United front against BSkyB

BT, Setanta Sports, Top Up TV and Virgin Media have urged Ofcom to refer BSkyB’s hold on the UK pay-TV market to the Competition Commission. Although Ofcom’s consultation is designed to focus on the entire pay-TV market it has already been interpreted in some circles as an investigation into BSkyB and follows a complaint made by the four in July this year.

In their original submission to Ofcom, released for the first time today (December 6), the four partners argue that Sky’s incentives and ability to leverage the existing market means that the “market failure cannot adequately be addressed by piecemeal regulatory intervention”. They say that Sky has control of key elements of the pay-TV business including infrastructure, 100% of movie rights and 80% by value of sports rights creating a vicious circle. “Sky holds the leading market positions at the key levels of the supply chain and, in particular, controls the most attractive pay TV content, the largest pay TV platform and the largest base of pay TV subscribers.”

The submission goes on to quote Ofcom’s own data that suggests that UK viewers pay more for their TV subscriptions than their European counterparts. According to the partners, pay-TV broadcasters should have “fair, reasonable and non-discriminatory access by third party pay TV retailers to Sky’s premium channels on economically viable terms and appropriate remedies to address the adverse effects which Sky’s downstream advantages have on the contest for content.”

In its response to the complaint, sections of which are labelled as confidential, BSkyB says that it is difficult to fully respond to the criticisms without having seen the full details of the original complaint. The broadcaster says the complaint “fails to point to any detriment to consumers – which should be the focus of any competition policy inquiry – let alone providing evidence to substantiate its allegations.”

The BSkyB submission adds that the four have misinterpreted the very nature of the pay-TV market and says there is no such thing as the vicious circle laid out in the complaint.

Ofcom will shortly publish a consultation document on the issue.