projectcanvas.info

Greater Content Competition An Opportunity for BT

Canvas progress report:  The BBC Trust's second round of consultation ended on February 2, and we expect a final decision by the end of March.  Assuming a Canvas shareholders' agreement is ready to be signed at that time, launch could be end 2010 or early 2011.  The major work would involve finalising the technical specs/liaising with box manufacturers, plus the EPG.

"Freeview 2.0": Canvas is effectively Freeview 2.0.  It will be particularly attractive to the 6m homes with broadband but which are not currently paying for content.  It could also increase the size of the broadband market (one study suggested by 500-870K) and boost the growth of connected devices.  It would have an area for Linear TV over the air (arranged in the same order as Freeview); an area for On Demand services over broadband (order tbd); and an area for web services (also over broadband, arranged in a user-driven fashion); this could include areas for services as diverse as NHS Direct or Flickr.

Key outstanding questions:  Canvas looks pro-competitive (breaking down platform barriers for content owners), but some media companies could still try to challenge its creation; it looks unlikely that this could freeze launch however as content is not being aggregated and the BBC shareholding will be only 16.6%.  Second, the DTG needs to finalise its work with Canvas to create common standards for consumer devices.

Impact for BT:  Canvas is likely to increase demand for fixed broadband services in general.  In addition, BT (among other ISPs such as TalkTalk or indeed Sky) could extend the reach of its content services.  While this could be at the expense of greater competition for viewers given the large number of providers on Canvas, as a relatively weak content player BT has arguably more to gain than to lose.  

Key facts:

• 10m out of 25m UK homes have Freeview, 0.5m have Freesat
• 6m homes buy broadband but not content and are the clear first market for Canvas
• Canvas is an open platform designed to democratise access to homes – content providers would no longer need to pay for DTT capacity (£10m+) to access TVs
• Not an attempt to control consumer electronics – the technical specifications will be open to all.  Equally Canvas will not create, licence or aggregate content, or require exclusive supply.
• We expect boxes to cost £150-£200 initially.  If ISPs want to subsidise this would not reorder content on the box but the boxes could be co-branded.
• New brand name not yet decided (Canvas just the working name).
• The open API means that in theory there could be an "apps store" in some ways like iPhone.  So e.g. while initially there will be no common payment mechanism over time someone could create a Canvas "wallet" enabling common payment across a variety of platforms.

For the broadcasters:

• Should help keep viewers within the broadcast event by potentially integrating Twitter etc
• Will not change the ordering of TV listings from what is currently normal on Freeview / Freesat.  There will not be prominence for shareholders, nor will prominence be available to be bought
• Will provide data (on an opt-in basis) on viewing habits.  Aggregated data at the Canvas level will be available to Canvas only on take-up and viewing habits.
• Could help maintain share of viewing in "free" homes for free to air broadcasters (+50% more than in pay homes)
• Return path will allow recommendations, and could allow tailoring of advertising.  It will eliminate the gatekeeping role between the advertiser and the content provider that Sky or Virgin currently provide in pay homes.
• FRND - "Fair, Reasonable and Non-Discriminatory" access
• There will not initially be an open web browser for security considerations and also to maintain simplicity.

For the ISPs:

• Canvas will work at a min bandwidth (prob 2 Mbps)
• However will allow ISPs to market higher bandwidth packages for HD content etc.
• Will also manage bandwidth by downloading most popular shows over the air to the PVR in the box