Pay TV phase three document - Stakeholders - Ofcom

Pay TV phase three document – non-confidential version
8.39 In their separate response, Setanta and Top Up TV argued strongly that the
wholesale must-offer obligation is only the first step on a “ladder of investment”. They
believed that it is crucial to include Sky’s satellite platform within the scope of the
wholesale must-offer obligation. It would enable third parties to build up a critical
mass of premium pay TV subscribers and to make necessary investments at all
levels of the pay TV supply chain in order to compete more effectively with Sky.
8.40 [ � ] was of the opinion that content should be made available to other retailers on
all other platforms, particularly DSat, DTT, cable and IPTV. Furthermore the ‘mustoffer’
obligation should extend to mobile platforms as they evolve over time.
8.41 The BBC acknowledged the complexity of the issue of extending the eligibility to
retailers operating on the satellite platform. It was broadly in favour of such an
extension but believed a decision on this point might be premature. The BBC felt that
by excluding the satellite platform we risked ignoring a potential source of market
power in the pay TV value chain that might affect downstream markets, restrict
competition and, ultimately, reduce choice for final consumers.
8.42 Tiscali thought that excluding retailers on the Sky platform may lack rational
justification and could be disputed by such retailers on the grounds of discrimination.
8.43 [ � ].
8.44 The primary purpose of the remedy is to address the restricted availability of Sky’s
premium channels on non-Sky platforms, and the effects on innovation and choice
we believe arise as a result. These concerns can be addressed by requiring Sky to
supply its premium channels only to retailers on non-Sky platform(s). We remain of
the view that these objectives do not require us to extend the obligation to retailers
on Sky’s platform(s).
8.45 Extending the proposed remedy to include Sky’s own platform(s) would be a
significant additional intervention. Competitors to Sky would then be able to purchase
wholesale access to Sky’s platform services and Sky’s content, both on regulated
terms. A likely outcome is the emergence of a large number of resellers, reselling
Sky’s existing services to Sky’s existing subscriber base. This would certainly result
in an increased intensity of retail competition, but it would also be disruptive to Sky’s
existing business, and may result in a reduced incentive on all firms to invest in new
content and new platforms.
8.46 An additional intervention of this type would only be likely to be appropriate if it
addressed a risk to fair and effective competition. We have considered two types of
effects which might be relevant to that assessment:
� Additional downstream effects of Sky’s wholesale market power, over and above
the restricted availability of Sky’s content on non-Sky platforms.
� Reducing or eliminating Sky’s wholesale market power at source.
8.47 It might be appropriate to consider extending a wholesale must-offer obligation to
retailers on Sky’s own platform(s), if there was some other competition concern that
related specifically to fair and effective competition concerning retailers on these
platform(s), and if those concerns would not be adequately addressed by requiring
Sky to supply its premium channels to non-Sky platforms. In particular:
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