Virgin Media is considering a legal challenge against the BBC Trust over a controversial new internet-video service approved yesterday.
The scheme will offer video on demand through a broadband connection, but rivals say it is wrong to use licence fee income to create a platform for combining television and the internet.
A legal challenge against the trust is one of a number of options being considered by Virgin Media, which might also ask the Office of Fair Trading whether the initiative breaches competition law.
The scheme, called Project Canvas, is a BBC-led venture in partnership with ITV, Channel 4, Five and BT. It is expected to go live next year.
A Virgin spokesman said: “We are disappointed the BBC Trust has approved Canvas and ignored the significant concerns raised by the commercial sector about the proposal. Canvas will severely restrict competition and innovation and ultimately this will harm consumers.”
Advertisement
Tony Ballard, a partner at leading media law firm Harbottle & Lewis, said that Virgin could either challenge the trust itself or take legal action against the project partners under competition law. Opponents of the scheme include BSkyB, which is 39 per cent owned by News International, parent company of The Times.
Canvas will offer content from the BBC iPlayer, NHS Direct and a number of other websites including Lovefilm. As well as putting a greater number of catch-up services on TV, the scheme could see viewers shopping and downloading music on the small screen.
Viewers would buy a set-top box and would also need to have broadband, but they would not have to pay an additional subscription. The trust said that Canvas had to remain “free-to-air”, although customers “may be charged for additional pay services that third parties might choose to provide via the Canvas platform.” Trustees also stipulated that the BBC must not exceed its estimated five-year cost of £24.7 million by more than 20 per cent.
Diane Coyle, a BBC trustee, said that the leeway was “realistic given the nature of devising a technology platform. In any BBC budget there is 10 per cent flexibility.” Ms Coyle added: “The trust has concluded that Canvas will deliver significant public value for licence fee-payers. People with broadband will be able to access a wide range of content including BBC iPlayer, free of charge, through their TV sets.”
A trust spokesperson said of Virgin’s possible challenge: “The trust would defend its position. We have full confidence in our decision.”
Advertisement
A BSkyB spokesman said: “The BBC Trust’s announcement is a predictable decision from a body that has shown little inclination to think independently or set meaningful boundaries on the BBC’s activities.”