Media watchdog Ofcom has demanded a rethink of the BBC's plans for an on-demand IPTV service, saying the launch could hurt rival commercial services.
The IPTV service, which could see BBC programmes airing simultaneously online and on terrestrial TV as well as providing viewers with the chance to catch up on programmes they have missed, may not be good for viewers, claims Ofcom.
It noted: "There is evidence that certain aspects of the proposals may have a negative effect on investment in similar commercial services which would not be in the long-term public interest."
A report by the watchdog into the service found that should the Beeb enter the IPTV market, it could account for 11 billion viewer and listener hours by 2011.
Despite predictions of its popularity, Ofcom believes such on-demand services could cause a drop off in DVD rentals and sales if viewers were able to 'stack' an array of programmes to watch later. The watchdog believes this part of Auntie's proposals should be dropped.
It also called for the BBC to shelve plans to make audio books and classical music available gratis, suggesting it would hurt the commercial market for such recordings.
Ofcom added it believes the amount of time viewers should be allowed to store previously shown programmes should be cut from the BBC's suggested 13 weeks to 14 days.
Even the nation's fat pipes could be affected by the proposals. The report said: "The cost of providing extra broadband capacity to deliver the BBC's proposed services to consumers is likely to be high, though any additional capacity would also be available for use by a wide range of other services including commercial on-demand services."
But it's not all doom and gloom. The regulator noted that on-demand will bring users new ways to access Auntie's offerings and could potentially boost the new media industry as whole.
Speaking on behalf of the BBCTrust, Diane Coyle, trustee and chair of the Public Value Test Steering Group, said in a statement: "Our decision will be based on an informed judgement of all the evidence, in the best interests of licence fee payers."
As well as taking into account Ofcom's opinions on IPTV, the Trust will produce a Public Value Assessment and then publish an interim decision for consultation before any service launch goes ahead.