Pay TV phase three document - Stakeholders - Ofcom

Pay TV phase three document – non-confidential version
268
� A must-offer obligation including both price and non-price terms.
9.13 Our view is that a proposed wholesale must-offer remedy should include some level
of detail of the terms of a wholesale offer – both with regard to price and non-price
terms. This section addresses a number of issues relating to how the price of
wholesale channels should be calculated, and consults on the appropriateness of a
range of prices, should we decide a wholesale must-offer remedy including pricing
terms is appropriate. The section also considers a number of non-price terms, such
as qualifying criteria for retailers, security, the potential for a reference offer, and
cross-promotion, should it be appropriate to impose such terms.
9.14 It is worth noting that even under our preferred approach of a wholesale must-offer
remedy including pricing and non-price terms, it would still be open to Sky to make
other offers and therefore to agree terms on other bases, in addition to those
specified by the wholesale must-offer remedy.
9.15 The section is structured as follows:
� Principles in setting wholesale prices: given the objectives we are seeking to
achieve through a wholesale must-offer remedy, what are the key principles we
should adopt in setting wholesale prices?
� Calculation methodology: at the stage of calculating specific prices, what
methodology should we apply?
� Implementation and analysis: what are the specific figures that result from
implementing different pricing approaches and what is an appropriate range of
prices and conditions for consultation?
� Non-price issues related to the implementation of a wholesale must-offer: what
are the appropriate terms around issues such as qualifying criteria for retailers,
security, and cross-promotion?
Principles in setting wholesale prices
9.16 In section 8 we highlighted a number of important aspects of a wholesale must-offer
that we need to consider. While our focus in this section is on the pricing of channels,
some of the broader principles around how we approach a wholesale must-offer
remedy will be relevant to the question of setting prices. These include:
� The channels that are covered by a wholesale must-offer: this is the first step in
determining the set of relevant wholesale products for which we should derive
prices;
� The overall approach to setting prices: in particular (i) the appropriate calculation
methodology to derive specific price levels, (ii) the appropriate structure for
wholesale prices and (iii) the evolution of prices over time;
� The application of a wholesale must-offer to retailers on different platforms: this
will inform how prices should be set across different platforms.
9.17 We consider the principles involved in addressing each of these issues below.