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Doubts Cast On BBC's $180m Project Canvas

Note: This article originally appeared on StreamingMediaGlobal.com. For news on online video outside the U.S., subscribe to the Streaming Media Global Xtra e-newsletter.

LONDON - There are increasingly doubts as to whether the BBC’s much-hyped broadband-to-TV Project Canvas will see the light of day.

The project is currently mired in a review conducted by the broadcaster’s governing body BBC Trust, which was expected to greenlight the platform in early autumn. Analysts, media agencies and other bodies have speculated to StreamingMediaGlobal.com that Canvas may not now be passed.

Analysts Screen Digest will no longer go on record with forecasts about Canvas’ launch, although it has restated its prediction that a "Canvas-like service" (a hybrid open IPTV platform) would reach at least 3.5m homes by 2014.

Likewise the Digital TV Group, which is writing the specifications for delivery of IP services to STBs including but not exclusive to Canvas, has also refused to discuss the likelihood of Canvas launching.

"I think everybody from CE and STB manufacturers, ISPs to broadcasters here and in Europe are behind the concept. The concept will happen whether it's Canvas or some other form," said Simon Gauntlett, DTG Technology Director.

With its specifications as yet ungratified, Canvas technology will no longer coincide with the imminent launch of terrestrial HD network Freeview HD.

The BBC with infrastructure partner Arqiva will be the first organisations in the world to deploy the DVB-T2 MPEG-4 technology into full operational service across an entire transmission network beginning December 2. With consumers required to purchase new set-top boxes (STBs) to receive the HD service, they may not be willing to change again when Canvas STBs are scheduled to hit shops before Christmas 2010.

Similarly Freesat, the free-to-air satellite platform, will debut BBC iPlayer at the end of this month, and with the catch-up portal also arriving on Freeview sometime next year it calls into question the need for a new platform that delivers DTT plus on-demand programming.

The BBC is also abandoning its stipulation that public service broadcasters should control a majority of shares in Canvas. The initial proposal had said Canvas would be a private company with two-thirds of shares ringfenced for PSBs (BBC, ITV and Five at present), and a third for ISPs.

Instead there will be just a single class of shares, and the company will operate by majority voting. But all shareholders must now fund the project equally, for a minimum four-year term.

The costs for this have been revealed as £115m ($180m) including launch costs of £22m ($36.5m) although £17m ($28m) is expected to be recouped from the sale of placements on the EPG. Marketing costs are anticipated to be £50m ($82m) although with the cross-promotional clout of ITV and particularly the BBC Canvas can be expected to succeed where other entrants such as Hulu may fail. The technology bill is £30m ($49m).

If the Trust were to vote in its favour, Canvas would still have to pass regulatory body the Competition Commission, which earlier this year notoriously dumped online VOD archive Kangaroo into touch. BSkyB was a vocal critic of Kangaroo and may consider mounting a legal challenge to Canvas even though payTV hasn’t been excluded from the platform.

Sky objects to the use of licence fee money to attempt to create a new platform, instead of contributing to the development of an industry-standard system for bringing web-based content to televisions.

Its channels however will be streamed through Fetch TV, a hybrid DTT VOD box operated by privately owned IP Vision in early 2010. IP Vision already supplies a similar download movie service for Disney-ESPN, and the BBC, and states that its service is capable of supporting HDTV transmissions.

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