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20|03|07

Market investigation into the pay TV industry

Ofcom has received a submission from BT, Setanta, Top Up TV, and Virgin Media, which asks Ofcom to investigate the pay TV industry and to consider whether to make a market reference to the Competition Commission under the Enterprise Act 2002.

Pay TV includes subscription and video-on-demand television services on all platforms: cable, digital terrestrial television (DTT), satellite and TV over DSL.

After careful consideration, Ofcom has today announced that it will investigate the pay TV market, including obtaining information from market participants. Following this assessment Ofcom will decide whether to make a market reference to the Competition Commission. Ofcom will also consider whether any concerns would be better addressed using sectoral powers or the Competition Act 1998.

Consumer groups including the Ofcom Consumer Panel and the National Consumer Council have also expressed concerns to Ofcom about one aspect of the pay TV market: the loss of BSkyB channels on Virgin Media’s pay TV platform.

Separately, BSkyB has announced a proposal to launch a new pay TV service on the DTT platform, based on new set-top box specifications. On receipt of a licence application, Ofcom would consult on whether to approve the licence variations needed for such a service. In the meantime, the implications of the possible entry of BSkyB into the pay DTT market, including impact on consumers and emerging competition, will be part of the market investigation announced today.

Ends.

Notes for Editors and CSEs

1. The investigation will be concerned with features of the market, including control over content, ownership of distribution platforms, retail subscriber bases and vertical integration.
2. On 13 March 2007 the Ofcom Consumer Panel wrote to Ofcom about the removal of BSkyB’s basic channels from Virgin Media’s pay TV platform. See: http://www.ofcomconsumerpanel.org.uk/nr/140307.htm. On 1 March 2007 the National Consumer Council announced that it was considering a possible super-complaint to Ofcom under the Enterprise Act 2002 on the same subject. See: http://www.ncc.org.uk/cgi-bin/kmdb10.cgi/-load747560_nccviewcurrent.htm.
3. On 8 February 2007 BSkyB announced that it proposes to launch a new pay TV service on the DTT platform. On 16 February 2007 Ofcom confirmed that, following receipt of any applications for the necessary licence variations, the process for regulatory approval would include public consultation. This is likely to include consideration of the implications of set-top box compatibility for competition and consumer confidence. See news release at: http://www.ofcom.org.uk/media/news/2007/02/nr_20070216.
4. Under a separate process, already underway, Ofcom is carrying out various functions in relation to the acquisition by BSkyB of a 17.9% shareholding in ITV plc. Ofcom has been asked by the Secretary of State for Trade and Industry to conduct an initial investigation into whether the acquisition by BSkyB raises public interest issues which are or may be relevant to a consideration of that transaction. Ofcom will report to the Secretary of State by 27 April 2007. Within the same timeframe Ofcom is also considering whether there has been a change of control of ITV plc such that it needs to undertake a review of the effects or likely effects of BSkyB's share acquisition on ITV plc’s programming obligations.
5. Ofcom is the independent regulator and competition authority for the UK communications industries, with responsibilities across television, radio, telecommunications and wireless communications services. For further details please visit www.ofcom.org.uk.

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