BBC takes swipe at Sky's pay TV role

MisterAnarchy

Interesting article here about how Sky manipulate the tv market .
http://www.digitalspy.co.uk/broadcasting/a95864/bbc-takes-swipe-at-skys-pay-tv-role.html

The BBC has urged Ofcom to broaden its investigation into the pay television market to include the power of platform operators such as Sky.

Sky's rival pay TV operators, meanwhile, used their submissions to the regulator to restate their case that Sky is narrowing consumer choice and keeping prices high. They want a full market investigation by the Competition Commission.

The BBC accused Sky of using "technical standards to limit the editorial and commercial freedoms of its channel customers".

Among its complaints were that Sky has prevented it from developing interactive services for the Sky feeds of its radio stations.

"As pay TV platforms are a significant potential source of market power, it is vital for Ofcom to undertake its analysis from the perspective of intermediate customers (including channel providers and other platform operators) as well as final customers," the corporation said in its statement, which was published today by Ofcom.

> Pay TV probe set for further phase

The BBC said all strong pay TV service operators, also naming Virgin Media's role with the cable network, were in a dominant position because, to be viable, the vast majority of channels need to be carried as part of their packages.

Developing its argument, the corporation heaped critcism on Sky. It said: "The absence of a multicrypt solution in [Sky] set top boxes and the unwillingness of BSkyB to licence its proprietary conditional access (CA) software... make it impossible for a third party to emerge as an independent retailer of pay channels on the digital satellite system."

The BBC also stated that Sky's position may have limited innovation in television: "It is striking that developments on the BSkyB platform were those which were useful to the platform operator given it is also a retailer and a channel provider, and that developments proposed by other users of the platform have not occurred.

"For instance, despite repeated requests, the BBC has never received from Sky the software developments necessary for it to offer interactive radio on BSkyB’s platform (despite the fact that it has been made available on other platforms). One might wonder whether the situation would have been the same had BSkyB operated radio channels."

Further "examples of thwarted innovation" cited by the BBC were "visual EPG – with mini screens; easy navigation between interactive services; full access for radio services to the seven-day EPG and Sky+ functionality; support for dual language subtitling – regionality is a feature that is generally not well supported on the Sky platform".

On Sky's conditions for carriage, the BBC said Sky put constraints on channels wishing to be placed on its EPG: "Two are of particular concern to the BBC: Specified minimum amount of non-repeating programming; and the technical specification of HD channels.

"Restrictions are being placed on the editorial and technical freedoms of channels through control of technical platform services. Given that Sky is also a channel provider, these restrictions potentially affect competition between third party channel providers and Sky’s suite of pay TV channels."

Virgin Media, which led calls for the pay TV investigation after its carriage dispute with Sky, used its submission to restate its position. It said: "...there can be no room for doubt that Ofcom has reasonable grounds for concluding that there are a combination of features which are preventing, restricting or distorting competition," and added that the regulator should therefore call on the Competition Commission to investigate.

In one noteworthy example, Virgin stated: "...Sky's wholesale terms are such that Virgin Media's margins are actually reduced if a subscriber to Virgin Media's XL package of basic channels upgrades to a package containing one or more of Sky's premium channels. As a consequence, Sky's conduct removes any incentive on Virgin Media's part to compete with Sky as regards the retailing of premium channels."

BT, whose BT Vision hybrid DTT-DSL TV service competes with Sky, made the case that Sky's control of both a popular pay TV platform and rights to a great deal of premium content are bad for consumers.

It called for "appropriate remedies" to "address the problem of the concentration of control over high value pay TV content at the wholesale level" - suggesting Sky be forced to resell its content to competitors in a regulated manner.

Setanta, which broadcasts pay TV channels and, like Sky, bids for premium sports rights, made a joint submission with Top Up TV, which also broadcasts a subscription service on DTT.

They joined calls for a Competition Commission investigation and noted: "...having acquired key content, Sky has both the incentive and the ability to withhold it from competing pay TV retailers".

Tiscali said Sky's domination of premium content rights was one factor limiting its TV-over-DSL IPTV service. The company called for Sky to "be required to wholesale content to other providers on a pricing basis that enables competition and does not unfairly impact Sky".

The company said: "These obligations should be imposed along with commitments from Sky to trade internally on a transparent and equivalent basis, so that no unfair advantages may be gained by downstream parts of the Sky organisation and margin squeezing would be exposed and discouraged."

In an apparent reference to Sky's preference to be the exclusive carrier of some channels, Tiscali added: "In addition to the remedies described, a review of contractual conditions and rights deals that allow a dominant player such as Sky to influence trading between other parties and limit competition and the development of services should take place, probably as a part of the ongoing pay TV market investigation."