Virgin, Sky fall out sparks competition probe

The ongoing spat between Virgin Media and BSkyB has prompted UK communications regulator, Ofcom, to launch a competition probe into the pay TV industry.

Ofcom said Tuesday it has received requests from Virgin, BT, Setanta and Top Up TV, to investigate the pay TV market and to consider whether to make a market reference to the Competition Commission.

Virgin and Sky fell out last month over a pricing agreement, resulting in the loss of all Sky’s basic channels from the Virgin Media cable TV service.

Consumer groups, including the Ofcom Consumer Panel and the National Consumer Council, have expressed concerns over the loss of Sky channels on the Virgin platform.

Ofcom will investigate all sectors of the pay TV market, including subscription and video on demand services, across cable, digital terrestrial television (DTT), satellite and TV over DSL, otherwise known as IPTV.

In response to the investigation, a Sky spokesman said the “marketplace for entertainment and communications services is fiercely competitive and changing fast. Customers have never had a broader set of businesses competing for their time and custom”.

Sky moved to deflect some of the attention, saying, “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.”

The satellite broadcaster has also proposed to launch a new pay TV service on the digital terrestrial television platform. Ofcom said the implications of the possible entry of BSkyB into the pay DTT market, including impact on consumers and emerging competition, would be part of the market investigation.

“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 Sky spokesman said.