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Ofcom may force Sky into sharing premium channels

by Parm Mann on 26 June 2009, 11:53

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Ofcom has published a further consultation as part of its pay TV market investigation, and proposes that Sky should be required to offer its premium channels to other broadcasters on a wholesale basis at regulated prices.

The ongoing investigation follows complaints from BT, the now redundant Setanta, Top Up TV and Virgin Media in early 2007, a quartet who argued that Sky's dominance in Premier League football and premiere movies leaves them unable to compete.

Commenting on top-flight sport and first-run Hollywood movies, Ofcom's investigation suggests that "Sky has market power in the wholesale supply of channels containing this attractive content, and that it is acting on an incentive to limit the distribution of these channels to rival TV platforms."

Ofcom states that Sky's actions are hampering consumer choice and adds that a study has revealed that Sky is earning higher returns on its wholesale business than its retail business. Ofcom's concern is that those earnings will be reflected in high prices for consumers.

The UK communications-regulator's remedy is a proposal that would require Sky to offer its premium channels to rival broadcasters at regulated prices. By doing so, the regulator believes other broadcasters will be able to offer Sky's premium channels - leading, theoretically, to improved choice and innovation.

Sky, as expected, has hit out at Ofcom and states that it "fundamentally" disagrees with the regulator, adding that it will "use all available legal avenues" to counter Ofcom's proposal.

The investigation continues, and Ofcom is expected to publish a final verdict later this year.

HEXUS Forums :: 2 Comments

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About time someone but the boot into Sky. I think all companies should share all information. Ondemand content should be distributed from one core to all TV companies who choose to offer it to their customers, all available channels should be made available where possible.
It's a tricky line to walk; on the one hand I want to see some stuff which is Sky exclusive currently on VM, so I lean toward the idea that channels should be available on any carrier for a reasonable cost, but on the other I can see that a carrier would wish to differentiate their service on a qualitative basis - essentially, “Go with us, because we make/buy the programs you like/carry our programming in a format you want” (in the latter case I'm thinking of things like Sky 1HD, for example). In general, most other parts of the economy allow differentiation of product by features and/or quality; you can have a Hyundai Sonata or a Jaguar XF - the latter will cost you more, but has more/better features and/or higher quality. With broadcasting, the product is delivered to its destination in a strictly limited and defined series of formats, so there isn't much wiggle room as far as quality goes. Eliminating the ability to compete through offering different features (say, exclusive channels) leaves price as the sole basis of competition, encouraging a “race to the bottom” with companies perhaps left with little incentive to invest in better infrastructure or more inventive programming.