Select Committee on Culture, Media and Sport Written Evidence

Memorandum submitted by Video Networks Limited


  Video Networks Limited ("VNL") is a broadband platform operator, which supplies the new home communications and entertainment service, Homechoice. Homechoice offers subscribers a large suite of digital broadcast television and radio channels, comprising over 50 free and pay, live and timeshift channels, including all of the recognised and popular BBC television and radio services, together with video-on-demand television, broadband internet connectivity and telephony services. In addition, on demand channels provide access to feature films, television programmes, music videos and public information services.

  Homechoice is supplied to customers via Digital Subscriber Line ("DSL") technology, using unbundled local loops on BT's Public Switched Telephony Network. After an initial soft-launch VNL launched its services commercially in late-summer 2004 in the Greater London area. At commercial launch, VNL had a presence in 73 BT exchanges and so was able to offer HomeChoice to 1.25 million households. VNL has recently expanded its network and Homechoice is now available in 136 BT exchanges, and can offer the Homechoice service to approximately 2.4 million homes across Greater London. VNL intends to expand its footprint to other regions in the United Kingdom in 2006.

  VNL welcomes the opportunity to comment on the impact upon creative industries of recent and future developments in digital convergence and media technology.


  1.  Digital convergence is at last becoming a reality and the opportunities for the creative industries and the new delivery systems are exciting. Consumers increasingly expect to be able to access whatever content they want, whenever and wherever they want. However, the impact of convergence goes beyond merely being able to see or hear the same thing in a different way or at a different time.

  2.  The potential of new technology to personalise the consumer experience, vary it and broaden it is impressive. New audio-visual formats will increasingly link "TV" with broadband and VOD applications and mobile audio-visual elements. Additional plot elements, character back-stories, alternative endings, competitions and communities will increasingly become part of a "TV" show's overall offering, through the exploitation of new technologies.

  3.  All this has occurred through the two arms of convergence: both the means by which content is delivered and the devices upon which content is receivable have converged, such that the same or similar audiovisual content is now deliverable and viewable across a wide range of platforms.

  4.  Theoretically this should mean there are more purchasers of rights, more sellers of rights and more outlets for rights, provided the incumbent major players are not able to monopolise and control rights and distribution.

  5.  Barriers to the fulfilment of the potential of convergence include various issues in relation to access to content, as follows:

    (a)  The relatively straightforward issue of "catch-up" rights (the right to make a TV programme available for a short period (seven days in the case of the BBC) after first broadcast on an on demand basis) has become mired in wider discussions between producers and broadcasters about new media rights, hindering the launch of such services by digital TV platforms with an on demand capability, such as Homechoice and the cable companies.

    (b)  A failure to resolve the issues between producers and public service broadcasters has led to many "new media rights" simply not being exploited at all, to the detriment of the producers and the new distributors.

    (c)  In the context of a fast-developing converged media landscape, long holdbacks in respect of any rights (or any holdbacks at all) have a chilling effect. As the barriers to cross-border content distribution are increasingly lowered and the new media world becomes increasingly international in scope, this carries with it the danger of placing the UK industry at a significant disadvantage.

    (d)  Vertically integrated broadcaster/TV platforms (such as Sky and Telewest) typically withhold their channels from new entrant DSL and IPTV platforms, hindering the emergence of technologically advanced converged platforms. In some cases they may have sufficient market power in respect of the distribution of digital TV to be able to place barriers in respect of the access by such new platforms to third party content, a point referred to by the OFT's recent determination in respect of Sky's acquisition of Easynet. This reduces consumer choice and limits the potential of new technology to benefit consumers and provide a new and innovative market for the creative industries.

    (e)  The primary terrestrial broadcasters (and those with a particular interest in the less-flexible delivery platforms, such as satellite and digital terrestrial TV) may have a vested interest in limiting the speed of the technological revolution and stifling functional creativity to protect the relative comfort and simplicity of the existing market.

    (f)  The bundling of rights can prevent the emergence of new services. This is true of (i) the bundling of rights via the primary rights in commissioned programming and (ii) the bundling of new media rights into any holdbacks. These practices effectively prevent "new media" distributors from creating new services and bidding for the rights required by those services. This further entrenches the privileged position of the free to air broadcasters and premium broadcast rights monopolists, to the detriment of consumers, new entrants and producers.

    (g)  Steps need to be taken to ensure that dominant or incumbent players cannot leverage their market power in one area to prevent access to content in another. It is important that a wider range of content aggregators can get access to content on sensible terms.


  1.  The UK leads the world in online TV piracy. This is due in large part to having a common language with the US, coupled with the fact that popular US TV series typically play out in the US months ahead of the UK. It is also fuelled by holdbacks imposed by the UK free to air broadcasters. The consequential explosion in online piracy of TV shows, via BitTorrent and other file sharing mechanisms, inevitably hits the UK creative industries directly, via the piracy of UK productions, as well as damaging the broadcasters of both the US and UK shows. Widespread piracy inevitably reduces the secondary rights value of creative content.

  2.  Piracy simply highlights a demand that is not being met. The vacuum created by holdbacks is inevitably filled by the pirates. The music industry experience has shown that the demand is not necessarily for "free content" but for on demand (and early) access to content.

  3.  Whilst new technology will struggle to defeat piracy, demand for pirated copies might be reduced by:

    (a)  closing or removing the holdback windows between first UK broadcast and secondary exploitation (absent a "dark" period the demand for pirated copies is reduced);

    (b)  allowing for a seven day video on demand catch-up window as part of the primary right to minimise the potential for someone to "miss" a programme;

    (c)  wider exploitation of creative content in all media, new and old; and

    (d)  direct action and education of those participating in piracy.

  4.  The government has appointed Andrew Gowers to head an independent review of intellectual property rights legislation. As a part of that exercise, consideration should be given to proposing clarifications to the law with a view to removing any danger of new forms of piracy slipping through copyright law loopholes.

  5.  At the same time, the review should consider areas where the existing law contains distinctions that are not suited to the way technology has developed or may in future develop. For example, as currently drafted, personal digital video recorders ("PVRs") fit within the so-called "home taping exemption", whereas server-side remote recording technology does not. Hence, a customer with a Freeview PVR or Sky+ box can legitimately make digital copies of TV programmes in their homes, but customers served by a distribution platform such as Homechoice are reliant upon the platform operator (and broadcaster) obtaining the necessary rights (on commercial terms) in order to make available even a seven-day "catch-up TV" service via their centralised servers. This is despite the fact that the centralised server is under the control of the platform (and indirectly the broadcaster) meaning a server-side recording facility is capable of filling the function of "home taping" without ceding control of the content itself (and as a result is intrinsically more secure than the in-home recording devices enabled and popularised by the uneven application of the Copyright Act's home-taping exemption).


  1.  Any attempt to extend the broadcast television regulatory regime to "non-traditional" media should be resisted as being (i) unworkable (ii) counter-productive and (iii) unnecessary. Whilst the protection of children is of paramount concern, self or co-regulatory approaches are more than capable of addressing this and should be encouraged.

  2.  Voluntary affiliation with self-regulatory bodies, coupled with improved education in relation to child protection software and PIN systems should allow public confidence to be maintained without stifling new services or creating an unworkable bureaucratic system. The Association for TV On Demand ("ATVOD") model in the UK provides a good example of a way forward and the voluntary utilisation of the BBFC system by games producers similarly demonstrates that the industry will happily and responsibly embrace the self-regulatory approach.

  3.  The government should strenuously resist attempts by the EU to impose anything more onerous on the industry. The worst outcome for the UK/EU would be the off-shoring of creative talent, investment and revenue generation to avoid an uneven playing field in an increasingly globalised creative environment.


  1.  Consumer expectation is increasingly moving away from reliance on content being scheduled at specific times on particular devices, towards on demand availability and mobility. The BBC is very pro-active in exploring new media opportunities but needs to be strictly controlled as regards the impact of its activities in these areas on the development of the commercial new media sphere.

  2.  It should be taken as read (although currently it is not) that the BBC should treat all distribution platforms on a platform neutral basis. However, the greatest danger is that initiatives such as the BBC's Creative Archive, whilst undeniably capable of being a force for the good of the UK's creative industry and the development of its next generation, will have a two-fold negative effect:

    (a)  to draw "viewing hours" away from new content; and

    (b)  to provide the BBC with a means to create for itself a disproportionately large presence in the on demand world (ie a "BBC Universe" which the consumer may struggle to leave) to the detriment of the development of the commercial creative sector (large and small).

  3.  Currently proposed safeguards are insufficient to prevent the over-reaching of the BBC or to prevent the BBC crowding out the commercial sector. Furthermore, the BBC being wedded to a non-commercial approach makes it significantly harder for the commercial sector to adapt to the on demand world, as the BBC does not need to develop commercially driven business models to support its new media activities. The raft of free BBC services emerging into the market serves to define and shape consumer expectation around the notion of free access to everything at all times and in all places.

  4.  If producers and other creators are expected to find a greater proportion of their income from "new media rights", a large "free" BBC content presence in the emerging markets will stand as a material barrier to the creation of new and innovative ways of developing, distributing and extracting value from audio-visual content. The controls on the BBC in this area need to be every bit as strict as those covering any proposed new BBC broadcast channels.

  5.  Arguably the restrictions and controls on the BBC in relation to non-broadcast exploitation of BBC content should be far stronger. The danger of the BBC crowding out the commercial sector is not to be underestimated. The BBC has already been permitted to launch two dedicated free to air children's channels and a youth-oriented channel into a market very well served by the commercial sector. Since then, the BBC has made available free downloads of the complete Beethoven Symphonies, to the dismay of the recorded music industry and has now announced its plans for the Creative Archive, along with trialling the proprietary iMP player (thereby taking great steps to creating a huge "BBC Universe" providing access to limitless amounts of free BBC content and significantly chilling any efforts by the commercial sector to provide new services for consumers).

  6.  Consideration should be given to requiring the BBC to limit the free distribution of content to its broadcast TV and radio channels (together with limited free "catch-up" windows). The BBC's forays into non-traditional distribution of repeat programming, downloads and so forth would then be required to operate on commercial terms, providing the basis for more fair competition and opportunities for the commercial creative sector. The Creative Archive project would need to be operated on a controlled basis and kept separate from other BBC activity (ie accessed separately, in a limited way) to ensure that it serves only its stated purpose, and does not serve as a viewing substitute for new or non-BBC content.

March 2006

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