Ofcom To Investigate Pay TV in UK

Ofcom has announced that it will investigate the pay TV market after receiving a submission from BT, Setanta, Top Up TV, and Virgin Media.
The regulator said that following "careful consideration" it will investigate the pay TV industry and consider whether to refer the issue to the Competition Commission.
The broad definition of Pay TV includes subscription and video-on-demand television services on all platforms: cable, digital terrestrial television (DTT), satellite and TV over DSL.
Following this assessment Ofcom will decide whether to make a market reference to the Competition Commission. Ofcom said it would also consider whether any concerns would be better addressed using the powers or the Competition Act 1998.
Consumer groups including the Ofcom Consumer Panel and the National Consumer Council have also raised concerns to Ofcom about one aspect of the pay TV market: the loss of BSkyB channels on Virgin Media’s pay TV platform.
In response to Ofcom's announcement a Sky spokesman said: "The marketplace for entertainment and communications services is fiercely competitive and changing fast. From the BBC to Google, BT to Apple and Vodafone to Virgin Media amongst many others, customers have never had a broader set of businesses competing for their time and custom.
"We note the references in Ofcom's statement to Sky's proposed pay-TV service on the DTT platform and the dispute with Virgin Media regarding the availability of Sky's basic channels.
"BT, Top Up TV and Setanta all have a commercial interest in preventing Sky from increasing customer choice by developing a new pay-TV service on the DTT platform.
"Recent events have also drawn attention to the fact that cable is a closed network with substantial protections. In any market investigation, we'd expect Ofcom to look at the physical and legal barriers and business practices that shield Virgin Media from true competition and prevent consumers from enjoying lower prices in broadband and telephony and greater innovation and choice in television."
In February Virgin Media and BSkyB failed to reach agreement on the rights to carry Sky channels on the Virgin Media, formerly ntl cable, television service.
Negotiations to renew the contract for carriage of Sky's basic channels - including Sky One, Sky Two, Sky Three, Sky News and Sky Sports News - across Virgin Media's network, broke down.
In a statement Virgin Media claimed: "The nature of these negotiations leads us to believe that this outcome has been deliberately engineered by Sky in order to suppress competition and coerce Virgin Media's customers into switching to its service by denying them access to the basic channels."
BSkyB has since run a series of adverts saying that these channels are all available on Sky's satellite service.
BSkyB has further announced a proposal to launch a new pay TV service on the Digital Terrestrial Television platform, based on new set-top box specifications.
Ofcom would consult on whether to approve the licence.
However the implications of the possible entry of BSkyB into the pay DTT market will form part of the Ofcom market investigation announced.
(SP)