Ofcom moves ahead with pay TV probe

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LONDON -- U.K. media regulator Ofcom has agreed to launch an investigation into the British pay TV market after receiving a joint submission from cable companies Virgin Media, Setanta and British Telecom.

The investigation comes after 3 million Virgin Media homes lost access to Sky's basic entertainment channels, including "Lost" and "Nip/Tuck" carrier Sky One, because the companies could not agree on the pricing details of carriage contracts.

The investigation will look at the program supply role of satcaster British Sky Broadcasting and other participants and will consider whether the Competition Commission should further examine issues of market dominance.
It also will review BSkyB's plan to launch a new digital terrestrial pay TV service and the implications it might have for such other players as BT Vision, Top Up TV and Tiscali TV.

"After careful consideration, Ofcom has today announced that it will investigate the pay TV market, including obtaining information from market participants," the regulator said. "Following this assessment, Ofcom will decide whether to make a market reference to the Competition Commission."

Ofcom confirmed that it decided to act after receiving written submissions from Virgin Media, Setanta, BT Vision and Top Up TV, but declined to cite their concerns.

BSkyB responded to the move by calling on the regulator to investigate the "closed-loop" access system by which cable operators can pick and choose which channels they want to carry, which it said contrasted unfairly with its own "must carry" obligations.

"BT, Top Up TV and Setanta all have a commercial interest in preventing Sky from increasing customer choice by developing a new pay TV service on the DTT platform," the satcaster said. "Recent events have also drawn attention to the fact that cable is a closed network with substantial protections. In any market investigation, we'd expect Ofcom to look at the physical and legal barriers and business practices that shield Virgin Media from true competition and prevent consumers from enjoying lower prices in broadband and telephony and greater innovation and choice in television."
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