The Rise of the YouView Leviathan
By Fellows and Associates’ independent correspondent Samuel Ali.
Television in the UK is going digital next year and, as
this switchover happens, a new digital TV service is planned to surface on the
market. From the BBC, ITV, BT and a number of other major partners comes
YouView, a long awaited TV service which will bring digital TV, BBC iPlayer,
ITV Player, 4oD, Demand 5 and SeeSaw and more to the television, through a
set-top box and no subscription fee. The ambitious joint venture which looks to
unite the realms of Internet and TV to create a video-on-demand super-centre
has negotiated the scrutiny of competition law challenges from the likes of
Virgin Media and BskyB. More impediments await this rising behemoth; this
article considers some of the early IP issues that have been stirred.
YouView is feared by competitors because it is set to
bring together a significant amount highly popular video and interactive
content into one portal, free from subscription. The accusation by some is that
this makes it anti-competition and anti-innovation. The powerful gatekeepers,
lead by the public funded muscle of the BBC, it has been suggested, will be
able to keep out new content providers, drive up the price of and hoard their
content and generally squeeze out the competition. In fact, it was these
arguments that toppled Project Kangaroo, YouView’s predecessor.
However, the OFT was not convinced by these arguments
when it came to YouView. Whilst Project Kangaroo had proposed the creation of a
video-on-demand ‘superstore’ through pooling of forces by its powerful
partners, YouView is a “super-centre”. That is, Project Kangaroo envisaged that
the partners would become one enterprise in the venture. All YouView’s partners
are doing, they say and the OFT agrees at the moment, is collectively building
a swanky open market within which they will resume their consumer-friendly
competition.
If YouView is not an enterprise, critics argued, then the
intellectual property rights being transferred to it by the BBC constituted an
enterprise, in their own right, and therefore justified a proper investigation
by the OFT. YouView will not be marketing, aggregating, producing, retailing,
nor hosting any television content. However, in producing a ‘common technical standard’
it will receive significant financial support from the partners, as well as
certain intellectual property rights from the BBC. The OFT cited, in
particular, the BBC’s transfer of IP rights valued at around £5.5 million,
comprising of software, designs, specifications and ‘know-how’ regarding the
development of connected-TV services as “important” – but not significant
enough to be an enterprise in its own right. The IP rights transferred were
deemed not to be ‘directly’ revenue generating and, at the time of
notification, the IP rights were financially and technically remote from being
commercially viable.
So, according to the OFT, in effect, the £5.5 million
rated IP rights being transferred to YouView were merely “bricks” from which
the venture would build their platform, rather than anything constituting a
business – a conclusion supported by the delay in launch from June 2011 to
early 2012.
However, as the OFT stated in their decision, any new
information, be it news of further IP rights transferred to YouView, or
clarification on rights already transferred, could re-open the question of
whether YouView was transferred an ‘enterprise’ by the BBC and trigger
investigation by the Competition Commission.
It seems unlikely that this will happen. The YouView
partners have worked very hard to structure the venture to pass competition
regulation. Furthermore, the delay in launch due to apparent technical problems
only lends credence to their claim that YouView is a construction site rather
than a ready-made business. BskyB, which has been trying to block the project
on competition grounds, was, earlier this year, named as a likely content
provider to YouView. Even competitors seem to be slowly resigning themselves
that this is happening.
The YouView Leviathan might be unstoppable but we can be
sure that, even if the competitors are forced to bite their tongue this time,
they will be examining the legal system that allowed this to happen. Fighting
this rising monster has cost them legal fees, lobbying fees, not to mention the
investment costs to feverishly get their own video-on-demand offering out into
the market. The costs will continue to rise if they pursue opposition. Ofcom
might present an opportunity, as they have stated that they will be monitoring YouView’s
competition impact. And, of course, the subscription profits of BskyB and
Virgin Media will take a hit.
One campaign that is likely to be reinvigorated as a
result is the bid to open up the possibilities of patenting software in the EU.
Moves are afoot in the European Parliament to bring our legislation closer to
that of the US, where even business processes, such as Amazon’s one-click
shopping system, can be patented. Should this happen, whilst some argue that
the powerful companies will monopolize software patents, it would also mean
greater certainty in identifying and valuing software intellectual property. If
the BBC had been forced by the market into patenting their connect-TV know-how
and software, the nature of the rights they have transferred to YouView would
be clearer and the OFT could make a more accurate assessment of whether the
situation constituted a merger situation. There would, in effect, be greater
transparency of business’ IP property. Yet, some would say that such
formalization of the waters is of most benefit to the aggressively acquisitive
and litigious. Then there is a danger that the likes of BskyB and Virgin Media
will fall foul of their own efforts, foiled in their own future ventures by
competition law. I guess, it’s another case of watch this space – or should
that be, this sea.
This article reflects the author’s opinions only and
should not be relied upon as advice. You can contact our news team via email at
[email protected].