Source: EURLEX
Language: en
Format: md

26 . 8 . 97 | EN | Official Journal of the European Communities No C 259 / 3

Notification of a joint venture agreement

( Case No IV / 36.539 — British Interactive Broadcasting — BiB )

( 97 / C 259 / 04 )

( Text with EEA relevance )

1 . On 13 June 1997, the Commission received notifi ­
cation pursuant to Article 4 of Council Regulation
No 17 (*) of agreements under which BT Holdings
Limited (' BTH '), British Sky Broadcasting Limited
(' BSkyB '), Matsushita Electric Europe ( Headquarters )
Limited (' Matsushita ') and Midland Bank pic (' Midland ')
have formed a joint venture, British Interactive Broad ­
casting Limited (' BiB ') to create and operate a platform
for the provision of digital interactive TV services to
viewers in the United Kingdom . These digital interactive
TV services comprise services which will be delivered
through a combination of digital broadcasting via
satellite, as well as on-line services delivered via a
telephone line . In addition, subject to the conclusion of
agreements with relevant third parties, the services may
also be transmitted via cable, digital terrestrial and / or
broadband PSTN .

2 . Depending on the service, some or all of the
content will be broadcast via the proposed Astra digital
satellite, which will then be decoded using a digital inter ­
active set top box and displayed on a viewer 's analogue
television set . The box will also include a modem which

will connect to a domestic telephone line to provide a
return path for the interactive services and the down ­
loading of on-line information to the viewer . Viewers
will be able to connect the box to any provider of local
telephony services in the UK . The same set top box will
be capable of decoding BSkysB 's digital broadcast
services for display on analogue television sets . In
addition, the parties have indicated that they intend to
enter discussions with a view to assessing the feasibility
of making the BiB platform available in conjunction with
the digital broadcast entertainment services transmitted
on digital terrestrial television and for digital cable
television in the UK .

broadcast servers, telecommunications network services,
satellite uplink and satellite transponder capacity . The
non-physical infrastructure includes conditional access
services, on-line authentication services, interactive
services navigation system, and transaction management
systems . Some of the elements of physical and
non-physical infrastructure will be provided to BiB by
the parents . The elements provided by BiB will make it
unnecessary for a content provider to acquire such
services itself . However, the parties have indicated that
content providers can self-provide all of the elements of
the physical infrastructure, provided that their infra ­
structure is compatible with that of BiB . According to the
parties, at present the non-physical infrastructure is
unlikely to be available separetely .

4 . The parties have indicated that the following
services ( provided largely by third party content
providers ) will initially be provided over the platform :
home banking, home shopping, holiday and travel
services, down-loading of computer games ( although this
may require a separate games console ), learning on line,
tickets for entertainment, leisure and sport, motor world,
a limited collection of Internet sites provided by a third
party and e-mail and public service information . The
platform will also allow interactivity to be integrated into
digitally broadcast entertainment services .

enter discussions with a view to assessing the feasibility 5 . In order to view the BiB service on their analogue
of making the BiB platform available in conjunction with television sets, viewers will have to buy a BiB compatible
the digital broadcast entertainment services transmitted digital interactive set-top-box and connect it to a
on digital terrestrial television and for digital cable telephone line . The specifications for BiB subsidized
television in the UK . set-top-boxes will allow reception of both digital satellite

television channels, including those of BSkyB, and BiB 's
digital interactive services . The specification for BiB
subsidized set-top-boxes also includes an interface for
the connection of separate side car units so that digital
terrestrial and digital cable could be connected at the
3 . BiB 's primary role will be to design, develop and choice of the viewer .
operate the digital interactive platform over which
content providers will interact with viewers . BiB will
provide or obtain from the parent companies or third
parties all of the necessary infrastructure to enable third
party over the content BiB platform providers, and to to make carry their out content transactions available with the 6 . In manufacturing order to maximize costs sales, of, BiB BiB intends compatible to subzidise set ­
viewers . According to the parties, the infrastructure can top-boxes, the installation of the set-top-box and the
be divided into physical and non-physical elements . The installation or upgrade of a satellite dish . The parties
physical infrastructure includes : on-line servers, have will into conditions

over the BiB platform, and to carry out transactions with the 6 . In manufacturing order to maximize costs sales, of, BiB BiB intends compatible to subzidise set ­
viewers . According to the parties, the infrastructure can top-boxes, the installation of the set-top-box and the
be divided into physical and non-physical elements . The installation or upgrade of a satellite dish . The parties
physical infrastructure includes : on-line servers, have or will enter into arrangements applying conditions

which retailers will have to pass on to customers of the
O OJ No 13, 21 . 2 . 1962, p . 204 / 62 . subsidized box . In order to benefit from the subsidy, the

No C 259 / 4 EN Official Journal of the European Communities 26 . 8 . 97

customer will have to take a standard period ( currently

12 months ) subscription to BSkyB 's digital satellite TV
services and connect the box to an active telephone line .
In addition, the arrangements will encourage the
customer to apply for a Mondex Card . BiB will pay the
subsidy both in respect of BiB compatible set-top-boxes
sold in retail outlets and those bought by existing
subscribers to BSkyB 's analogue satellite television
services . In order to qualify for receipt of subsidies,
retailers and manufacturers are expected to commit to
making boxes available at prices no higher than
maximum levels agreed with BiB and BSkyB .

orities, then the exclusivity period will be reduced to an
appropriate fixed period of not less than 18 months from
the launch of BiB 's digital interactive TV services . Third
party suppliers of interactive services will be able to
supply these services via the BSkyB EPG following the
fixed period . In return, a provider of interactive services
must pay for the services received, and make a
contribution to the historic and ongoing costs of subsi ­
dizing the sales of BiB compatible set-top-boxes . The
parties are in the process of discussing the precise
method of calculation of the subsidy contribution with
the UK regulators and with the Commission .

7 . Once the customer has purchased the set - top-box 10 . The following agreements have been notified to
and has the appropriate transmission means to receive give effect to the above described operation :
the signals ( satellite or possibly cable or digitial terrestrial
in the future ) and the telephone connection, access to
BiB 's services will be free, though BiB has reserved the
right in the future to charge a fee to customers who take
the BiB service without the BSkyB digital satellite TV a joint venture agreement — agrees the nature of the
package . However, content providers may choose to business, its management, funding and exit provisions
require viewers to pay a fee to access to their content / for the shareholders . It also contains provisions
service . According to the parties, BiB 's revenue will regarding access to the BSkyB EPG,
primarily come from charges to content providers
whishing to use the platform . The structure of these
charges remains to be negotiated with content providers,
but is expected to include some form of commission
payment linked to the value of transactions conducted an initial commitments agreement — sets up a
over the platform . contractual framework for necessary development

a joint venture agreement — agrees the nature of the
business, its management, funding and exit provisions
for the shareholders . It also contains provisions
regarding access to the BSkyB EPG,

an initial commitments agreement — sets up a
contractual framework for necessary development
work to be carried out by the parties and by third
parties prior to BiB being completed,

8 . BiB wishes to attract as many content and service
providers to use its platform as possible to make it
attractive to consumers . It is anticipated that the
set-top-boxes subsidized by BiB will also be available to
competitors of BiB, provided that competitors providing
interactive services agree to contribute towards the
repayment of the subsidy paid by BiB . Providers of
broadcast TV services are also expected to make a
contribution and the subsidy recovery mechanism will
have to be approved by the relevant regulatory auth ­
orities . Only unscrambled free to air broadcasters ( not
providing onl-line services ) need not to pay such a
contribution . In order to make use of BiB subsidized set

top boxes, third parties will also be required to contract
with BSkyV for provision by it of conditional access
services, unless such third parties wish to provide
unscrambled services free to air or use a conditional
access system in respect of which a simulcrypt agreement
has been concluded with BSkyB .

9 . For commercial reasons the parties have agreed that
BiB will be the exclusive provider of digital interactive
TV services via the BSkyB Electronic Programme Guide

(' EPG '). If a subsidy recovery mechanism is agreed
between the parties and the relevant regulatory auth ­

— a technology transfer and licensing agreement — each

of the shareholders grants BiB a non-exclusive licence
for the use of intellectual property rights which are
essential to the operation of BiB,

— a marketing services agreement — BiB appoints BSkyB

to carry out certain marketing services on its behalf
including arrangements relating to the manufacture
and sale of BiB compatible set  - top-boxes and joint
marketing to the BiB / BSkyB services .

11 . The following agreements are necessary to give
effect to the above-described operation and will be
notified once the documentation is settled at a later date :

— a transponder capacity agreement — BSkyB sub-leases

capacity on two transponders of a digital Astra
satellite to BiB,

26 . 8 . 97 EN Official Journal of the European Communities No C 259 / 5

— a transaction management system development and

licence agreement — Midland will provide these
services to BiB,

— a merchant aquirer agreement — Midland will provide

these services on an exclusive basis to content
providers in respect of transactions on the BiB
platform,

— a conditional access agreement — BSkyB will supply

these services,

— an on-line authentication agreement — BSkyB will

supply these services,

— a Mondex agreement — Midland will have the right

to offer a Mondex card to each purchaser of a BiB
compatible set-top-box .

12 . In addition, a collaboration agreement was signed
between BT and BSkyB in October 1996 to work
together on the development of a system for digital
interactive services . Matsushita may become a party to

this agreement at a later date . This agreement does not
form part of the notification and has been provided for
information only .

13 . Upon preliminary examination, the Commission
finds that the arrangements which have been, or will be,
notified could fall within the scope of Regulation No 17 .
The Commission invites interested third parties to submit
any observations that they may have regarding these
arrangements to the Commission . In accordance with
Article 20 of Regulation 17, such observations will be
protected by professional secrecy . Observations must
reach the Commission not later than thirty days
following the date of this publication . They may be sent
to the Commission by fax ( No ( + 23 2 ) 296 9804 ) or by
post under reference number IV / 36.539 — British Inter ­
active Broadcasting ( BiB ) to the following address :

European Comission,
Directorate General for Competition ( DG IV ),
Directorate C,
Office C 150 3 / 114,
Avenue de Cortenberg / Kortenberglaan 150,
B-1040 Brussels .