Project Canvas pushed through by OFT

Project Canvas looks one step closer to becoming reality after the Office of Fair Trading (OFT) said it did not have the jurisdiction to investigate the plan despite complaints from Virgin Media and BskyB.

The service is a joint venture between the BBC, ITV, Channel 4, Five, BT, TalkTalk and Arqiva. It will combine the digital terrestrial TV service of Freeview with broadband in a next generation web-connected set-top box in a bid to deliver internet protocol television (IPTV) to all and allow consumers to watch on-demand services, such as the BBC iPlayer and 4oD, on their TVs rather than computers.

Sheldon Mills, the OFT’s director of mergers, said: “Our investigation has confirmed that the [joint venture] partners, including the BBC, do not intend to transfer an existing business into the JV. Therefore, regardless of the potential significance of the 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.”

BSkyB and Virgin kicked off about the venture claiming that it would ruin the commercial market, however it seems Project Canvas got around the OFT by labelling it as just a portal.

A source close to the project told us: “Whereas with Project Kangaroo they were trying to sell content through the platform, Canvas is just essentially a portal. if you want ITV content, it will still essentially load the ITV player – and display all their ads.”

He also said it was only costing about £15m for each partner to run the site too.

The fate of the project now lies in the hands of The BBC Trust, which told us: “We note the Office of Fair Trading’s decision.

“As we said when the proposals were submitted to OFT by the Canvas partners, we would await the OFT’s decision before reaching final conclusions on Project Canvas. We will now proceed with concluding our assessment and will publish our final conclusions as soon as possible.”

Despite kicking up a fuss, BSkyB would not reply to any of our requests for comments, which we can only assume means it is licking its wounds in a large corner somewhere, however a Virgin representative told us: “As they stand, the Canvas proposals risk severely restricting competition and innovation in the UK’s digital media landscape.”

We’ll have to wait and see what happens with this one.

* EyeSee Lord Reith (pictured above) might well be turning in his grave.