Industry, government butt heads over BBC ad site

Britain's online media community had its day at Parliament today, urging ministers to regulate the BBC's Internet business to give them a fighting chance.

But ministers put the BBC's most vocal rivals on the defensive. In a lively 30-minute exchange, the House of Commons Select Committee on Culture, Media and Sport and members of the British Internet Publishers Association debated whether the BBC was unfairly trampling on the competition in Britain's online media sector. Today's testimony is expected to go to Secretary of State Chris Smith to determine if protective legislation is needed to foster competition in the U.K.'s fledgling Internet market.

At today's hearing, ministers repeatedly questioned the need to subject the BBC to strict government surveillance at such an early point in the development of Britain's Net market. BIPA has been lobbying the committee to launch a probe into the BBC's Internet plans, in particular a controversial project to launch an ad-supported global news site.

BIPA suggested to ministers that BBC Online - the unit that oversees the corporation's Internet ventures - be put under the watchful eye of the government regulatory body Oftel. BIPA contended that the BBC's sites are a threat to for-profit rivals and that the corporation is unfairly benefiting from TV license fees.

"We survive on the scratchings of a very small advertising market," said Chief Executive and BIPA Chairman Rob Hersov. "Any traffic taken away from us and towards the BBC hurts."

BIPA also testified that the BBC has been poaching talent from dot-coms, luring people away with higher-paying jobs. But the group's biggest complaint was the BBC's plans to launch commercial sites. Sources have told The Standard Europe that the BBC plans to launch in early summer, an ad-supported news site directed at a North American audience.

BBC later confirmed that the plans are in place, but such a project would need approval of the government and the BBC's board of governors.

This scheme, BIPA fears, is just the beginning. Members testified today that they were aware of plans for the BBC to launch a classical music site that would accept ads.

The publishers' group also told the committee it is unwilling to accept one of its early recommendations that the BBC site be put under the control of BBC Worldwide, a separate for-profit unit. "I think that would be disastrous," said Hugo Dixon, managing director of Hollinger Telegraph New Media. Dixon added that giving the BBC the freedom to compete directly with independent media companies in a commercial capacity would put rivals at a distinct disadvantage.

It was an argument that met with little support from the committee. Alan Keen, the most defiant minister on the matter, suggested that it was hypocritical for BIPA to suggest that competition in the market could be enhanced by putting the clamps on the BBC.

"Because a public company is using initiative and enterprise - for this, we should stop it?" Keen asked.

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