Project Canvas nears green light

Office of Fair Trading approves Internet TV service

LONDON -- After regulatory deliberations that have taken almost a year, he U.K. antitrust body the Office of Fair Trading has decided that the BBC, ITV, Channel 4 and Channel 5-backed Internet TV platform Project Canvas has no regulatory case to answer.

The OFT said Wednesday that after reviewing the case it had concluded that the partnership did not technically qualify as a merger, and so was "outside U.K. merger control jurisdiction."

The decision almost gives the green light to its backers, who also include British Telecom, broadband operator Talk Talk and digital bandwidth operator Arqiva. The BBC Trust will now make its final conclusions on the project.

The OFT's inquiry began earlier this year, following a lengthy investigation into the concept by the BBC's own oversight committee, the BBC Trust.

The project has been attacked by existing media companies including BSkyB and Virgin Media, who have invested heavily in their own VOD services.

The Canvas partners aim to build an open Internet-connected television platform with common technical standards, allowing viewers to download television content onto a set top box and watch via a television set, rather than on a computer as is mostly the case currently.

Online downloads in the U.K. have proved hugely popular, with the BBC iPlayer logging an average of over 60 million downloads per month for viewing on PCs or Macs.

Numbers are expected to soar when the content is available to watch on a television set.

An earlier version of Canvas, Project Kangaroo, was nixed by regulators last year 2009 because it was bundled with access to pay and free content from its main partners.

Canvas will not take any direct role in marketing, aggregating or retailing Internet television content under its own brand.

"Our investigation has confirmed that the joint venture partners, including the BBC, do not intend to transfer an existing business into the JV," said OFT director of mergers Sheldon Mills.

"Therefore, regardless of the potential significance of Project Canvas JV for the future of Internet connected television, the notified proposals do not give rise to a merger qualifying for substantive investigation by the OFT," he concluded.