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UK’s Canvas Web-TV JV Earns A Competition Complaint From Virgin Media

Virgin Media (NSDQ: VMED) has sent a formal complaint to Ofcom, urging it declare the UK’s Project Canvas connected-TV joint venture anti-competitive, following months of opposition.

For Canvas – which comprises broadcasters BBC, ITV (LSE: ITV) and C4; ISPs TalkTalk and BT (NYSE: BT) plus spectrum infrastructure company Arqiva – it could be serious than Ofcom alone. Though it usually sticks to media policy matters, the media regulator also has concurrent powers over competition legislation together with the Office of Fair Trading (OFT).

Virgin Media tells paidContent:UK the OFT “has offered to help” Ofcom assess the complaint. Ofcom itself was not available to discuss the complaint Monday (Virgin only briefed about it at the end of the day), but a complaint should not pre-judge an outcome – Ofcom has two months to decide whether it should start an investigation at all.

It was the OFT which, in 2008, decided it “could not make a robust judgment” on whether Project Kangaroo – the commercial web VOD JV from BBC Worldwide, ITV and Channel 4 – would be anti-competitive; so it referred it up to the Competition Commission, which ultimately prohibited the launch.

However, the BBC has frequently taken pains to differentiate Kangaroo from Canvas, a scheme to deliver free VOD, internet services widgets and pay-per-view services like LoveFilm to Freeview TVs without a subscription.

The equity holders have formed a JV company to operate the service on a non-profit basis, but pledge other content providers will get to publish to Canvas boxes. The idea is to head off proliferating TV-over-broadband standards that might emerge with the rise of efforts from the likes of Samsung, Sony (NYSE: SNE) and Google.

Virgin Media’s complaints are severalfold but, essentially, its subscription cable platform, with a successful existing VOD service, stands to lose out from customer migration to a free alternative.

Its spokesperson says Canvas would “diminish existing competition”, like IP Vision and 3View, whose hybrid Freeview/IPTV boxes already offer VOD from the likes of BSkyB (NYSE: BSY) over broadband to TVs. “The BBC Trust expressly decided that they would be negatively impacted, but that they didn’t care.”

“The Canvas partners have significantly exceeded their original claims to be creating a common set of open standards which could have been improved upon by others and are now intent on controlling every aspect of how people watch TV.”

Virgin Media has been invited to dovetail its set-top boxes with Canvas but has declined. According to Virgin’s spokesperson, it’s merely the “look-and-feel” which is the sticking point here…

“We can’t do anything to make our service look any different from BT’s, for example.” It has already contracted TiVo (NSDQ: TIVO) to build a new Virgin box with similar internet and VOD features from its TiVo Premiere product, but

“We could have a Canvas-compliant box, customise the look and feel as an option within a “Virgin Media interface that includes all the TiVo functionality. There snothing that prevents the JV partners from doing that.

The bare-bones Canvas spec that is public says the general Canvas UI must be universal but that specific carriers could bring rudimentary homepage customisation and menu items could be tweaked with branding for content suppliers.

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