In its first Market Impact Assessment (MIA) publication UK regulator Ofcom has recommended that the on-demand plans of state-funded broadcaster the BBC, (affectionately or un-affectionately known as ‘Auntie’), be scaled back. The BBC Royal Charter and Agreement, which came into effect on 01 January, 2007, requires the BBC Trust to subject all new BBC services to a Public Value Test (PVT) to assess whether they would be in the wider public interest. This comprises a Public Value Assessment (PVA) - to be carried out by the Trust – and a separate, independent MIA conducted by Ofcom.

The regulator acknowledges that the proposed new services – including catch-up TV, simulcast TV and audio downloads over the Internet - represent an important opportunity for audiences to access BBC content in new and different ways. The services also have the potential to expand growth in UK-based new media industries. However, Ofcom reckons there is evidence that certain aspects of the proposals may have a negative effect on investment in similar commercial services which would not be in the long-term public interest.

In more detail the BBC’s proposed on-demand services consist of:

·         catch-up TV: offering viewers the chance to watch any BBC programme from the previous seven days over NTL:Telewest, Homechoice and the Internet at a time of their choosing. This would also allow series stacking - the ability to store and view an entire series of programmes;

·         simulcast TV: BBC channels that are broadcast on television would be made available at the same time over the Internet;

·         and audio downloads: BBC radio programmes (excluding full-track commercial music) would be available to download from the Internet.

Ofcom calculates that the new services could account for almost 4bn viewer and listener hours by 2011. A significant proportion of these hours – over half in the case of simulcast and audio download services – could represent additional viewer and listener activity over and above current levels. The suggestion is that the proposed services are therefore likely to stimulate considerable interest in other new media services to the benefit of all UK consumers and businesses. They offer significant potential value to licence fee payers.

However, Ofcom says the MIA has raised the following 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. Ofcom believes the scale of series stacking should therefore be substantially reduced or excluded altogether;

·         in the case of catch-up TV on the Internet, the ability to store programmes for up to 13 weeks could have negative effects on competition and therefore investment in consumer choice. Ofcom believes this storage window should be reduced or removed. 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 believes the latter should be excluded from the proposed services and the availability of classical music recordings should either be constrained or removed;

·         and the cost of providing extra broadband capacity to deliver the BBC’s proposed services to consumers is likely to be high, though any additional capacity would also be available for use by a wide range of other services including commercial on-demand services.

Ofcom has now passed its MIA to the BBC Trust to be taken into account alongside the PVA. The BBC Trust is expected to publish a consultation document setting out the draft findings of the PVT once it has reached its decision. This will be based on the results of both the PVA and the MIA.

Ofcom’s assessment is based on the application submitted by BBC management to the then BBC Governors (now the BBC Trust) in August 2006. 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 PVT should be considered.

We say: this is an interesting development in the current debate about access to electronic and digital content. Many content owners – seen by increasingly vocal sections of the public as villains of the piece - are presently trying to enlist the help of governments, ISPs and the courts in combating the so-called piracy of their content (click). Now a regulator is endeavouring to limit the freedom of action of a content owner to deliver its content to new audiences in new ways.
John Williamson