Competition Commission Rules Against IPTV Project Kangaroo
Posted: 03rd Dec, 2008 By: MarkJ
Project Kangaroo (UKVOD), the joint BBC, ITV and Channel4 broadband Internet TV (IPTV) / Video-on-Demand (VOD) service, has been hit by a major blow today after provisional Competition Commission (CC) findings concluded that the service would "restrict competition".
The CC has concluded that the joint venture is likely to result in a substantial lessening of competition (SLC) in the supply of UK TV VOD content at the wholesale and retail levels. The CC does not, however, expect the joint venture to lead to an SLC in online advertising or content acquisition:
However the CC has suggested a number of ways that UKVOD could resolve the situation. These include putting in place access remedies to control the way that content is offered to other providers and/or making material modifications to the terms of the joint venture.
This might include, for example, adjusting the scope of the joint ventures activities or the terms of exclusivity between the joint venture and its parents. In the event that none of these are effective, prohibition would also be an option.
The CC will now hold further hearings with the main and interested parties before publishing its final decision on the competition issues and remedies. The deadline for the final report is 8th February 2009.
The CC has concluded that the joint venture is likely to result in a substantial lessening of competition (SLC) in the supply of UK TV VOD content at the wholesale and retail levels. The CC does not, however, expect the joint venture to lead to an SLC in online advertising or content acquisition:
Peter Freeman, CC Chairman and Chairman of the inquiry group, said: "Video on Demand is a relatively new and rapidly expanding medium and UKVOD clearly has much to offer. However, we are concerned that a loss of rivalry between BBCW, ITV and C4C, who are normally regarded as close competitors, could restrict existing and future competition for VOD. Whatever benefits viewers would gain from this rivalry would clearly be lost.
Of course there are already several other well-established providers of various types of VOD services. However, the evidence that we have seen tells us that domestic content is key to being able to offer strong competition to UKVODs proposed service. The parties control most of that content, putting them in a powerful position in relation to competitors and viewers. We think that it would be difficult to obtain content from third parties to match UKVODs offer in scale or attractiveness.
In this situation, UKVOD would have the ability and incentive to impose unfavourable terms when licensing domestic content to rival VOD providers. At the extreme, UKVOD might withhold content from its rivals altogether. Any reduction in access to content would be likely to impact unfavourably on viewers.
We now seek comments on how to address the loss of competition and its adverse effects for viewers."
Of course there are already several other well-established providers of various types of VOD services. However, the evidence that we have seen tells us that domestic content is key to being able to offer strong competition to UKVODs proposed service. The parties control most of that content, putting them in a powerful position in relation to competitors and viewers. We think that it would be difficult to obtain content from third parties to match UKVODs offer in scale or attractiveness.
In this situation, UKVOD would have the ability and incentive to impose unfavourable terms when licensing domestic content to rival VOD providers. At the extreme, UKVOD might withhold content from its rivals altogether. Any reduction in access to content would be likely to impact unfavourably on viewers.
We now seek comments on how to address the loss of competition and its adverse effects for viewers."
However the CC has suggested a number of ways that UKVOD could resolve the situation. These include putting in place access remedies to control the way that content is offered to other providers and/or making material modifications to the terms of the joint venture.
This might include, for example, adjusting the scope of the joint ventures activities or the terms of exclusivity between the joint venture and its parents. In the event that none of these are effective, prohibition would also be an option.
The CC will now hold further hearings with the main and interested parties before publishing its final decision on the competition issues and remedies. The deadline for the final report is 8th February 2009.
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