Summary:

The BBC’s plans to bring the internet into living rooms via an open IPTV standard are a step closer to becoming reality after the BBC Trust…

image The BBC’s plans to bring the internet into living rooms via an open IPTV standard are a step closer to becoming reality after the BBC Trust officially opened its public consultation period on Project Canvas. In a JV with commercial and public broadcasters, the BBC would bring the iPlayer, as well as content from ITV.com, 4OD and Demand Five to set-top boxes and TVs for free — as well as website content including “elements of bbc.co.uk”, public agencies like NHS Direct and “existing web services like Flickr”. The project would cost £6 million over five years.

The BBC argues that the 53 percent of UK households without pay-TV subscriptions “risk falling behind”. And mindful of past regulatory problems, the BBC Executive is keen to point out that Canvas won’t “manufacture, sell or support hardware for consumers”, or “create, aggregate or retail content or act as an ISP”.

The BBC warns that if Canvas doesn’t happen, services like Freeview and Freesat “risk decline if they do not evolve within the existing model” — while the BBC notes that BSkyB (NYSE: BSY) is considering launching its own Sky Player as a paid-for service over DTT, which would pose a real threat to free services. If the plan is passed — and there is always the chance it won’t be — the first Canvas boxes will be in shops for 2010, priced between £100 and £200. The Beeb expects 3.3 million Canvas boxes or TVs to be sold by 2013, though the BBC expects some of them to still be using the TV-only functions at that point. Public and corporate contributions to the consultation must be in by April 17 and a final decision is due on July 24. More details on the proposal after the jump…

BBC Trust Consultation on Canvas (pdf) | BBC Executive Proposal (pdf)

Paid-for services: Will Canvas be 100 percent free? Not necessarily: “Set top box and other device manufacturers may choose to incorporate conditional access functionality to allow access to paid-for television or other services“. So one-off payments or subscriptions may be needed to watch everything on Canvas — which begs the question of whether this genuinely will be a free service or one with some commercial content hidden behind a pay-wall. And it’s not just TV: “Payment may also be required for internet based on-demand content through a range of payment models.”

How fast?: The document says a connection of 1.6Mbps should be enough to watch Canvas, with a suitable data download limit, but the Beeb admits users may have to “upgrade their existing broadband package” or get a connection with a higher download limit. It would have been a massive irony if the 2Mbps national minimum sought by Lord Carter in his Digital Britain review wasn’t enough to watch Canvas as this is exactly the kind of innovation he is calling for.

Trouble ahead: But with BSkyB and Virgin Media (NSDQ: VMED) jostling for customers in the competitive pay TV market, it’s a fair bet they won’t welcome the license-fee funded BBC stealing a march on them with a new free TV platform. Sky is boosting its revenues very nicely with cut-price sales of its HD Sky+ box and a Virgin subscription is currently the only way you can watch the iPlayer through your TV. These services have been written into business models and the Beeb is effectively distributing the technology for free. Good for the viewing public, bad for shareholders of those three companies.

Archive: Is this Kangaroo re-born? The BBC Executive’s proposal says Canvas will provide “all our existing on demand services (e.g. iPlayer, interactive) and planned services (e.g. archive)“. The archive-monetising project Kangaroo was rejected by the Competition Commission in the face of strong criticism from VOD players big and small but Canvas could finally see an archive service from the Beeb and others see the light of day. The BBC also argues Canvas will “revolutionise services like news” with localised headlines, weather and travel.

Partners: So far, ITV (LSE: ITV) and BT (NYSE: BT) have already signalled their intentions to join the Canvas JV and the BBC hopes other partners, particularly ISPs, will join too. If passed the project will effectively consume the part-BBC-funded Freesat initiative — and the total cost, including Freesat, will be £16.6 million over the next five years.

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