October 04, 2009

VM and BT submission to Ofcom

The Sunday Telegraph today has published extracts from the Virgin and BT submission to Ofcom in the run up to a final rerport and recommendation on the pay TV market by the watchdog. Here are some of the highlights:
Virgin and BT say that if Ofcom applied the new pricing rules, consumers could see prices drop for channels such as Sky Sports 1 by as much as 20 per cent.
The argument rests on Ofcom's proposals to demand a wholesale "must-offer" price similar to that used in telecommunications. This would mean Sky dropping its prices to other providers.
"The proposed wholesale must-offer remedy would promote the emergence of a more balanced mix of pay TV platforms and retailers which will benefit consumers in terms of choice, price and innovation," the submission says.
"[It] will enable each platform to compete based on its different strengths, and products to be developed which appeal more closely to the preferences of different groups of customers. Those who do not want or cannot have a satellite dish will not need one. Those that do not wish to commit at the outset to a twelve months subscription but are willing to pay for some TV channels will be more readily able to do so."
The submission adds: "In a more competitive market, it is clear that further innovations would result. One example is the greater availability of HD [high-definition] services on platforms other than satellite and the development of an increased range of on-demand and interactive services by Sky's competiton. For the first time consumers will be able to enjoy genuinely interactive services by being able to participate actively in the TV experience."
Here's what I think will happen next:
1. Sky will make its own submission that will be as strongly worded as ever, complaining that the interfering watchdog is exceding its brief and is proposing to limit an appropriate commercial return on Sky's considerable investment in pay TV content
2. Ofcom will take until the new year to publish its final report, which will find in favour of BT and Virgin, against which Sky will immediately appeal. This delays any action until Cameron's new Tory government can dismiss any ruling as part of the promised Ofcom deconstruction that is apparently a priority for them (I'd personally have thought there were other things they should be sorting out, but what do I know?!)
3. After many months, a compromise is met between Sky and VM/BT when the latter threatens to take things to the EU; Sky drops the price by a nominal amount and makes some of its unique HD services more broadly available. Savings to customers are minimal but on all platforms.
4. Sky Sports, Sky Movies et al finally appear in HD on cable as a subscription offering, but the HD market has already been pretty much monopolised by the satellite service.
5. Longer term, ESPN secures half the Premiership football packages next time they are auctioned and customers find any savings secured on Sky Sports are lost paying for games on ESPN.


Tom Chiverton said...

I agree. Unfortunately big company posturing never results in a good deal for consumers.
OFCOM has proved itself utterly toothless over (for instance) ADSL speeds, so I don't hold out much hope.

Mark said...

My only real point of contention would be the Blogger's prediction that ESPN will purchase half the Premiereship rights next time they are up for renewal. Sky won't let those rights go so easily while so much of their business depends on soccer.
As for OFCOM being "utterly toothless", I'd say it was more a case of Rupert Murdoch having struck a deal with Cameron's Tories in return for the announced support of his newspaper(s).
Of course, a Tory win at the next election is not yet a foregone conclusion.....

lee said...

Really does hinder on who wins the general election next year.

It's amazing you know, I consider myself politically and socially astute, yet until The Sun came out and backed them, I didnt' see all the little pieces together, of Cameron cosying up to Murdoch.

OFCOM being "watered down" was his initial statement, now he is claimed to "abolish" it - give Sky a free reign.

Oh how wonderful, back to Thatcherite years of deregulation!

And yes, let's get more HD lol