IP Vision has formally complained to Ofcom about Project Canvas, the proposed platform that would compete directly with its existing Fetch TV service in the United Kingdom. IP Vision, which is backed by French set-top box company Netgem, says that Canvas will limit competition and distort the market. It is calling on the communications regulator to review whether the planned Canvas joint venture is in breach of competition law.
The Fetch TV service, which combines a twin-tuner Freeview+ HD digital video recorder with video-on-demand delivered over broadband, including access to the BBC iPlayer and Sky Player, already offers a proposition remarkably similar to that envisaged by the partners in the proposed Project Canvas platform. It is available to buy online and through retailers like Tesco.
In a letter to Ofcom, IP Vision claims that Canvas, which is backed by all the main public service broadcasters, will have unfair access to and control over some of the most popular programming available.
IP Vision complains that licensing of the trade mark used to promote the platform will be conditional on adoption of all the proposed standards and a defined user experience, offering little incentive for innovation.
Project Canvas has budgeted £48 million for marketing the platform, which IP Vision claims is disproportionate. The partners in the project also have considerable potential to cross-promote its services.
The company argues that the removal of competition between the Canvas joint venture partners with respect to platform, application and service development restricts competition in the market. It says the shadow cast by Canvas has already provided a disincentive to new competitors and this will only get worse.
The Canvas partners have invited expressions of interest to identify device partners to develop products. IP Vision complains that the ability for the joint venture partners to enter into preferential arrangements with selected suppliers further damages competition across the value chain.
IP Vision argues that the lack of technology and service innovation in the plans proposed by the Canvas members, and the elimination of competition and choice that will result is harmful to the interests of consumers.
Eddie Abrams, chief executive of IP Vision, expressed his concerns in a statement issued to informitv. “As a leader in this nascent sector in the UK, we are all in favour of healthy competition that benefits both the industry and consumers,” he said. “However, this group of industry Goliaths, supported in part by BBC licence fee funds, will have the power to dominate the sector — even though what Canvas will offer will not be superior to solutions already on the market. Surely this can’t be good for the UK television industry or for the consumer?”
“If Project Canvas rolls out as intended, market competition, consumer choice and technology and commercial innovation will be stymied. The consumer will end up paying the price of an uncompetitive market in the form of restricted content, service and technology choice.”
IP Vision is asking Ofcom to review whether the Canvas joint venture is in breach of the Competition Act.
The Office of Fair Trading previously ruled that the proposed Project Canvas joint venture did not constitute a merger and therefore did not come under the jurisdiction of the Enterprise Act 2002 but noted that that does not preclude the application of other provisions of competition law.
The Competition Act 1998 prohibits anti-competitive agreements or cartels and abuse of a dominant position.
The Act prohibits agreements between businesses which prevent, restrict or distort competition or are intended to do so and which affect trade in the UK. That includes cartels, or agreements between businesses not to compete with each other.
Organisations are also prohibited from abusing a dominant position in a market. While the broadband and broadcast markets are competitive, the partners in Project Canvas have significant market power in each of the sectors in which they operate and in combination could arguably hold a dominant position.
Businesses that break the law can be fined up to 10% of their worldwide turnover and individuals found to be involved in cartels can be fined and imprisoned for up to five years.
The OFT referred a previous proposed joint venture between the BBC, ITV and Channel Four, known as Project Kangaroo, to the Competition Commission. This concluded that the “joint venture would be too much of a threat to competition in this developing market and has to be stopped”. As a result the project was abandoned by the broadcasters, subsequently resurfacing in the form of SeeSaw, run by transmission company Arqiva, one of the partners in the proposed Project Canvas platform.
IP Vision follows Virgin Media in making a formal complaint to Ofcom. Sky has also been critical of Canvas but has yet to complain. The satellite operator makes its Sky Player online video service available on the IP Vision Fetch TV box, demonstrating that premium programming can be syndicated through third-party services based on existing standards.
It will be difficult for Ofcom to ignore the complaints about Canvas. An investigation could further delay the proposed launch.
Meanwhile, the Digital Television Group industry is developing in parallel its own Connected TV specification, which could form the basis of an open industry standard in the United Kingdom, undermining the originally stated rationale for Project Canvas.