The British Broadcasting Corp.'s controlling trust Friday approved Project Canvas, a joint venture Web-television service that will bring Internet content and new video-on-demand to the TV early next year.
But the approval, which was widely expected, was subject to conditions including free-to-air access for users, access to the platform for content providers and Internet Service Providers, as well as industry consultation.
BBC Trust also said the BBC's involvement will not exceed its estimated costs by more than 20% over a five year period, and that Project Canvas "will comply with all applicable laws including competition and state aid law."
"The Trust has concluded that Project Canvas will deliver significant public value for licence fee payers - people with a broadband connection will be able to access a wide range of on-demand content including BBC iPlayer, free of charge, through their TV sets," said Diane Coyle, BBC trustee and chair of the trust's strategic approvals committee.
However, there are conditions on the BBC's involvement which recognize "the potential impacts on the market if Canvas is successful", Coyle said in a statement.
The Trust will review the BBC's involvement in Project Canvas 12 months after launch to check whether the conditions have been met.
Project Canvas is a collaboration between the BBC, ITV PLC, BT Group PLC, RTL Group SA's Five, Channel 4, TalkTalk Telecom Group PLC and Arqiva Ltd. and is expected to launch early next year, a spokeswoman for the parties said. She declined to comment on the project's next step, which includes appointing a chief executive and chairman.
"I think they're still working towards April next year," to launch, said Alex Towers, head of finance, economics and strategy at the BBC Trust.
The service will allow traditional broadcasters to attract new audiences while retaining existing viewers who have turned to the Internet for entertainment.
Project Canvas welcomed the BBC Trust's approval Friday, noting it marks the conclusion of a regulatory process that began in February 2009, when the Trust published the BBC's initial proposals.
Project Canvas is expected to cost around GBP24.7 million over five years. It will publish a revised budget in the next few weeks.
Last month, the U.K. Office of Fair Trading said it wouldn't investigate Project Canvas as it didn't have jurisdiction to review the venture as none of the partners are contributing an existing business to the project.
In December, the BBC Trust provisionally approved the BBC's involvement in Project Canvas, saying that "the likely public value of the proposal justifies any potential negative market impact."
Project Canvas has faced criticism from pay-TV companies, particularly British Sky Broadcasting PLC, which cites a lack of independent scrutiny for the project.
Media and cable group Virgin Media Inc. has also expressed opposition. A company spokesman said: "We are disappointed the BBC Trust has approved Canvas and ignored the significant concerns raised by the commercial sector about the proposal. Our position on this matter remains unchanged. As it stands, Canvas will severely restrict competition and innovation and that ultimately this will harm consumers."
BSkyB wasn't immediately available to comment.