Ofcom today announced its decision to remove the regulation requiring Sky to offer Sky Sports 1 and 2 on a wholesale basis, as the company is now widely supplying these channels to other pay TV providers on commercial terms.
The 'wholesale must-offer' regulation was introduced in 2010 to promote choice and innovation for consumers through greater competition in pay TV1.
Last year, Ofcom began a review to determine whether regulation remained appropriate.
Since 2010, consumers have been able to choose from a wider range of services, enabling them to watch sports through a range of pay TV broadcasters and devices.
Following consultation and evidence from stakeholders, Ofcom has found that Sky is now supplying sports widely on commercial terms outside of the regulation.
Given the evidence of Sky's supply arrangements, Ofcom is lifting the wholesale must-offer regulation. However, Ofcom will continue to monitor closely market developments and, if necessary, will quickly step back in.
Sky now makes Sky Sports available through commercial wholesale arrangements with its pay TV competitors, including BT, for its BT Vision service, TalkTalk and Virgin Media. Sky Sports channels are also available on Sky's internet-based NOW TV service, which can be accessed on a range of platforms and devices - such as EE TV, Apple TV, games consoles, smartphones and tablets, as well as NOW TV set-top boxes.
Since 2012, BT has invested over £2bn in building its sports offer, including 25% of Premier League rights and exclusive rights to broadcast all Champions League matches live until the 2017/18 season. BT Sport is now available on a number of platforms and devices, as well as being bundled with BT's broadband service.
New providers have entered or plan to enter the TV market, such as EE and Vodafone, and companies are increasingly competing to provide pay-TV services as part of a package that includes broadband and mobile.
The only supply arrangement for Sky Sports 1 and 2 under Ofcom's wholesale must-offer regulation is with BT for its YouView service. Ofcom expects all providers to engage willingly, constructively and in a timely manner to ensure sports continues to be made widely available to viewers.
Ofcom continues to monitor the pay TV market closely. Should evidence emerge of practices which we consider to be prejudicial to fair and effective competition, we will quickly reassess the need for regulation. In particular, Ofcom wants to be sure that consumers continue to have access to, and a choice of, packages and services containing Sky Sports 1 and 2.
Pay TV is an important market that is valued by consumers, with 58% of UK homes now subscribing to a pay TV service. Ofcom wants to ensure choice and innovation is delivered to consumers through fair and effective competition.
Ofcom is examining how pay TV content is bundled with telecoms services as part of its wider Strategic Review of Digital Communications. Ofcom is considering responses to its July discussion document and initial conclusions are expected to be published at the turn of the year.
NOTES FOR EDITORS:
1. Ofcom's 2010 decision to impose the wholesale must-offer obligation on Sky was appealed to the Competition Appeal Tribunal (CAT). In 2010, the CAT put in place interim arrangements which maintained the wholesale must-offer regulation in place in respect of BT (on its BT Vision service), Virgin Media, Top-Up TV and Real Digital. In November 2014, the CAT extended the interim arrangements to BT YouView. The interim arrangements remain in place.
The Competition Appeal Tribunal (CAT) found that Ofcom had misinterpreted the evidence in concluding that Sky was not a willing wholesaler of its premium channels. The CAT also considered that Ofcom's concerns that Sky was engaging in practices with regard to wholesale prices and the supply of new products to Virgin Media which were prejudicial to fair and effective competition were unfounded. The CAT therefore allowed Sky's appeal. The CAT's decision was further appealed to the Court of Appeal. The Court of Appeal found that the CAT had failed to deal with Ofcom's competition concern regarding rate-card pricing in relation to new entrants. The Court of Appeal remitted the matter back to the CAT for further consideration. That process remains ongoing.
2. In June 2013, Ofcom opened an investigation into a complaint from BT alleging that Sky is abusing a dominant position by making wholesale supply of Sky Sports 1 and Sky Sports 2 to BT's YouView platform conditional on BT wholesaling its BT Sport channels to Sky for retail on Sky's satellite platform. Ofcom's investigation is ongoing and we will review the status of the complaint in due course.
3. Ofcom is the independent regulator and competition authority for the UK communications industries, with responsibilities across television, radio, telecommunications, wireless communications and postal services.