Virgin looks to block Canvas with Ofcom complaint

 

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By Stewart Mitchell

Posted on 3 Aug 2010 at 09:02

Virgin Media hopes to pull the rug from beneath internet TV platform Project Canvas after lodging an official complaint with Ofcom claiming the platform is anti-competitive and will stifle rival innovation.

Project Canvas is a BBC-backed consortium of companies – completed by TalkTalk, BT, ITV, Channel 4 and Arqiva - looking to deliver a wide range of on-demand programming over the internet.

As we reported two weeks ago, Virgin was understood to be unhappy with the Project Canvas proposals, and the way it felt it had been waived through by the BBC Trust, which gave Canvas the green light in June.

They have created a closed proprietary platform in which the partners control the look and feel of the project and control what goes on it

Now it has detailed its concerns and thrown down a gauntlet to both Ofcom and the Office of Fair Trading to fully investigate the project and the relationship between the partners.

“When you look back at what the BBC was proposing back in 2009 it said it wanted to create an open set of standards to make the platform work,” a Virgin Media spokesperson told PC Pro. “Instead, they have created a closed proprietary platform in which the partners control the look and feel of the project and control what goes on it.

“The project says it will have a policy of inclusion but if you look at the statement about being a partner it says one of the advantages is that being a partner gives them editorial control.”

Although the OFT has previously ruled that Project Canvas did not pose any threat under the Enterprise Act concerning mergers, it did not rule out further investigations under competition law.

“The more we heard about the project the more worried we were and we felt that a light needed to be shone on this project in a way that the BBC Trust was unable to do,” the Virgin spokesperson said. “Hopefully Ofcom, working with the Office of Fair Trading can do that.”

At the heart of the matter is the fact that Project Canvas represents a critical mass of traditional broadcasters that could pose a threat to pay-TV operations such as Virgin Media and Sky.

"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 the national broadband market," said Virgin Media in a statement. "This will stifle future innovation as well as eliminate existing consumer choice for home entertainment.

TalkTalk evidence

Virgin claims the recent decision by TalkTalk not to pursue plans for a TV service highlight how Canvas could hamper competition.

"There can be no clearer evidence of this direct loss of competition than the comments of Charles Dunstone (chairman of TalkTalk)," the Virgin spokesperson said. "He said that TalkTalk did not intend to invest further in its own digital television service because 'We have a much better chance of succeeding alongside the public service broadcasters with Canvas when it is ready'."

Ofcom is expected to rule on whether to launch a full-scale competition investigation within the next two months, while Sky is also rumoured to be prepping its own challenge to the project.

Project Canvas could not be reached for comment at the time of going to press.