BBC's Project Canvas Finally Gets The Go-Ahead

After months of delay and mounting speculation that VOD venture Project Canvas would be quashed, the BBC is to push ahead with the initiative after being given the nod by its own governing body BBC Trust.

The BBC Trust is expected to publish provisional conclusions to its review tomorrow (Tuesday) to be followed by a final consultation period running until mid-January. It is expected that those conclusions are favourable to Canvas.

That being the case, set-top boxes using Canvas software and costing about £200 ($322), could be in the shops in the run-up to Christmas 2010 to maintain the BBC Executive’s launch target for the Project. Canvas-enabled TVs will also be available.

Last week Carphone Warehouse, owner of ISP TalkTalk (which boasts 4 million UK customers), joined the project. Public service broadcaster Channel 4 also signed up with each commiting to invest £16.4m to get the venture up and running.

They are the fifth and sixth partners to join Project Canvas, which aims to bring on-demand programming to viewers with Freeview and Freesat digital TV services, following the BBC, ITV, RTL’s Five, and BT.

Building pay-TV functionality into the platform won’t appease pay-TV providers like Virgin Media and BSkyB, who will see their business at most threat from the launch. BSkyB has already submitted a series of statements to the Trust questioning Canvas’ market impact. It has also expressed concern that public money is being used to distort the nascent market for IPTV—a similar argument to that which derailed PC VOD platform Kangaroo from further development at the start of the year.

The BBC has already spent around £1m building the platform with a budget of £6m ($9.6m) earmarked over five years to develop the technology needed to support it. Overall Canvas is expected to cost £115m ($185m) over the first four years, including a marketing budget of just over £48m ($77.3m)—high figures which have drawn criticism (for use of public money) and some skepticism (for a business plan that anticipates £17m to be recouped by sale of EPG slots).

The Financial Times newspaper reports that that BBC Trust is expected to launch a review into the corporation's broadband syndication policy to ‘clarify’ the rules governing where and how digital content is made available.