BBC online news ‘monopoly’ faces OFT scrutiny

The BBC faces an Office of Fair Trading (OFT) inquiry into its practice of giving away news to commercially-operated Web sites for free, following a complaint from ITN, a rival news organisation.

Writing in today's Media Guardian, Stuart Purvis, ITN chief executive, claimed the BBC could, through this distribution strategy, "establish a monopoly 'news voice' across a whole series of new platforms - mobile phone, commercial Internet portals, broadband interactive services. The same services that were supposed to deliver more consumer choice not less".

The OFT may always choose not to take up ITN's complaint, but Purvis reckons the company has an "excellent" case to bring before EU competition authorities. Also, ITN is seeking advice on whether it can take the BBC board of governors to judicial review for "failure to abide by their own charter and agreement".

The BBC currently has distribution agreements in place with Yahoo!, Vodafone, BT Openworld, Cellnet and others. One could see how frustrating this would be to a news wholesaler such as ITN, or PA, or Reuters. Especially, since it is not an everyday event where the BBC has the upper hand.

A few weeks ago, the FT accused the BBC of bleeding value into Yahoo! by giving away news for free. We explained the rationale behind the BBC's move and noted that only news wholesalers had anything to fear. We also attacked the BBC's use of taxpayers' money to fund its online services.

It is all very well to follow the free, a basic orthodoxy of Web economics (give it away, build a community, and figure out how to make money later).
But it looks like the OFT has a juicy case to sink its teeth into.

And what will happen if ITN gets the regulators to beat up on the BBC? All in all, the Internet and other digital platforms will not represent a goldmine for traditional news wholesalers, BBC or no BBC.

Nature abhors a vacuum, and other free online content providers (wishing to market their site) will fill the place of the Corporation. And then there are the news aggregators, such as Moreover.com or newsnow.co.uk, which present a much cheaper proposition than likes of ITN. ®

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