As the BBC Trust prepares a final ruling on the online video joint venture, BSkyB's chief operating officer puts the case against
Like everyone else at Sky, I've long been used to reading that I work for a 'satellite broadcaster'. But an increasingly large part of my time is spent on something that has absolutely nothing to do with dishes or set-top boxes. That, of course, is the growth and development of online video, which is increasingly central to this supposed 'satellite' business.
The reason for Sky's growing interest in broadband delivered video is simple. As we invest more than £1.5bn a year in content, it is important to make that investment work as hard as possible. So we aim to get our content in front of customers via multiple platforms and devices, whether through the TV, PC or mobile, or over satellite, cable, internet protocol television (IPTV), broadband, wifi or 3G. Taking an agnostic approach to technology means we can extract every drop of value from our investments while customers consume our content on their terms.
It's now more than four years since we launched our online video service – the first of its kind from a UK broadcaster. Since that time, Sky Player has continued to evolve, most recently with the launch on Xbox and the imminent arrival on Fetch TV, and others have also been innovating with online video, from LoveFilm and 4oD to Blinkbox and SeeSaw.
Looking ahead, I expect the pace of change and innovation will be just as strong, particularly as online video makes the leap from the PC to the TV screen. An increasing number of Freeview boxes will be broadband-enabled and TV manufacturers like Samsung and Panasonic are developing IP-enabled sets, for which others are developing a range of video 'apps' to be offered on those sets . So, while business models are still developing, there will be more opportunities for content providers as well as growing choice for consumers.
When the sector is at such an embryonic stage of development, I struggle to understand why we need a new, publicly subsidised platform in the shape of the BBC and BT-backed Project Canvas venture, which is under review by the BBC Trust. Sky's concerns regarding the BBC's involvement in Canvas have been widely reported, but I suspect the reasons for those concerns are not as well understood.
To be clear, we're against neither the growth of online video nor the development of common standards. But what we do stand firmly against is the use of public money in a way that distorts fair competition or undermines the scope for other innovative services to emerge in the future. Anyone looking at the Canvas proposals has to consider the consequences – whether intended or unintended – of diverting part of the licence fee away from programme-making and into proprietary platform development instead.
Taking in turn the three main elements of the Canvas project – adopting common technical standards, specifying a consistent user interface and bringing internet-connected TV to more consumers – there appears to be no need for the licence fee to be redirected in this way.
First of all, industry will deliver common standards for broadband video delivery whether Canvas goes ahead or not. That's already being considered by an established body, the Digital Television Group, which has accused the BBC and its Canvas partners of developing a standard separately from the rest of the industry. All sections of the industry, as well as consumers, would be better served if a single standard is developed through the DTG, giving all content providers – free and pay - certainty over key issues such as compatibility and digital rights management.
Second, far from being a positive development, the desire of the Canvas partners to impose an identical user interface on all compliant devices is anti-choice and anti-innovation. The reality is that consumers benefit when companies seek to differentiate their products, because that's what drives improvement. Let's not forget, the benefits of this horizontal approach, with multiple competing user interfaces, have helped Freeview reach many of millions of households in recent years.
And third, internet-connected TV is already happening and will continue to spread over time as consumer demand grows in response to innovation by the market. The danger here is that Canvas deters commercial players from launching new products and services that would compete with a BBC-backed platform.
So, rather than replicating what would otherwise occur naturally, the BBC could put the licence fee to better use by creating outstanding content and, importantly, making it available without discrimination on all platforms. The BBC's failure to operate a transparent and fair content syndication policy, and the trust's ineffectiveness in this regard, leads inevitably to the conclusion that the corporation puts its own interests ahead of those licence fee payers who might prefer to access BBC content on a platform other than Canvas.
Sky is far from a lone voice of dissent in this process. The Canvas proposals have created common ground with the likes of Virgin Media, Samsung and start-ups like IP Vision. All of them agree that the BBC should support innovation by investing in original content and distributing that content as widely as possible, not by spending the licence fee on an unnecessary and market-distorting platform.
The effects of that distortion could spread far beyond the original purpose of the licence fee. BT, one of the UK's biggest companies, could well become one of the great beneficiaries of the BBC's investment in Canvas. When the BBC Trust comes to consider its decision, it must recognise that helping BT to relaunch its TV service is not the right way to use the licence fee.
Mike Darcey is BSkyB's chief operating officer
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