Yahoo (NSDQ: YHOO) - a relative newcomer to broadcast policy lobbying - responded to Ofcom’s ongoing second review of public service broadcasting (PSB) by picking holes in the regulator’s vision for online. It offered an alternative model - a public content fund involving advertising and rev share - and joined the growing ranks grumbling about the BBC’s scale...

—Search: Yahoo said Ofcom’s assertion that search is becoming “the starting point for the vast majority of online experiences” was “over-stated”. On its proposal that search engines should give particular prominence to PSB content, Yahoo said: “This analysis misunderstands the incentives behind search. Internet users turn to search engines to find content and information online which they are looking for. Providers of public service content would have to exhaust a number of innovative distribution models before the manipulation of search results could be considered a proportionate policy response.” Translation: Yahoo fears regulation.

—Funding: Yahoo called for a “public fund for commissioning content”: “Ofcom has overlooked the potential of distribution partnerships with commercial online service providers and aggregators as a means of generating revenue for content creation. Ofcom should explore advertising supported models (including revenue share).” Translation: Yahoo will happily publish content someone else pays for if it can run ads on top.

—BBC: And though it didn’t initially name names, Yahoo did raise the prospect that BBC.co.uk should be scaled back if it’s found to be anticompetitive: “It is important to assess the scope of (PSBs’) remit with respect to online content and, if market provision is sufficient, narrow the scope of public service provision to only those areas where the market does not make adequate provision. The BBC already accounts for a significant proportion of the UK’s online audience and creates a difficult landscape for other media owners to compete.”

(Of course, major new BBC products already can’t launch without satisfying the BBC Trust’s public value test, which comprises a test to identify potential negative market impact and has ordered the BBC to scale back several projects in the last couple of years).

In its response, Guardian Media Group (GMG) argued there’s no market failure, no need for Ofcom to intervene and no reason why BBC and C4’s special broadcasting provisions should extend to the web: “The BBC and BBC Worldwide are encroaching into online areas where commercially funded players could provide the content required.”

GMG said Ofcom was wrong to suggest the growth of UK online advertising was evidence the BBC had only minimal market impact: “The BBC’s £68m investment in local websites and Channel 4’s planned £50m 4IP investment are well in excess of levels available to all bar a select few media organisations and, in reality, cannot fail to have an impact on commercial investment ... We are concerned that Channel 4’s £50m proposed investment in online through 4IP will substantially distort and harm fledgling commercial markets.”

Meanwhile, Channel 4 - which is at the centre of Ofcom’s review, which could overhaul PSB funding - used its response to suggest a very different and public-spirited online role for itself: “Commercial online providers are (only) incentivised to provide audiences with more of what they already know they want.”

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