Ofcom, the media regulator in the United Kingdom, has given the green light for YouView (formerly known as Project Canvas) to launch next year, after announcing that it will not instigate a formal probe into the internet TV service despite complaints from major UK broadcasters like British Sky Broadcasting (BSkyB) and Virgin Media that the venture is anti-competitive in nature.
YouView – whose backers include UK household names such as BBC, ITV, Channel 4, Channel 5, BT and TalkTalk – aims to bring subscription-free video-on-demand (VoD) service initially to Freeview users with broadband internet access. But the project has come under fire from the likes of Sky and Virgin Media who claim that YouView will restrict competition in the fledgling IPTV (internet protocol television) market.
Ofcom revealed that it has received formal complaints about YouView from 13 organisations including Virgin Media, IP Vision and BSkyB, some of which alleging that YouView is in breach of the Competition Act 1998.
According to Ofcom, these parties are concerned that the partners in the venture might – in their own interest – keep VoD content and the development of technical standards to themselves, away from the grasps of rival platforms. Although not officially disclosed by Ofcom, it is understood that some companies are also incensed that YouView is partially funded by public money (through the BBC license fee), giving it an unfair competitive advantage.
But Ofcom basically dismissed these complaints, mainly on the grounds that the IPTV sector is still young and evolving, making it extremely difficult to predict YouView’s impact with any degree of confidence at the moment. Believing also that the benefits delivered by YouView to the public will outweigh any possible detriment to competition, Ofcom has decided against investigating YouView under the Competition Act for now. This paves the way for YouView to stay on schedule to launch by mid-2011, but Ofcom will keep a close eye on the situation, and reconsider opening an investigation if necessary in the future.