Virgin Draws Bead on Project Canvas - Bails on Joint BBC UKTV Project

written by: Richard Kastelein

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Published on Wednesday, 11 August 2010 21:31

Virgin Media has notified regulator Ofcom to look into BBC-backed Project Canvas, which it says is monopolistic and will stifle competition in the TV market.

Virgin, which has been a virulent opponent of Canvas since it was proposed, has made a last ditch efffort to derail the initiative, which was given final approval by the BBC Trust two months ago.

Virgin has argued that the partners developing the service - the BBC, ITV, Channel 4, TalkTalk, BT and Arqiva - have failed to uphold their promise to create a TV platform which would work with all other internet TV services, such as Virgin Media’s own on-demand offering and feel it's closed and it's proprietary walled garden is too high. 

“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. Canvas will stifle future innovation as well as eliminate existing consumer choice for home entertainment.”

“They are establishing a single new TV platform of their own with a considerable incentive to favour this over other TV services. This could severely affect consumer options for watching public service programming in the future.”

Ofcom will apparently review Virgin Media's complaint over the next couple of months to examine whether it merits a full investigation.  Development of Canvas will keep going while the review process is underway.

Project Canvas was originally criticised by broadcasters Sky and Virgin Media as well as some TV manufacturers, which all claimed the service was a misuse of the BBC’s licence fee. They all submitted complaints to the Office of Fair Trading, but it ruled that it was not within its remit to investigate the venture and gave the project the green light.

In news that's possibly related, Virgin Media recently announced that it wants to split with BBC Worldwide  and sell off its half of UKTV. According to The Sunday Times, investment banks UBS and Goldman Sachs are involved in the sell-off, which ISP Virgin Media hopes will raise around £350 million. Virgin holds 50 per cent of the business and the other half is owned by BBC Worldwide, the broadcaster's commercial arm.