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The regulator's Market Impact Assessment concluded that the BBC's iPlayer - which will potentially allow viewers to download programmes and store them on their PCs for later viewing - 'might deter innovation and investment by relevant alternative providers in the commercial sector'.

Ofcom was particularly critical of plans to allow viewers to store shows for up to 13 weeks before they are automatically deleted from their system. 'In the case of catch-up TV over the Internet, the market impact of the proposed service is likely to be significantly increased by the ability to store downloaded programmes for up to three months, before they are viewed. This effect would be especially strong if the 13-week storage period was combined with series stacking [allowing viewers to store several episodes of one series]. In our view, unless the PVA [the BBC's Public Value Assessment] provides strong reasons for taking a different course, the 13-week storage window should either

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be removed or substantially reduced,' Ofcom's assessment concluded.

Although Ofcom acknowledged that the iPlayer would likely prove an attractive service to the public, it also warned of potential adverse effects for end users. 'We estimate that, for the average broadband customer, using the proposed Internet-based services would involve downloading an additional 3GB of data per month. .. Some customers may have to move to a more expensive broadband package in order to be able to use the BBC services,' it concluded.

Ofcom also raised concerns that the BBC was aligning itself too closely to Microsoft. 'We note that the BBC's Internet TV services will initially use Microsoft's Windows Media Player 10 and associated DRM solution, although there are plans to develop a RealPlayer alternative in the near future. We consider that the extension to Real Player will be important to lessen the potential impact on the market for media player and DRM software. It will also have the benefit of extending service availability to users of other operating systems such as Apple's OS X.'

The final decision on iPlayer and other proposed on-demand services will be made following the BBC Trust's Public Value Test. Diane Coyle, Trustee and Chair of the Public Value Test Steering Group, made it clear that Ofcom's judgements are not necessarily terminal for the iPlayer project. 'The MIA forms only one part of the PVT process. In reaching our eventual decision, we must also consider the potential public value created by the on-demand proposals,' she said.