Bumbling BBC gives away millions to Microsoft with exclusive 2 year viewer lock-in! (Updated)

Yes, it’s true, the Executive of the BBC is giving Microsoft the equivalent of millions in revenue. For free. On an exclusive basis. They don’t seem to have even realised the commercial implications of what they are doing. But this blogger does.

The BBC wants to begin offering a BBC on-demand TV over the internet service. It’s a very laudable aim – giving viewers 7 days to freely download a program they missed, and then a further 30 days to watch it before it disappears in a puff of smoke. OK, electrons, but let’s not get pedantic.

The problem is, they are planning to use a Microsoft-based DRM strategy. Not only will the strategy be based only on the Microsoft platform, but it will also need Windows XP or above and Media Player 10 to work. If you have a computer that uses Windows 3.1, 95, 98, ME, NT4, 2000, or any Linux or Apple Macintosh computer the BBC will thus exclude you – even if you have paid your licence fee.

Before everything is finalised though, it has to go through a Public Value Test or PVT, and the Conclusions of the BBCTrust [pdf download, 167 kb] which now sits above the governors and the Executive are now available for public scrutiny.

I’ll save you reading through the entire document (it’s pretty yawn inducing overall) but I recommend you read just two bits.

On Page 10, near the bottom it says:

The BBC Executive proposes a digital rights management solution which would require consumers to be using Windows XP (or above) and Windows Media Player 10 (or above) to be able to access seven-day TV catch-up over the internet.

You have to hand it to the Microsoft sales guys, don’t you? They really got into the BBC’s britches! No wonder the BBC is gently pushing Vista – it’s fundamental to their ideas for DRM, so of course they are looking favourably on any press release from Microsoft and even gave Bill Gates an easy time of it when Huw Edwards interviewed him this week.

Then, at the top of Page 11 they go on to say:

Our understanding is that the BBC Executive aspires to offer an alternative DRM framework, which would enable Apple and Linux users to access the service, but has yet to identify a satisfactory solution. In either case, we will expect this to have been addressed within 24 months.

This is the most dangerous point. It basically gives free rein to Microsoft to build a dominating presence in the nascent TV over internet market in the UK. Not only that, but it allows Microsoft free access to BBC television for at least 2 years, as the BBC Trust only require a proposed solution, not an implemented one, within 2 years!

By that time, Microsoft will have used the advantage thus gained to deal a mortal blow to Apple in the home environment for entertainment, or will at least have dramatically clipped Apple’s wings so expansion into that space will have been made only by Microsoft, and not by Apple. First mover advantage would then give yet another monopoly market share to Microsoft. In the UK, the BBC is clearly the dominant player.

The BBC may argue that they had to pick one technology, and don’t have the resources to develop solutions for two. Since their revenue comes mostly from the UK TV Licence Fee – which has just been increased – I can understand their resources are limited to their £4 billion per year income. Which is why it is all the stranger that they haven’t asked Microsoft to pay millions for this exclusive arrangement. Well, not to the BBC anyway. It’ll certainly be worth that and more to Microsoft who get to lock consumers out of Apple and Linux, just at a time when the pendulum is beginning to move in that direction and away from Microsoft.

It isn’t as if there are not already some well-tested alternative solutions in place. Apple has very successful Movies and TV Shows sections with DRM in it’s iTunes store which serves both Microsoft and Apple computers. Linux I know less about, but there must be some alternatives out there for Linux too.

The provisional conclusions are open to consultation for a period of eight weeks, following which a final decision whether or not to approve the proposals will be made by the Trust by 2 May 2007.

If you use an Apple Mac or a Linux box, you need to ask why as a licence payer you are being penalised for choosing a more secure computer; if you use Windows you should ask why Microsoft has not been asked to pay for this vastly commercially advantageous deal that will guarantee them a protected market share for at least two years.

You can send in your complaints to pvtconsultation.ondemand@bbc.co.uk or by snail mail (always gets the BBCs attention) to this address:

On-Demand Consultation
BBC Trust
35 Marylebone High Street
London W1U 4AA

The Minister with responsibility for TV in the UK is Tessa Jowell, who must be looking for a good platform on which to rebuild her reputation right now after the Mills-Berlusconi affair. You can e-mail Tessa Jowell at tessa.jowell@culture.gsi.gov.uk

Ofcom first raised the issue of competition, so are also involved. You can reach them here:
Ofcom Board members and their email addresses

As the Ofcom website is very difficult to navigate to a point from which you can actually do something I’ve also copied the names and emails of their main movers for you:

Chief Executive Officer

Chief Technology Officer

Partner, Competition

Peter Ingram you may remember was involved with the EU’s legal case regarding Microsoft’s alleged abuse of monopoly power which Microsoft have so far lost every round of, but have still to change their attitude regarding lockins of users and lock outs of competitors of their software.

I’ve had a look at the EU website too. The EU’s Competition Commissioner, Neelie Kroes, is clearly going to need to look into this matter. Here’s a relevant excerpt from her website:

“As European Commissioner for Competition, my aim is to promote a fair and free environment for business in Europe.

The job involves both setting EU-wide rules to guarantee fair competition, and enforcing them fairly and with vigour, to prevent and punish any breaches. That means making sure that:

  • companies do not carve up markets or fix prices amongst themselves;
  • taxpayers money is used to pursue socially desirable objectives without disproportionately distorting competition or wasted when public authorities grant subsidies to business“.

(The italics are mine, just to highlight the areas which this BBC action is moving into.)

Clearly, the BBC-Microsoft deal will carve up markets; the two year timescale will significantly distort competition; and the lack of a fee being charged to Microsoft is in effect a subsidy. It’s a subsidy because a canny commercial broadcaster would have wrung a high price for giving such a hugely advantageous arrangement to a software company that is just beginning to lose market share in both the internet and desktop computer markets.

In effect, the BBC are giving Microsoft a two year season ticket for free.

To contact Neelie Kroes:

Neelie Kroes
European Commissioner for Competition

Further info:
The Guardian on the BBC iPlayer

University of Auckland Computer Science Department Paper by Peter Gutmann
A Cost Analysis of Windows Vista Content Protection

18 comments on “Bumbling BBC gives away millions to Microsoft with exclusive 2 year viewer lock-in! (Updated)

  1. Hey there…

    Thanks for leaving the link – this is worst than I thought! OMGoodness!

    Have you spoken to BoingBoing about this? Got some further publicity on the matter?

    You got my support.


  2. Hi,
    Interesting bit of information there! I agree that it’s not a good situation. I also liked your ‘Is the BBC a monolith?’ article too. I’m going to link to both that and this article on my blog if that’s ok as I think they both contain interesting information.

    How do you know about this Microsoft deal anyway?


  3. Thanks for looking in Rick, Digg me too if you like.

    I’ve read the documentation published by the BBC Trust about this issue, and quoted it in my article. Unfortunately they have held back a considerable amount of documentation so as not to “give away commercially sensitive information” or words to that effect. I imagine this would include discussions with Microsoft.

    The important point though is the exclusion of so many licence payers from a service, just because they bought the wrong brand of computer. Imagine not being able to view BBC TV because you bought a Sony TV! It amounts to the same thing, is a significant support to a commercial monopoly and should not be allowed.

  4. Sorry, but you might want to check some of your facts. Simple truth is, there is no functional DRM solution for Linux, and Fairplay does not allow you to do expiry of downloaded content.

    The BBC can’t launch the iPlayer on Mac or Linux until some form of DRM solution exists that allows this to happen – they only have the rights with their programming to allow it to be downloaded for free in this way for a limited period of time. And maybe the people to be shouting at about the fact that no such DRM solution exists (at least for the Mac) is Apple…

  5. Thanks for dropping by Phazer, it’s always nice to have an opinion from the other side.

    The facts are not in question: by this action the BBC will be complicit in helping Microsoft create a monopoly using licence payers money.

    Before the recent change in strategy, weren’t the BBC developing their own Open Source DRM codec that would have worked cross-platform?

    I’m amazed the BBC have chosen to ignore Apple’s successful iTunes distribution network. The BBC already offer free content in the form of podcasts from there, and in the US the content providers are happy to provide over 200 TV shows and 20,000 audiobooks through iTunes – not to mention movies – so the content providers must be happy with the Apple DRM protection. Let’s face it, anyone can copy content on their TiVo or Hard Disk recorder and keep the copy indefinitely.

    Don’t the BBC ever look at the big picture? Microsoft clearly did; they must have thought all their Christmases had come at once!

  6. So the BBC have chosen not to support iTunes – I am sure they did their research before settling on the MS solution. I am not familiar with downloading videos off iTunes, can content be set to expire after x days? AFAIK the Apple Fairplay system only protects against copying content onto different hardware and can’t make it unusable after a time period has elapsed. Since this was one of the BBC’s requirements, I would imagine this may have swayed their decision?

    In any case, Mac users are not completely locked out, since they can run XP on their Mac hardware using Boot Camp, right?

    Incidentally, the BBC are not the first to release a video on demand system – Sky and Channel 4 both launched similar services recently and both used MS technology. I don’t recall seeing anyone urging people to complain to Ofcom for using MS in either of their services – why are you singling out the BBC for this unfair treatment?

  7. No, the BBC were developing their own Codec, but it didn’t have it’s own DRM – they would have to apply someone else’s DRM to Dirac, which would lead to exactly the same situation as we have now.

    Again, the whole point of the iPlayer is that the BBC do not own all the copyright for most of their programmes. And if they want to repeat those programmes, they have to pay the people who do for it again. And if they distribute programmes by DVD they have to pay those people a percentage of the revenues. And that cost (vast as it is) cannot be encompassed by the licence fee payer – not without quadroupling the fee (and even then you wouldn’t get a lot of the stuff the BBC gets now). So it gets passed on to the consumer – if you buy a DVD from BBC Worldwide, you’re paying for those royalties to be paid, same as any other company.

    Now, why would the rights holders in this case allow the BBC to give away what are essentially DVD’s for everything for free? They wouldn’t get any repeat fees. They’d lose hundreds of millions of pounds a year. And copyright law is very clear. They own the copyright, and they have to give explicit permission.

    Note, if you will, that the BBC’s podcasts have all commercial music edited out. They don’t include scripted content, or clips of other shows. They don’t include original compositions, or poetry or prose. They don’t include acted contributions. And they don’t include any of these things because the rights cannot be cleared to give them away free in perpetuity. The money just doesn’t add up.

    When commercial TV operators sell their works on iTunes on the US there is a fundamental difference to the iPlayer – it’s not free, and hence the rights holders get revenue. This IS a free service, and thus has to be limited like a rental. And if it’s going to be limited, it needs DRM that supports the files timing out after a length of time. And I’m afraid there is only one DRM in town that supports that at the moment.

    One would note that BBC Worldwide will also be offering downloads of BBC programming this year – and those won’t be free. They’ll be like iTunes in the US – about £2 a show. And, since there’s revenue there to pay residuals out of, they won’t need to have any time limitation – and thus they COULD be offered using other DRM providers. And I strongly suspect they will. Indeed, I would be surprised if it didn’t turn out the first company to offer those was iTunes… Heck, at the rate the Trust is going this might launch before the iPlayer.

    You’re also being slightly disingenuous with these claims of two years. For Macs at least, as I understand it the BBC can launch a Mac iPlayer tomorrow once the DRM 7-day timeout is implemented in Fairplay. And rumour has it Apple is about to launch such a thing imminently. A Mac version might only be a few months behind.

    Linux is slightly different. I don’t believe a vaguely secure DRM timeout is even possible for Linux, never mind forthcoming. And they’re just going to have to get used to that.

  8. Your argument has some logic, but it’s basis is fundamentally flawed. I’ve found that looking at the big picture helps. I’m not talking about HDTV here, just detached objectivity – an “out of the box” perspective if you like.

    The BBC strategy is predicated on equating digital content delivery with broadcast delivery, which means it must be free. But that pairing’s wrong, isn’t it? Online video delivery is far more like DVD video delivery: both are delivered post-event, and can be enjoyed more than once. Broadcast delivery is quite different, ephemeral, traveling through the air like a beautiful but gone in a day Mayfly, vanished the day after.

    Treating online digital delivery as if it were broadcast delivery leads to the current situation which probably breaks EU laws and the BBC’s mandate by favouring a single commercial enterprise. How come no one saw that coming? If they did see it, how did they not care?

    On the other hand, charging for online delivery as if it were an electronically delivered DVD leads to no conflict, because it would allow both Windows and Apple users to take advantage equally of the digital content that could still have DRM protection, as in the US.

    The only way forward for a National Institution such as the BBC now is to avoid bias, and avoid creating a monopoly. It simply isn’t enough to say “that’s the only solution available” because it isn’t. We just have to step out of the box we’re in to see that.

    You should also check out the Peter Gutmann article I listed at the end of the main article. It’s compelling stuff!

  9. Why are Sky and Channel 4 different to the BBC? Because they are commercial enterprises with a profit motive and shareholders.

    The BBC is state owned and paid for by compulsory licence fee. It is governed by rules that specifically rule out commercials, product placement or bias.

  10. I just added another blog post with some additional thoughts about the whole BBC iPlayer / DRM issue, and coincidentally Steve Jobs wrote his ‘Thoughts on Music’ article on Apple.com. It’s perhaps a little rambling but I’m curios to see what people think!

    I hope you don’t feel I’m intruding on your blog entry here with my comment, I’m very interested on people’s thoughts about ways the BBC can resolve the issue regarding the use of MS DRM.

  11. I’m sorry, but I find the notion that it’s in the wider public interest to charge them an unneccessary £2 a time to watch programmes they’ve financed to be made in the first place for no other reason that to try and make a tiny, insignificant dent in Microsoft’s already existing OS monopoly to be more than a little ignorant of the “big picture”, and I strongly suspect the general public would agree with me there.

  12. I find the notion that it’s in the wider public interest to charge them an unneccessary £2 a time to watch programmes they’ve financed to be made in the first place

    So give the BBC DVDs away for free then! Same principle… you can’t have it both ways.

    As for Microsoft’s monopoly, you’re getting confused a little, aren’t you? The video on-demand service hasn’t launched yet.

    Because it hasn’t launched yet, we still have time to avoid the creation of a new monopoly by fait accompli.

  13. [quote]So give the BBC DVDs away for free then! Same principle… you can’t have it both ways.[/quote]

    It’s not the same principle, because one is a temporary copy and one a permament one.

    [quote]As for Microsoft’s monopoly, you’re getting confused a little, aren’t you? The video on-demand service hasn’t launched yet.[/quote]

    Nope. WMV is embedded in Windows, which has an effective monopoly. It’s already done.

  14. Now you’re just trolling.

    The principle you are trying to have both ways is the one where the licence player “is charged to watch programmes they’ve financed to be made in the first place”. Your words. But you only want them to be applied when it suits you.

    You say the deal with Microsoft is already done to use WMV in Windows, which to be true would mean that the BBC executives must have broken their own charter since the PVT process has not completed yet. Legally, any contract signed so far is on shaky ground if what you say is true.

    Of course, there are managers in the BBC who are probably so arrogant they think they can do things like that, or so out of date they forgot the PVT was necessary. Somehow I don’t think the European Union will see the BBC using licence payers money to support Microsoft’s monopoly in that way as something that will enhance competition in Europe.

    Steve Jobs was right to bring up the subject “Why do we have DRM at all” because the pirates can break into all forms of DRM eventually and copy the content anyway! The Free Software Foundation are right to call it Digital RESTRICTIONS Management.

    Both Universal and EMI have had either much reduced profits, or issued profits warnings recently – and they’ve been running DRM which clearly hasn’t worked!

    The trend is away from proprietary solutions and towards Open ones. Open Government, Open Standards. Open Document Format.

    You really need to wake up and smell the coffee.

  15. […] really wants but force them to have it even when their older things still work fine. Check out this blog article for more info on that […]

  16. […] of raw DRM powered lockins to the table, including one lockin with the BBC who are awarding an effective monopoly for their on-demand video service to the software giant. Microsoft clearly believes they will gain from tying consumers into having […]

  17. […] quite a few MS fanboys in its technical department. Not surprising when you read stuff like “Bumbling BBC gives away millions to Microsoft with exclusive 2 year viewer lock-in! ” which shows that someone in the BBC has crossed the line in being so wedded to their own […]

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