BBC Trust reaches provisional conclusions on BBC on-demand proposal

BBC Trust reaches provisional conclusions on BBC on-demand proposals

31 January 2007

Following application of its first Public Value Test (PVT), the BBC Trust has today published its provisional conclusions on the BBC Executive's new on-demand services and opened a period of consultation.

The Trust's provisional conclusion is to give the BBC Executive the go ahead for the new on-demand services, but subject to certain conditions and modifications to the proposition. The Trust will reach its final decision before 2 May 2007, after taking account of the responses it receives during the consultation period.

Speaking on behalf of the Trust, Diane Coyle, BBC Trustee and Chair of the PVT Steering Group, said:

"The BBC Trust has a duty to ensure the public receives value in return for paying the licence fee. Our view is that the BBC's new on-demand services are likely to deliver significant public value, and should be allowed to proceed, but subject to certain conditions in order to reduce the potential negative market impact."

In its provisional conclusions, the BBC Trust explains that evidence from the Public Value Assessment (PVA) indicates public value would be derived from these proposals, particularly as patterns of media consumption shift from linear broadcast to on-demand; and sets out how it has considered this evidence alongside that supplied by Ofcom in its Market Impact Assessment (MIA).

Diane Coyle also said:

"In representing the public interest, the Trust's duty includes ensuring that the BBC does not adversely affect the market by reducing choice for licence fee payers. In reaching our decision, the Trust has therefore taken account of both the potential public value added and the potential negative market impact. We concluded that a number of modifications to the BBC's proposals are necessary to deliver the greatest value to the public.

"Today we are inviting feedback from the public, the commercial sector and the BBC management team on our provisional conclusions. It is an open consultation, with access to the supporting evidence we have considered in reaching our judgement. We look forward to receiving and considering all responses in coming to a final decision before 2 May 2007."

The on-demand proposals

The BBC Executive's on-demand proposals are the first to undergo a PVT. They include four services:

Seven-day TV catch-up over the internet
Seven-day TV catch up over cable
Simulcast TV over the internet (streaming of live television networks)
Non-digital rights management audio downloads over the internet (podcasting)

The three internet-based services are intended to be offered as part of the BBC iPlayer, which will pull together all the audio and video services offered on bbc.co.uk.

Provisional Conclusions

The Trust has reached its provisional conclusions after careful analysis of both the Market Impact Assessment (MIA) and Public Value Assessment (PVA). In doing so it has taken into account all the evidence and issues raised, including public research and submissions made by stakeholders during the earlier period for representations. The Trust's approval of the proposition is subject to a number of modifications:

Storage window for seven-day TV catch-up over the internet should not be wholly excluded because it creates public value; but should be limited to 30 days. The BBC Executive's application proposed 13 weeks for this feature.
Series stacking: The public value of allowing access to free content needs to be balanced against the value of the BBC's secondary rights and potential for negative market impact. The Trust agrees with Ofcom that there is a need for a tighter definition of which series would be offered for stacking.
Platform-agnostic approach: As proposed, the TV catch-up service on the internet relies on Microsoft technology for the digital rights management (DRM) framework. The Trust will require the BBC Executive to adopt a platform-agnostic approach within a reasonable timeframe. "This requires the BBC to develop an alternative DRM framework to enable users of other technology, for example, Apple and Linux, to access the on-demand services."
Genres included in non-DRM audio downloads: Audio-books and classical music should be excluded from the non-DRM downloads. The public value to be created is not, in the Trust's view, sufficient to justify the potential market impact of allowing downloads of these genres.
Protection of children from unsuitable content: The Trust will require the BBC Executive to present options to ensure this.

Other issues arising from the PVA and MIA

Access for third-party content: The BBC Executive team did not seek approval for including third-party content alongside BBC programmes on the internet services available via the BBC iPlayer, though this was an issue raised by industry stakeholders. The Trust has considered the issue but agrees with Ofcom that allowing access for third-party content could increase the negative market impact of the BBC's proposals. The Trust has concluded that the BBC's proposals should not be modified to permit this.
Bookmarking for downloads: Though advertised in early promotional material, the BBC's proposition submitted to the Trust did not seek approval for a 'bookmark' feature, which would enable users to 'bookmark' a programme in advance of transmission. The Trust's approval of the proposals would not cover such a feature.
Syndication of BBC content to third-parties: The Trust considers that BBC content should be available to all significant players on a non-discriminatory basis. It will develop and publish a syndication policy and consider on each occasion where syndication is proposed whether a PVT or other action is necessary.

Market Impact Assessment

The MIA of the BBC's proposals, carried out by Ofcom to Terms of Reference agreed with the BBC Trust, concluded that the consumer benefits to be derived from the proposed services are potentially very considerable and that it is important the BBC should participate actively and fully in the markets for on-demand services. Ofcom noted the potential for the BBC's proposals to help build the market as a whole. Yet it found evidence that certain aspects of the proposals may have a negative effect on investment in similar commercial services and recommended a number of modifications. Where Ofcom has made recommendations for modifications designed to minimise negative market impact, the Trust has accepted these.

Public Value Assessment

A PVA, carried out by the Trust with the support and assistance of the Trust Unit, concluded that the proposals would create significant public value when assessed against their fit with the BBC's public purposes and the criteria of reach, quality, impact and value for money. The PVA expressed a number of reservations about the proposals including the impact of an extended viewing window of 13 weeks on the value of secondary rights held by the BBC, and the need for controls to protect children.

Ends

Notes to editors

The BBC Trust is the BBC's new, independent, governing body.

The PVT, MIA, PVA and BBC Executive's application can be read in full on the Trust's website at http://www.bbc.co.uk/bbctrust/research/iplayer_public_value_test.html. Details of the consultation and how to respond are also available using this link. Research by Sparkler, carried out as part of the PVA, and advice to the Trust from PricewaterhouseCoopers is also published.
Diane Coyle is a BBC Trustee. She chairs the BBC Trust's Public Value Test Steering Group. She is an economic consultant specialising in new technologies and globalisation and has been a member of the Competition Commission since 2001. Diane is a frequent commentator on radio and television and has written many books and articles on economics including the forthcoming The Soulful Science, and Sex, Drugs and Economics. She was the Economics Editor of The Independent newspaper (UK) from 1993 to 2001 and has a PhD from Harvard.
Other members of the Trust's PVT Steering Group are: Alison Hastings, Patricia Hodgson, Jeremy Peat and Richard Tait.
Details of all the Trust members can be found at in the Trust members section of this site.

Timeline to date

The BBC Governors announced on 31 August 2006 a Public Value Test on the BBC Executive's proposals to launch new on-demand services, including BBC iPlayer.
On 18 September 2006 the details of the MIA and the PVA were announced.
Additional information on the proposals was published on 10 October 2006 and the period for representations extended to 7 November 2006.
The MIA process has been commissioned and overseen by the Joint Steering Group comprising Ofcom and the BBC Trust and chaired by Ofcom for this MIA. The Joint Steering Group has met four times, the last meeting being held on 17 January 2007.
The BBC Trust's PVT Steering Group has met twice since 1 January 2007, the last meeting being held on 18 January 2007.
On 19 January Ofcom submitted the MIA to the BBC Trust
On 23 January 2007 Ofcom published the MIA
On 24 January 2007 the BBC Trust approved the Public Value Assessment as part of the PVT process and evaluated both the MIA and the PVA in reaching its provisional conclusions about the BBC Executive's proposition.
On 31 January 2007 the BBC Trust published its provisional conclusions, along with other supporting material not previously published, and opened a public consultation.

In view of the amount of information being released and that this is a new process, the Trust extended the consultation period from an expected 28 days to eight weeks. The consultation will close on 28 March 2007 and the Trust expects to announce its final decision before 2 May 2007.

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