British Sky Broadcasting has accused the BBC of "riding a coach and horses" through the market for internet TV by investing licence-fee money in Project Canvas.
The BBC and its partners, ITV, BT and Five, say Canvas will bolster the free-to-air TV platform Freeview as Sky, Virgin Media and other pay-TV providers launch more advanced technology services that could leave Freeview trailing behind. It plans to launch the digital set-top boxes before Christmas 2010.
In its submission to the BBC Trust's consultation on Canvas, Sky says the project raises potential issues of state aid and puts too much control over the technology in the hands of free-to-air broadcasters.
Sky says it doesn't object to the platform per se: "We do not mind what platform consumers use to consume our content," but it is concerned that the BBC's licence fee-funded involvement in Project Canvas "potentially stifles innovation" because the corporation is trying to establish its own platform, rather than contributing to an industry-standard system for delivering online content to TV sets.
"The BBC doesn't have the remit to correct market failure," Stephen Nuttall, Sky Commercial Director said. "If Canvas doesn't happen, IP delivery will still be there. The BBC should work with the [Digital TV Group] and other standards bodies to go about creating this IP standard."