media is planning to enhance its own television offering in partnership with Tivo and Cisco. Its chief executive, Neil Berkett, has said that he is willing to include elements of Canvas in its next-generation set-top boxes but cannot accept a standard user interface.

Sky, which aims to enable broadband connections to its existing high-definition set-top boxes, has also been critical of Canvas and is considering whether to make a formal complaint.

The complaint from Virgin Media will allow the communications regulator to launch its own investigation as it considers appropriate. That could be a lengthy process, possibly further delaying any launch. It will be a critical test of the converged communications regulator, which has authority over both commercial television and broadband provision.

The Project Canvas partners appear unperturbed by the complaint. In a statement a representative said: “Our proposals remain unchanged and will create an open standards-based internet connected TV environment within which competition and innovation can flourish. We remain focused on launching a consumer proposition next year that will transform people’s daily TV viewing experience.”