Changing Channels: Youview Is Highly Controversial, Despite Its Cosy Image

Not everyone finds it easy to embrace technological innovation. Richard Halton, who heads the plan to transform British living rooms by enabling households to watch their favourite shows over the internet but on their TV sets, seems aware of this. "Simple" is the word he keeps coming back to when describing YouView, a service that will arrive next summer.

From then it will be possible to catch up with any of the past week's output from the BBC, ITV, Channel 4 and Channel 5, and to access detailed programme information that you would normally find only on a website. We will be able to use social media features such as Twitter and Flickr, and channels from new broadcasters, such as arts and charities. All this will be available from the sofa, using neither a mouse nor a Merlin-style wand but an old-fashioned TV zapper.

"You don't want to use a mouse and a keyboard when watching the telly," says Halton. "You want to use your remote control. You don't want to be presented with an interface that bombards you with information; it needs to be something really simple."

The 36-year-old chief executive of YouView has conducted research into British living-room habits and wants his internet-TV experience (which will require new set-top boxes costing around £200) to endorse the same values. "We found that the Nintendo Wii was a very social, all-the-family-together experience; whereas other consoles, where people tend to play more hardcore and sometimes more violent games, tends to get banished to the children's bedroom."

YouView, meanwhile, will espouse "warmth, safety, entertainment, coming together and relaxation", says Halton.

The project consists of seven partners, the BBC, ITV, Channel 4, Channel 5, BT, TalkTalk and Arqiva, with each partner putting around £5m over the next four years. Despite the cosy image, it is highly controversial. Virgin Media has been most critical, claiming that it is an anti-competitive cartel. Research has been produced claiming to show that the venture, which is aimed primarily at users of Freeview and was originally called Project Canvas, has stifled investment in the rest of the internet-TV sector, damaging the British creative industries.

Downstairs, four floors beneath the Goodies room, is the project's technological hothouse. Many of the staff are involved in long-distance conversations. On the walls are clocks showing the time in London, Seoul, Atlanta and Rennes.

"Clocks on the wall are normally a sign of corporate bravado but this project is actually working in four time zones," says Halton. "We have got a team who are creating bleeding- edge technology in terms of IP [Internet Protocol] delivery and presentation technology."

YouView's three product partners - Cisco (Atlanta), Humax (Seoul) and Technicolor (Rennes) - are all developing their own versions of the YouView set-top box. "They will look slightly different, and all have different pricing strategies," says Halton. "One of the reasons FreeView was very successful was because lots of manufacturers were encouraged to make the boxes, and that created a lot of competition which reduced the prices very quickly. That was important to driving the adoption."

He says a further 40 potential box manufacturers are waiting in the wings.

But for consumers the more important issue is what they will be able to see that they can't watch now. "We want to make sure there's a massive range of content," says Halton. As well as the on-demand offerings of the four public-service broadcasters, there will be movies from LoveFilm and Blinkbox.

Halton has been talking to arts and non-governmental organisations about giving them a platform on which to broadcast. He mentions the National Theatre, the Royal Opera House, the World Wildlife Fund, Oxfam and the Prince's Trust as bodies that could benefit from a relationship with YouView.

"This could be the doorway for organisations that a lot of individuals are members of and care passionately about. They would never be able to fill a broadcast channel - it is £10m a year to run a FreeView slot - but this suddenly opens up the living room TV to them." Independent television production companies might also see a value in having a broadcast arm.

So attractive will the combined content package be, he predicts, that one million British households might be tempted finally to install internet to get online for the first time to access the YouView service.

What's not to like? Well quite a lot, if you are attempting to build a business on a rival broadcasting platform.

Virgin Media's chief executive, Neil Berkett, says the Project Canvas/ YouView project has only complicated the digital world by forcing pay-TV customers (such as those of Virgin and BSkyB) to pay for a second set-top box if they want the service. YouView, he argues, allows the BBC to emerge as a "de facto gatekeeper of the digital world".

His fears will not be eased by the knowledge that Halton was formerly one of the BBC's senior strategists.He advised BBC

director-general Mark Thompson on his Creative Futures editorial plan. But framed on the walls of the YouView offices you will find branded publicity material for Channel 4 projects such as The Big Food Fight and Slumdog Millionaire. "It's a totally separate business," emphasises Halton. "Most of these people have never worked for the BBC."

Another wall is garishly dedicated to multi-coloured slips of paper - the Kanban system devised by Toyota. "I love that this is a high-tech project but at the heart of it is a load of post-it notes," says Halton.

As one would expect from a hardened strategist, he fights back at the accusations that YouView is a cartel. Virgin Media and BSkyB, he points out, are both working on their own versions of internet protocol television (IPTV), and YouView is merely the next stage of FreeView. "We believe that if FreeView doesn't get a chance to evolve, the outcome is less competition, because Sky and Virgin expand to fill the space," he says. "The reality is that without the scale of something like YouView the medium to long-term outcome is a market entirely dominated by Sky and Virgin."

The complaints of rivals amount to mischief-making, he suggests. "I don't think Virgin or Sky are remotely concerned that what we are doing will slow them down. They are already off and away and will be in the market around the same time we are." He also dismisses as "utterly bizarre", research by Avista that found that investment in British IPTV businesses had fallen 90 per cent since Project Canvas was announced two years ago. "We are pushing the boundaries of global tech businesses," he says. "As a project, we are doing as much or more to sponsor innovation in this space than has happened in the totality of this industry in this country over the last 15 years."

It was in late 2007 that Halton had the idea for what has become YouView, calling meetings with colleagues at the BBC, ITV and BT and warning them that if something was not done soon, Google TV and other foreign-owned businesses would dominate the British IPTV sector. Although Project Canvas then became "stuck in the regulatory weeds for a while", Halton admits his fears have proved unfounded and that "the market hasn't taken off as quickly as everyone thought".

By the summer that will change, he says.

"These things have their time, and YouView will launch and it will feel like it's in the vanguard."