BT boxes with Kangaroo over IPTV

UK telecoms company BT has become the latest party to warn that proposed BBC, ITV and Channel 4 on-demand joint venture Kangaroo raises serious competition concerns.

The firm, behind the BT Vision IPTV service, has claimed that Kangaroo would “very likely” reduce competition in the UK VoD space – something that would be particularly harmful to its own interests.

BT Vision launched at the end of 2006 and now has over 280,000 subscribers but hopes to reach two to three million within the next three to five years.

BT now fears, however, that this target could be dented by the arrival of Kangaroo in the marketplace, especially given the UK-centric nature of the programming the proposed service will make available.

“The Kangaroo parties together own or control a vast library of very valuable VoD content. In particular, together they control the great majority of all UK-produced TV content.

“There is a very real likelihood that, by providing this vast library of content on the Kangaroo service, the parties will be able very materially to reduce competition for the supply of UK VoD content,” said BT in its submission to an ongoing Competition Commission enquiry.

BBC, ITV and C4 earlier this month filed their own position papers with the government authority, maintaining that Kangaroo would merely add a “differentiated competitor to a dynamic marketplace” and that the strength of alternative platforms would mean competition would remain “vigorous.”

Last week, newspaper the FT reported that the joint venture had backtracked on plans to retain exclusive rights to programmes commissioned by its shareholders. But BT maintains that, should Kangaroo get the go-ahead, it would have unfair advantages over rivals.

The telco claims that the ability of the Kangaroo parties to cross-promote their service on their respective linear TV platforms, plus the likelihood its popularity would attract an increasing proportion of ad revenues, could give it a market-dominating position.

BT expressed “very real concerns regarding the reduced incentives of the Kangaroo parties to supply their content to competing retail providers” on acceptable terms. It also fears “the extent to which the Kangaroo service may be in a position to obtain third-party content on materially more favourable terms.”

The company has conducted research among its existing BT Vision subscribers, who have access to VoD programming from all US studios, which revealed that demand for UK content remains the driver.

“The success of the BT Vision platform is dependent, to an important extent, on content from the Kangaroo parties,” said the company, adding that this would mean it would be affected more by its launch than other less-UK-focused on-demand services such as Joost and Babelgum.