The BBC's plans to offer all its TV and radio shows on-demand via the internet and cable TV have been criticised by the broadcasting watchdog Ofcom.
The BBC's on-demand plans will allow viewers to download shows
Ofcom said that certain aspects of the BBC's on-demand service, which is due to start later this year, could have a "negative effect" on commercial rivals.
It added that while the BBC's plans would boost interest in rival services, it would likely limit their investment.
Ofcom said such an outcome "would not be in the long-term public interest".
'DVD sales impact'
The watchdog has passed on the findings of its market-impact assessment to the BBC Trust, the independent body responsible for governing the broadcaster.
The BBC Trust is currently looking at the public-value assessment of the BBC's on-demand plans, to decide whether they would be in the wider public interest.
Under the BBC's proposals, viewers would be able to watch any BBC programme from the previous seven days via the internet, using a tool called iPlayer, or through NTL-Telewest's cable television service at a time of their choosing.
Channel Four has already launched a similar service of its own.
Ofcom estimates that the BBC's on-demand service could account for almost four billion viewer and listener hours by 2011.
In addition to limiting investment by commercial rivals, Ofcom said it was also concerned about the impact on related markets such as DVD rentals and sales.
For this reason it has recommended that the BBC's on-demand service reduces from 13 weeks the planned amount of time that users could keep downloaded programmes.
The BBC Trust said it welcomed Ofcom's "thorough analysis", but said it formed only one part of the Trust's ongoing public value test.
"In reaching our eventual decision, we must also consider the potential public value created by the on-demand proposals," said Diane Coyle, trustee and chair of the Trust's Public Value Test Steering Group.
She added that the Trust would make its decision on the BBC's on-demand plans, "based on an informed judgement of all the evidence, in the best interest of licence fee payers".
"Once this process is completed the Trust will publish its interim decision for consultation, along with the evidence on which it is based.
"We will ensure all stakeholders have adequate time to respond before reaching our final judgement."
The Trust's interim decision is expected later this year.