It is too early for competition investigation of broadcasters' IPTV joint venture, says Ofcom

Cable company Virgin Media and digital television integration startup IPVision complained to Ofcom about the tie-up. The project was called Project Canvas at the time of the complaint but has since been renamed YouView ahead of its launch next year.

It involves collaboration between the BBC, ITV, Channel 4, and Five, telecoms firms BT and TalkTalk, and mast and satellite company Arqiva. It will sell a set-top box which will receive digital television; 'watch again' programming; and data services such as applications and widgets, YouView said.

The companies claimed that the venture was likely to restrict competition between TV platforms; that it rewarded television producers for withholding content from other platforms; and that its technical standards-setting process has excluded other platform builders.

Ofcom has rejected the claims, though, and has refused to open an investigation into the joint venture because the internet protocol television (IPTV) market is so young.

"IPTV is still an emerging sector, and the impact of YouView on the market will not be known with any confidence for some time," said an Ofcom statement on the issue. "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."

Ofcom said that it would need to observe how YouView and its competitors behaved in the market for IPTV when those services became widely available before deciding whether to launch a competition-based investigation.

"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," it said.

YouView's predecessor, Project Kangaroo, was vetoed by the Competition Commission in 2009 because it would have damaged competition for the supply of video on demand content in the UK.

The joint venture was restructured and scaled down, then given the green light by the Office of Fair Trading (OFT), which had referred the first scheme to the Competition Commission.

"Unlike in the Project Kangaroo joint venture which was blocked by the Competition Commission in 2009, it is not proposed that the JV Partners will contribute any video-on-demand content or other business to Canvas, and Canvas will have no role in aggregating, marketing or directly retailing any such television content," said an OFT statement at the time.

Ofcom said that the supply of content was still an issue that required examination, but that it was too early to conduct that study.

"The impact of YouView on content syndication is difficult to determine with any confidence at this point," said its statement. "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," said Ofcom. "Given the possibility that harmful effects might emerge later, Ofcom will, nonetheless, keep the content syndication policies of the YouView partners under review."

Ofcom said that the joint venture had made its technical standards available to other industry players, and said that there was insufficient risk of anti-competitive behaviour on this issue to justify an investigation.

"Ofcom’s view is that consumers’ interests will not be served by opening an investigation," said Ofcom chief executive Ed Richards. "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," he said.

BBC governing body the BBC Trust gave its approval for the scheme in June of this year.

IP Vision, which is behind an alternative IPTV system, said that it understood Ofcom's reluctance to rule at this early stage but urged it and the BBC Trust to rein in the venture.

"We applaud Ofcom for recognising that there is a potential impediment to free market competition, and even potential for consumer harm, should YouView’s technical standards not be made available in a timely, fair and transparent manner to other players in the market," said IP Vision chief executive Eddie Abrams. "We therefore call on the BBC Trust to ensure technical specifications are published in a fair way and in sufficient detail for third parties to implement both for use in concert with the YouView trademark and also for competing digital TV implementations."

YouView chief executive Richard Halton said that the joint venture believed it would help, not hinder, competition in the IPTV market.

“We have been clear throughout this process that YouView will stimulate competition in the TV platform market and create opportunities for content providers and device manufacturers. Most importantly it represents a great consumer proposition," said Halton. "“In a market dominated by pay services, we are creating the only mass market IPTV service that will be subscription free."