If it's possible for a computer giant to tiptoe, Apple is trying gamely as it prepares for expansion into online video services in Europe.

Luxembourg's economy minister, Jeannot Krecké, last month told a reporter Apple would locate its European iTunes video operations this spring in his country, a tiny, land-locked Grand Duchy that has attracted other e-commerce heavyweights with the magnet of low value-added taxes.

Then the minister sought to backtrack, while Apple's spokesman insisted the company had not announced anything about a Luxembourg e-store and would not react to "rumors and speculation."

"We don't generally comment on the future of our business and product road map," said a spokeswoman, Sheryl Seitz.

But Apple's every move is being watched by other players maneuvering furiously for any early advantage in the global online video market, which is expected to grow into an $11 billion annual business by 2011.

In Britain, RTL's Five is selling passes for £40, or $78, to download the season's latest episodes of the American "CSI" shows from CBS, before they appear on British television. Canal Plus in France just started offering video downloads that can be saved to a disc. And public broadcasters, including the BBC and Arte, an eclectic French-German channel, are positioning their offers for video downloads.

Since CanalPlay was started last year, the company has sold more than two million videos online in France, according to Bruno Thibaudeau, who heads business development.

Thibaudeau said he was aware of Apple's interest in the market but remained undeterred even if Apple opened for business from Luxembourg with its lower taxes and more flexible laws for the timing of releases of movies for home entertainment.

"We are a channel with great programs, but one that is not so big as the others," said Emmanuel Suard, director of development for Arte, which is based in Strasbourg. "And that means we have to put our programs in every form — broadband, Internet, television and so on — so that the maximum number of people see our programs.

"There's a danger that if we just stick to television broadcasting our audience will be reduced."

The early moves by public broadcasters — which are supported with licensing fees paid by viewers — is stirring some discontent among groups like the British Open Source Consortium, a trade group, which last week filed a complaint about the BBC to the government regulator, Ofcom.

In the early start-up in Europe, the public broadcasters and most of the emerging commercial players are shunning Apple's Macintosh operating system and the open-source Linux system by permitting access only with Microsoft's Windows, which has more than 90 percent of the personal computer market.

"The basis of the BBC is universal access to information with its long tradition of broadcasting news to the whole world," said Mark Taylor, president and founder of the consortium, which represents 70 companies that provide services based on open source software to the public sector. "To lock people into a system seems a little strange at a time when the age is to open up information."

Private companies are taking a similar approach to that of the public broadcasters. Canal Plus in France recently started offering video downloads that could be burned to compact discs through its store, CanalPlay, but only for Windows users.

The same restrictions are imposed by Vodeo.tv, an online video start-up in France, and Arts Alliance Media, a digital film distributor in London that supplies companies with the infrastructure for selling videos on demand.

"It's nothing Machiavellian," said Mark Livingstone, president of Arts Alliance Media. "We're using Windows because the digital rights management is approved by the major studios and unfortunately it doesn't run with Mac. There's a lot of development going on in a nascent market and it's just starting to take off. I'm sure it will be available to other systems within 12 months."

The governing board of the BBC is not making a final decision on whether it would offer a video download system until early May. But it has already taken a preliminary step toward approval by deciding that the BBC's proposed video service would be valuable for public viewing.

The BBC's proposal includes an Internet service that allows viewers to download shows for a week after an episode airs on television. It also includes audio downloads of BBC radio programming and streaming of BBC television channels. The name of the service will make many think of Apple: iPlayer.

"We're looking at making it available across the board," said Esther Brown, a spokeswoman for the BBC's commercial arm, the BBC Worldwide, which is also developing an iPlayer that will be accessible beyond British borders with the aim of raising revenue for reinvestment in the BBC.

The BBC Trust, though, expressed some doubts in a January report evaluating the proposed iPlayer. "Our understanding is that the BBC aspires" to offer an alternative system, "which would enable Apple and Linux users to access the service, but has yet to identify a satisfactory solution. In either case, we will expect this to have been addressed within 24 months."

The two-year period comes at a sensitive time, critics argue, with Microsoft promoting its new Vista software to entice consumers to switch or upgrade.

"If one was a cynic, it looks like an attempt to get people to upgrade," said Taylor, of the open source group, who said a two-year delay to open the iPlayer system to other alternatives gave a vast competitive advantage to Microsoft. "What we're really objecting to is being locked into one technology choice."

Another public broadcaster, Arte, which relies on more than €350 million, or $455 million, in public financing annually, is readying its video-on-demand system for September. Currently, it is selling movies and documentaries online for prices from €0.99 to €3.39 with a catalogue of 680 titles. But by autumn it will also offer a catch-up television system that allows viewers to download programs seven days after appearing on the air.

The channel tested the system last month to get a sense of demand by offering free downloads of "L'embrasement," a thriller that follows a fictional journalist to the suburbs of Paris where riots erupted in 2005.

Suard said the film was downloaded almost 50,000 times and the results demonstrated that the channel — whose average viewer is about 55 years old — could broaden its reach to younger viewers in their 30s and 40s. While Arte does not have advertising on its broadcasts, the channel is also considering putting commercials on-demand videos.

France, Britain and Germany are the countries leading development of the online video market in Europe, according to a survey of the market by Informa Telecoms & Media, a London research firm. Britain generated the equivalent of $480 million in video-on-demand revenue last year, while France trailed with $241 million, and Germany at $151 million, the survey said.

That compared with $1.9 billion for the United States and $290 million for the entire Asia-Pacific region, it said. Informa predicted total global revenue would grow to $11.4 billion in the next four years.

© 2007 Doreen Carvajal, International Herald Tribune. Original article.

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