Sky accuses Ofcom of “extreme agenda”

In the third phase of Ofcom’s long running pay-TV enquiry, Sky has accused the regulator of holding an “extreme agenda” in plans that would allow it to set the wholesale prices for Sky’s premium movies and sports channels.

In a 277 page response that brings together previously released arguments with new materials, Sky says its channels would be treated as regulated assets in order to further Ofcom’s policy objectives of promoting growth on DTT and IPTV platforms. Frequent mentions in the response to competition law suggest that if Ofcom pushes through its proposals before next spring’s General Election, then Sky will clearly be seeking judicial intervention.

“No rational channel provider would willingly alter its preferred business model or reduce its wholesale prices in order to promote the growth of particular Pay TV retailers in the manner proposed by Ofcom. Nor would it be considered desirable, in a free and competitive market, for entry or expansion by designated operators with higher cost bases to be promoted and sustained through subsidy,” says the Sky submission, returning to its theme that wholesaling its premium content would mean an effective subsidy being paid to competitors including BT and Virgin Media. Sky says that crucial elements of Ofcom’s case rely on “the self-interested assertions of third parties”.

For its part the surviving members of the original BT-Virgin-Setanta grouping, whose complaint initiated the original enquiry, called for Ofcom’s pricing methodology to be revised downwards. They also argued for bonus channels Sky Sports 3 and Sky Sports Xtra to be brought within the definition of premium channels that would be included within the wholesaling plan.

It should be noted that while Ofcom has continued to consult on the proposal to regulate its wholesale ratecard, the pay-TV combo has continued to make its content available on an ever-increasing list of devices. It is now possible to view live and catch-up TV from the Sky Player on the Microsoft X-box, the over-the-top IPTV service Fetch TV, mobile networks and most recently the Windows 7 Mediacenter.