Ofcom 'preparing new Sky wholesale regime'

By Andrew Laughlin

Ofcom could soon unveil a new regulatory structure forcing Sky to offer greater wholesale access to its movie and sport content, according to Media Week.

The telecoms watchdog initially began its investigation into the pay-TV market back in 2007 after receiving official objections from BT, Virgin Media, Setanta and other operators.
Of primary concern to the companies was Sky's dominant hold over the premium channels, which was claimed to limit competition and consumer choice.

Ofcom's first consultation on the issue arrived in December 2007, followed by a second in September 2008, in which it acknowledged Sky's "market power" in wholesale premium coverage.
It was at this stage that the regulator put forward the idea of "intervening to change the way in which key content rights are bought and sold".
In between these documents, the BBC claimed that Sky was using "technical standards to limit the editorial and commercial freedoms of its channel customers".

In a statement published in May 2008 by Ofcom, the BBC criticised Sky for limiting innovation in television by holding back certain key technologies from its rivals.
Expected later this month, the watchdog's next consultation is expected to back a "wholesale must-offer" scheme, in which Sky will be forced to free up access to premium channels for other operators under regulated terms.
In the wake of the financial crisis surrounding Irish sports broadcaster Setanta, which recently verged on the brink of administration, this could particularly focus on Sky's dominant control of sports coverage, notably Premier League football.

Ofcom is also believed to favour a fixed wholesale pricing structure that fosters greater competition in the UK pay TV market.
Speaking to Media Week, BT managing director of strategy and regulation Sean Williams said: "The problems being experienced by Setanta throw into stark relief the market failure in pay TV in the UK.

"It is also further evidence of the need for Ofcom to remedy the situation swiftly. Competition in pay TV in the UK is not working effectively."
However, a Sky spokesman told the publication that BT could use its "muscle" to secure premium content, but instead it "prefers to try to get Sky channels on the cheap".

He added: "Companies which invest and take risks deserve to be rewarded. Setanta's problems are solely the result of decisions taken by its management and shareholders.
"After two years, Ofcom has found no evidence of excessive profits or high prices."