BSkyB has suggested that if it is unable to reach an agreement with Virgin Media over the carriage of its basic channels then it should be allowed direct access to the cable operator’s customers. The proposal is similar to the Sky by Wire service offered to IPTV services in the UK where Sky effectively rents the bandwidth from the operator and maintains its own relationship with the customer. Such scenarios have been commonplace in continental Europe for many years.
Under Sky’s latest proposal the cost to Virgin of carrying a package of basic channels including Sky One, Sky News and Sky Sports News would be set at 90p per subscriber, per month, a reduction of 5p from the broadcaster’s previous offer. However, Virgin said that the new offer failed to remove minimum guarantees that according to Ernie Cormier, chief commercial officer, Virgin Media left the deal exactly the same. Without agreement it seems likely that Virgin will switch off its feed from Sky on March 1.
In a further concession, Sky has agreed to a 16.2p per subscriber reduction in fees for the three channels currently broadcast in the clear on Freeview. BSkyB plans to remove Sky News, Sky Sports News and Sky Three from the DTT service in favour of a four channel pay-TV service.
The 16.2p would only be payable once the channels have left Freeview, which Sky says represents a 19% overall increase from the present contract, in return for the increased investment it says has been put into the channels. (JC)
Seems to be a huge degree of brinkmanship going on. Would it really be surprise if Virgin backed down tomorrow and a compromise enabled Virgin customers to continue receiving Sky One?
Sky By Wire will hardly be in the consumer’s interest – it’s overly expensive and limited (for example, it’s only half of the movie channels but is more expensive than the full movie package on Sky).
While I could see some benefit for Virgin (as they might loose fewer sports fans), they might be better off playing hardball with Sky and not letting Sky have direct access to their customers.