UK communications regulator, Ofcom, has published a Market Impact Assessment of the BBC's plans to launch new on-demand services. (Note 1: the services in question include a) a catch-up service that would allow viewers to watch any BBC program from the past seven days on Virgin cable, on the HomeChoice IPTV service or on the Internet, and that would also allow series stacking--i.e. the ability to download, store and view an entire series of programs; b) a simulcast service that would make BBC channels available on the Internet, simultaneously with their broadcast; and c) an audio download service that would make BBC radio programs, excluding full-track commercial music, available for download on the Internet. Note 2: Ofcom Market Impact Assessments of new BBC services are required by the new BBC Royal Charter and Agreement, which went into effect January 1st. The Charter calls for the BBC's governing body, the BBC Trust, to subject all new BBC services to a "Public Value Test," consisting of a Public Value Assessment to be carried out by the Trust itself, and an independent Market Impact Assessment by Ofcom.)
In a communication published on its Web site, the regulator concedes that the proposed services "represent an important opportunity for audiences to access BBC content in new and different ways," and have the potential to "account for almost 4 billion viewer and listener hours by 2011," a significant portion of which "could represent additional viewer and listener activity over and above current levels." Therefore, Ofcom says, "the proposed services are…likely to stimulate considerable interest in other new media services to the benefit of all UK consumers and businesses," and thus "have the potential to expand growth in UK-based new media industries."
However, Ofcom also says that the Market Impact Assessment has raised a number of concerns:
- Series stacking "could discourage investment in commercial on- demand services and is likely to have an adverse effect on related markets, such as DVD rentals and sales." The regulator therefore proposes that "the scale of series stacking should…be substantially reduced or excluded altogether."
- An Internet-based catch-up service that stored programs for up to 13 weeks (as per the BBC's plans) "could have negative effects on competition and therefore investment in consumer choice." Ofcom therefore proposes that this storage window "be reduced or removed," and points out that "in the event of removal, viewers would still have up to 14 days to download and view the content."
- The ability to download free BBC audio content "might have a serious adverse impact on specific markets, notably commercial classical music recordings and audio books." Ofcom therefore proposes that content that competes with audio books be excluded from the proposed services and that "the availability of classical music recordings should either be constrained or removed."
- The cost of providing extra broadband capacity to deliver the proposed services is likely to be high; though Ofcom concedes that "any additional capacity would also be available for use by a wide range of other services including commercial on-demand services."
Ofcom has sent its Market Impact Assessment (the full text of which can be found on its Web site, ofcom.org.uk) to the BBC Trust, which is now working on a consultation document setting out the draft findings of the Public Value Test of the proposed services (note: the document will reflect the results of both the Market Impact Assessment and the BBC Trust's own Public Value Assessment; however, critics of the BBC's new Royal Charter have objected that it does not require the BBC Trust to abide by the findings of the Ofcom MIA). The regulator says that if the BBC "wishes to alter the proposals in any significant way--for example, by exceeding the service budgets it has put forward or by including non-BBC content, specially commissioned content or full-track commercial music"--an additional Public Value Test should be considered.
Originally Published: January 31, 2007 in [itvt] Issue 7.16 Part 1
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