No investigation into Project Canvas

19 October 2010

Ofcom announced today that it will not open an investigation into 'Project Canvas' under the Competition Act following complaints made by Virgin Media and IPVision.

Project Canvas is a partnership between the BBC, ITV, Channel 4, Five, BT, TalkTalk and Arqiva which will offer digital terrestrial channels and internet-delivered TV services via a set-top box connected to viewers' TV sets.

It also involves creating technical standards which can be used by participating services to deliver content via a single set-top box using a branded user interface which will be known as YouView. It is currently expected to launch in the first half of next year.

The complaints

Virgin Media and IP Vision submitted complaints to Ofcom that alleged potential breaches of the Competition Act 1998. Ofcom also received submissions from 11 other parties, including BSkyB. The complainants raised a number of concerns, including that:

  • Project Canvas partners are incentivised to withhold content from competing platforms;
  • Technical standards produced by Project Canvas had not been developed openly and were not made available for use by those outside the joint venture
  • Use of the Project Canvas brand (YouView) is tied to the specified user interface/ electronic programming guide; and
  • It is likely to restrict competition between TV platforms.

Ofcom's assessment

In assessing whether it should investigate these complaints, Ofcom took into account the likelihood of harm to the interests of viewers and consumers. At the current stage of YouView's development, our view is that it would be premature to open an investigation because:

  • IPTV[1] is still an emerging sector, and the impact of YouView on the market will not be known with any confidence for some time;
  • It is likely that YouView will bring benefits to viewers and consumers. Any potential harm to competition would need to be offset against these benefits; and
  • Whether or not YouView and its partners will harm competition in the ways alleged will depend upon how this emerging market develops and how they act, particularly in relation to providing access to content and issuing technical standards.

Content

The impact of YouView on content syndication is difficult to determine with any confidence at this point.

If YouView did lead to its partners restricting the supply of video on demand content to rival firms, this could lead to consumer harm and may well generate competition concerns.

But at the present time, there is little evidence that YouView's partners are likely to withhold content as a result of their involvement in the project. Given the possibility that harmful effects might emerge later, Ofcom will, nonetheless, keep the content syndication policies of the YouView partners under review.

Standards

The partners behind YouView have already made a number of technical standards available to the industry. And while there is potential risk of consumer harm if transparency is restricted in the future, Ofcom does not consider the risk sufficiently material at this stage to justify an investigation.

User interfaces

There is a risk that YouView may result in a more limited choice of user interfaces and user experiences for viewers. But an assessment of this would need to recognise the choice that already exists in the TV market and new opportunities for entry from other firms, as well as the potential benefits to consumers of a common 'look and feel'. Taking these factors into account, we do not consider that the risk of consumer harm is sufficient to warrant opening an investigation on this basis.

Ofcom to monitor developments

We do not propose to open a Competition Act investigation, however Ofcom will continue to monitor developments, particularly in relation to YouView's approach to sharing standards and its effects on content syndication. If evidence emerges that the operation of YouView could cause harm to viewers and consumers in the future, Ofcom may reconsider whether to investigate.

Ofcom's Chief Executive, Ed Richards, said:

"Ofcom's view is that consumers' interests will not be served by opening an investigation. It would be premature at the current stage of YouView's development given the absence of a clear risk of consumer harm."

"But if evidence does emerge in the future that YouView causes harm to the interests of viewers and consumers we may reconsider whether to investigate."

ENDS

[1] IPTV (Internet protocol television). The term used for television and/or video signals that are delivered to subscribers or viewers using internet protocol (IP), the technology that is also used to access the internet. Typically used in the context of streamed linear and on-demand content, but also sometimes for downloaded video clips.

NOTES FOR EDITORS

1. Under section 25 of the Competition Act 1998, Ofcom has the power to conduct an investigation if there are reasonable grounds for suspecting that there is or has been an agreement which may affect trade within the UK that has or had as its object or effect the prevention, restriction or distortion of competition within the UK. The Competition Act comes with powers to levy substantial fines on companies that have been found in breach.

2. In assessing whether it would be appropriate to open an investigation into these complaints Ofcom took into account a number of factors including the likelihood of harm to the interests of viewers and consumers and the appropriate use of resources.