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BT calls for Ofcom to investigate Sky dominance of pay TV market

Friday, July 10th 2015 by Phil Wilkinson-Jones

BT has called for Ofcom to investigate Sky’s dominance of the UK’s pay TV market as part of its review of the telecoms industry.

John Petter, CEO of BT’s consumer division, claimed a lack of competition in pay TV had led to high prices and poor outcomes for consumers.

His comments are the latest in a war of words between BT and Sky and follow calls by Sky for BT's consumer arm to be split from its Openreach business, which owns and maintains the UK’s largest broadband network.

Mr Petter's calls also came a day before Sky launched a new deal offerng free fibre broadband for 12 months – available to anyone switching to Sky Fibre and taking Sky line rental.

In a speech to the Broadcasting Press Guild, Mr Petter said the sector’s problems were in contrast to the falling prices, rising speeds and strong international performance seen in the UK broadband market.

Calling for Ofcom to formally amend the scope of its ‘digital communications review’, an overarching review of the UK’s fixed and wireless networks to make sure they work for consumers and businesses, BT said Sky customers are paying almost £50 a year more than the EU average for basic TV channels and £75 a year more if they include premium movie and sports channels.

“Whereas in the energy market regulators have criticised the ‘big six’ operators, in pay TV Sky has a 64 per cent share, so there is really only the ‘big one’,” said Mr Petter.

The broadband market has four major players but none have more than a 32% market share, he added.

“Relative to EU averages Sky customers are paying around a half a billion pounds more per year for the basic packages of pay TV channels.

“Switching in pay TV is 50% lower than the levels seen in broadband, so it is clear we just aren’t seeing the right levels of competition for Sky.”

‘Talk to the hand’

Mr Petter highlighted the fact that, as of last month, switching broadband or landline provider is easier for consumers than changing TV services.

Changes put in place by Ofcom mean the responsibility for switching broadband and landline provider now lies with the company to which the customer is moving.

But the new simplified process does not include pay TV services where switching is, in BT's words, “unregulated”.

Mr Petter said the broadband market benefits from regulation at a wholesale level, which allows all service providers equal access to the national network maintained and run by Openreach.

By contrast, he said in pay TV “there are weak wholesale obligations that only apply to Sky Sports 1 and 2”.

“We think Ofcom should heed the call of Sky’s biggest shareholder. James Murdoch once said in relation to Sky that 21st Century Fox fought for ‘a level playing field and to have competition policy applied with an even hand’,” said Mr Petter.

“But when it comes to competition in pay TV, the message from Sky seems to be ‘talk to the hand’.

“We think Ofcom should make Mr Murdoch happy and give the UK a competitive pay TV market that is fit for the next decade.”

Sky today launched what it called its 'best ever fibre deal', offering customers Sky Fibre broadband, which is normally £10 a month, free for 12 months, in an offer that is available to everyone switching to Sky Fibre when they take Sky line rental.

Lyssa McGowan, director, Sky Broadband, said: “We know there are lots of people who would like to try superfast speeds but are put off by the high prices charged by some providers.

"With this ground-breaking offer, we’re making Sky Fibre even more accessible. Now superfast broadband is genuinely for everyone.”

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