Leading UK Internet publishers and radio stations have joined forces to halt the BBC's increasing activities in the Internet arena.
The online operations of ITN, News International, United News and Media, Talk Radio, Emap and the Telegraph newspaper are among members of the British Internet Publishers Alliance (BIPA) that believe the BBC's launch of a free ISP breaks all the rules the company has to abide by as a publicly funded operation.
BIPA was formed last year after members of the European Publishers Council became concerned that the BBC unfairly dominates the online world as it is allowed to use money raised from the television license fee to finance its public service site BBC Online, which in turn benefits its commercial activities.
But it was the announcement of Freebeeb.net that further angered BIPA which said the BBC must be prohibited from launching it on the grounds that it would stifle competition and innovation in the market.
BIPA submitted a report to the Davies review, a panel setup by the government to look into the way the BBC is funded.
The report read: "If allowed to become an ISP, BBC Online would be able to market free Internet on a scale that no one else could possibly achieve. The effect would be to drive most other providers out of the market and reduced the choice for the consumer. Its large size would also give it an unfair bargaining advantage with telecommunications providers."
The BBC argues that the Internet is the third arm of broadcasting and therefore its online services are an extension of its public service obligations to the licence fee paying public. According to the UK Internet User Monitor from Fletcher Research, BBC Online's reach - a measure of the number of people that have accessed a site - is now 45 per cent, second only to Yahoo.
To complicate matters further there has been speculation that the government will allow BBC Online to carry advertising, a move that BIPA sees as disastrous.
Angela Mills, of BIPA and executive director of the European Publishers Council, said there is already huge cross subsidiary and cross promotion and the addition of advertising on BBC Online would further distort the market.
Mills believes the BBC's public service site and its commercial operations, including its Internet access service, must be run absolutely separately to allow it to continue providing good quality content and to prevent it from abusing its power.
BIPA is concerned that the BBC also benefits from free advertising for its Web sites via its television shows. The BBC is also allowed to promote all of its Web sites under the generic BBC name followed by the specific page for the TV show or feature. BIPA says this discriminates against other the likes of the ITV companies which are prohibited from advertising their Web addresses in the same way.
The group is also concerned that Internet publishers are finding its increasingly difficult to hold staff with relevant skills as the BBC is claimed to be luring away staff with pay increases by around 30 per cent for permanent staff and up to 60 per cent for contract staff.
The BBC refused to comment.
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