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The BBC Royal Charter and Agreement, which came into effect on January 1, requires the BBC Trust to subject all new BBC services to a "public value test" to assess whether they would be in the wider public interest.

This comprises a "public value assessment", to be carried out by the Trust, and a separate, independent "market impact assessment", conducted by Ofcom.

Ofcom has now published its first MIA, which covers on-demand services including catch-up TV over cable and three internet TV and audio services using the iPlayer software being developed by the BBC.

Its overall verdict was that the services would bring "substantial public benefits" by expanding and stimulating the on-demand market and would generate 3bn viewer hours by 2011, or about 3% of total UK viewing hours, half of which would be new demand.

One is a seven-day catch-up TV service that allows viewers to store and view a large proportion of BBC programming. This would also allow viewers to access an entire series of programmes within seven days of the broadcast of the last programme in that series, known as "series stacking", and to store downloaded programmes for up to 13 weeks before viewing.

Ofcom objected to series stacking over the internet and cable and to the 13-week storage window and recommended they should be watered down or excluded from the service.

It said series stacking "would make the service a more direct substitute for commercial services" and the BBC's current definition of what constitutes a series was "very broad".

Another proposed service is simulcast TV over the internet, which Ofcom said feedback from other broadcasters indicated was the "least contentious" because they are likely to offer similar services.

The third and last proposed service is for non-digital rights-managed audio downloads and this also met with objections from Ofcom.

It said: "[It] could have a significant negative effect on investment in competing on-demand services, and related markets. This risk is especially high in the case of recordings of live classical music and book readings."

It called for the remit of the service to be tightened and for live classical music to be excluded.

Ofcom's report leaves the ball in the BBC Trust's court, acknowledging that it is for the trust to decide the best approach, taking account of the public value and the market impact of the services.

Ofcom stressed that it would have no problem with the BBC providing the services it objected to on a commercial basis through BBC Worldwide, citing the 15-part series 'Bleak House' as an example. It said it was important for the trust to guard against the BBC cross-promoting BBC Worldwide services via the iPlayer platform.

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