Intellect is the UK trade association for the IT, telecoms and electronics industries including the consumer electronics industry and the fixed, mobile and satellite telecommunications industries. Its members account for over 80 per cent of these markets and include blue-chip multinationals as well as early stage technology companies. These industries together generate around 10 per cent of UK GDP and 15 per cent of UK trade.
Within its membership, Intellect includes Consumer Electronics (CE) manufacturers who are all represented on our Consumer Electronics Council. These companies manufacture a range of digital products for the consumer market, including digital set-top-boxes (STB) and digital televisions (DTV) for the digital terrestrial and satellite platforms. We estimate our CE membership represents over 70% of the UK digital TV equipment market. This response has been developed in consultation with these member companies who are listed in Annex 1. It is likely that the BBC Trust will also receive direct responses from many of these companies. Summary
The Intellect CE Council agrees that the global market for internet-connected television devices will grow and that there will be public demand for services such as BBC iPlayer to be accessed through the TV in the UK. Therefore we support the aim of developing an open standard that would enable broadband content and services to be accessed by digital TV equipment.
However, Canvas is not an open standard. As it is currently described we believe it will damage the existing digital TV market, have a negative impact in the longer term and will not realise the public value benefits that are envisaged. The reasons for this are summarised below and then covered in more detail in answers to some of the questions posed by the Trust:
The process adopted to date for developing Canvas
While this subject does not directly form part of the consultation, the process by which Canvas has been developed to date has had a significant impact on manufacturers. In particular:
Response to BBC Trust questions on Public Value Assessment
Do you think Canvas would be a good use of licence fee money?
We believe that delivery of BBC content to the TV via IP is a strong proposition and we support that aim.
However, the market for internet-connected TV is global. By seeking to define a UK specific standard in a global market Canvas runs the risk of creating a technological island. This will mean economies of scale will be lost and that some manufacturers will not produce Canvas compliant equipment for the UK market. This will in turn mean less competition and innovation. Ultimately the UK consumer will lose the benefits that these market forces bring such as choice, quality and value for money.
Our members believe strongly in the TV over IP proposition (or so called Hybrid or DVB+IP which is what Canvas in essence purports to be) and have already begun developing products. Much of this development is based on open standards. The technology being developed provides what they feel consumers need and what their customers (retailers) will want. From the content side, the BBC and other content stakeholders appear to see this differently in that they want to serve content in a manner which a) is packaged b) controlled and c) rendered how they believe to be suitable for the target market. We believe that to create the most value for licence fee payers there must be an adoption of open standards and a lessening of prescription to uphold competitiveness and stimulate products to the market. If this happens a horizontal market will flourish.
In what ways do you believe these proposals are different from other services or facilities available (or anticipated soon to be available) in the wider market?
In the UK Intellect’s members work with the Digital Television Group (DTG) to develop the DTG ‘D-Book’ which sets out the detailed technical standards for digital terrestrial television in the UK. The DTG works closely with industry members to ensure the harmonisation of open international standards by profiling them for UK interoperability. This is vitally important for European or global manufacturers who rely on open international standards to generate genuine economies of scale which in turn increase competition, drive innovation and benefit consumers.
The BBC has not engaged with the DTG in the development of Canvas despite a tried and tested structure and open standard development process being in place. D-Book 6, the latest edition which has just been completed, sets out the open technical standards for Digital television in the UK. Intellect and DTG members have, as part of the latest D-Book development, mandated broadband network connectivity on all Freeview HD receivers – based on MHEG technology to enable the delivery of broadband television services such as 4oD, ITVPlayer and iPlayer to future Freeview receivers. However, given that Canvas is now in consultation and our understanding is that it is using differing technologies, some of these developments have been frozen, rupturing product cycles and causing concern in the market. It is completely practical that the return path work can continue using MHEG (a completely open standard) and that a Canvas type service can be developed over time by considering these technologies.
Other international standards development projects are underway that will achieve the same aim. An example of a similar project is the Open IPTV Forum (OIF) which can be seen at www.openiptvforum.org. While the BBC has joined as a partner we can see no evidence that their intention is to seek to influence and work with the standards development that is underway.
The Market Impact Assessment Annex to the consultation says “We do not believe that another player has the incentive to invest in similar technology and licence it to Freeview/box manufacturers…manufacturers might be in a position to develop an open standard, but it is difficult to understand why they would want to make it available to other set-top box manufacturers that are direct competitors”. We believe this is wrong. Through the EBU, we are aware of standard specification activities in both France and Germany that have considerably wider cross-industry involvement than the Canvas project. Furthermore, the members of the OIF are mainly global device manufacturers, include the largest IPTV STB manufacturer in the world and have published standards available on its website.
At a recent industry conference a BBC speaker said of Canvas, “We have spoken with a number of Europe’s leading broadcasters, and there is interest in the idea of a common platform. But we’re still very early in the process”. However, at the same event David Wood, Head of New Technology at the European Broadcasting Union (who promote cooperation between European broadcasters) urged the BBC to take a more proactive leadership role in European IPTV standards development and bemoaned the proliferation of national standards that were harming the industry.
This evidence demonstrates that the BBC is not placing enough importance on aligning itself with existing open standards projects and that the process to date has been closed.
We firmly believe that the UK should be at the forefront of digital communications technology development. The BBC has played a vital role in ensuring the UK is a leading country in the development and application of cutting edge broadcast technology. However, the BBC must seek to adopt open standards and work on a European and global scale.
Please explain whether any potential negative impacts identified as a result of the investment in Canvas can be addressed and/or mitigated
Further questions will be answered to provide a greater level of detail for the BBC Trust but the view of the Intellect CE Council is that project Canvas must immediately:
How important is it that the BBC improves access to its on-demand and online video content in the run up to digital switchover and the launch of terrestrial high definition television? Do you think the proposals for Canvas will help to achieve this?
Digital TV switchover is already underway and over 4 Million households will have completed the process by the end of 2009. The timetables for the launch of Freeview HD products (STB and DTV) are still unclear as silicon development timescales and cost are not set and business cases are not yet finalised. As we have not seen the draft specification for Canvas we cannot comment on the length of the development timescales.
While in theory it makes sense to align development timescales with the Freeview HD project and aim for introduction of product in 2010 we extremely doubtful that this can be achieved but are unable to comment in detail on whether that is possible for the same reason as above.
One of the stated objectives of Canvas to drive take-up of broadband services in households with Freeview or Freesat which do not currently subscribe to a broadband connection. To what extent do you believe the proposal will achieve this objective?
The concept of IP enabled devices from TV and STB manufacturers has already been embraced. We believe that more IP enabled device will increase broadband use and more IPTV services such as iplayer, ITVPlayer and 40D will in turn stimulate IP device development and deployment. We see four critical success factors for Canvas to drive broadband take-up:
Content – The BBC iPlayer alone is a compelling offering for anyone who currently cannot access it and ITV.com and 4OD (should they join the JV) will add to that. We believe that for many these services available through the TV will drive demand for broadband take-up. For some the £8-£19 monthly charges will outweigh the desire for content
Marketing – It is unclear how Canvas would be marketed with Freeview and Freesat. The focus for both to date has been on a one-off payment with no subscription and the monthly broadband subscription to get the new services could confuse many.
Quality of service – Launching with Freeview HD would mean Canvas being immediately compared to high quality HD services. Canvas seems to be working on the basis of SD services using a basic download speed of 1.6Mbps so it will suffer in contrast. This could be compounded further by peaks in demand for video content via Canvas that could lead to congestion in the broadband network and a significant dip in the quality of service.
Timely availability of a wide range of receivers – Driving broadband take-up will require timely availability of a range of products. This is dependent on a number of factors one of which is the fit of the technology choices for Canvas with industry trends, manufacturer roadmaps and the roadmaps of semiconductor suppliers to the TV and Set Top Box (STB) industries. The consultation document does not give any information on these technology choices.
To what extent do you believe the proposal, as outlined, will contribute to the BBC’s public purpose?
We do not believe that the proposal will achieve point 5 of the BBC’s public purpose: Bringing the UK to the world and the world to the UK.
This is predominantly due to the fact that the BBC has not engaged properly with the DTG or other European and international efforts in this area and that failure to do so may act as a disincentive for some global manufacturers to invest in a UK market that could become a technological island.
Response to BBC Trust questions on Market Impact Assessment
What do you believe are likely to be the most important trends in terms of technological development and/or consumer demand?
Please explain whether you believe the BBC’s planned investment in Canvas would impact how these markets will evolve (either positively or negatively). For example, do you believe Canvas would create barriers to entry in any of those markets? Do you believe Canvas would have positive or negative impacts in any of those markets?
Open standards The consultation makes it clear that Canvas is not an open standard but rather a “standards based open environment”. We believe that genuine open standards while more difficult and time-consuming to develop, have proven to be most effective and successful when deployed. As mentioned above, Intellect and DTG members have, as part of the latest D-Book development, mandated broadband network connectivity on all Freeview HD receivers – based on MHEG technology to enable the delivery of broadband television services. However, given that Canvas is now in consultation and our understanding is that it is using differing technologies, some of these developments have been frozen, rupturing product cycles and causing concern in the market.
Adobe Flash It is also rumoured that Canvas will use the Adobe Flash multimedia platform. Manufacturers feel it is wrong to use a proprietary solution controlled by a single technology vendor rather than an open standard. Adobe Flash requires a licence fee and while Adobe have responded to criticism by embarking on the “Open Screen Project” (which seeks to remove licence fees payable to Flash ”players”) this initiative is still in its infancy and licence fees are still an issue. There is also very limited competition to Adobe in supplying Flash streaming servers meaning they are significantly more expensive than streaming servers for open standard protocols.
Furthermore, many of the benefits of Flash are conditional on using the latest version of Flash as used in PCs. This version needs significant work to make it ready for embedded platforms. Using the older versions which are ready for embedded platforms will not deliver many of the benefits relating to content authoring. Using the latest PC versions will require significantly more capable (i.e. expensive) terminals. While this will probably be addressed in time, this is not compatible with making Canvas services widely accessible quickly.
Ultimately, existing vendors would end up being beholden to Flash and that is not a healthy situation in an open competitive market. If this decision has indeed been made it is vital that a review is put in place to examine the process by which it was taken and the reasons for doing so.
Inappropriate control We also believe that the current proposal goes beyond simply creating an open environment and seeks to assert inappropriate control over parts of the market where manufacturers and retailers would usually compete and innovate. In particular:
In a market that is suffering price depreciation at a more rapid and sustained level than ever before this type of intervention from a trusted source needlessly speeds that up. It also sets an unrealistic price expectation among consumers. The UK market is, and always has been, based on choice across a range of products and prices. A consumer will make buying decisions based on many different criteria including functionality, brand, usability and price. If the BBC has set an unrealistic price expectation in the mind of the consumer it can detract from the quality of the product and lead to a faster commoditisation of the market and the quality and functionality of products will drop so that price points can be met. The BBC Trust should ensure that this type of direct market intervention does not occur again and that this estimate is withdrawn.
Annex 1 – Intellect CE members
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