Pay TV phase three document - Stakeholders - Ofcom

Pay TV phase three document – non-confidential version
314
first is to determine whether retailers must meet certain qualifying criteria and the
second is to determine which platforms they should be able to retail the channels on.
9.214 Whilst we can envisage cases where Sky may have legitimate concerns that
wholesaling its channels to certain retailers may have a damaging effect on its
business and/or brand, it is important that prospective retailers are provided clarity on
the qualifying criteria Sky would apply.
9.215 We are of the view that Sky could identify a number of objectively justifiable reasons
why it would not wish to wholesale its channels to a prospective retailer ahead of
individual negotiations. For example, Sky would legitimately want to ensure that a
prospective retailer’s platform was sufficiently secure to avoid compromising the
value of Sky’s own retail proposition, and that the prospective retailer could deliver
the wholesale channels to a reasonable quality to avoid deteriorating Sky’s wholesale
channel brand. Documenting these criteria and making them available to prospective
retailers would provide increased clarity of the criteria that retailers are expected to
meet and could reduce concerns over discrimination by providing increased
transparency. These “Minimum Qualifying Criteria” would be similar in concept to
(and a superset of) the Minimum Security Requirements document that we proposed
in our Second Pay TV Consultation (see below).
9.216 We envisage that the Minimum Qualifying Criteria would set out Sky’s reasonable
requirements for qualifying retailers as well as the requirements for a qualifying
distribution platform e.g. picture quality, support for access services and parental
control etc. [ � ].
9.217 While documented Minimum Qualifying Criteria will help to provide clarity and
transparency to prospective retailers, it is unlikely to be exhaustive and Sky could
have additional, objectively justifiable concerns in relation to individual retailers. In
these circumstances we would expect Sky to enter into commercial negotiations to
resolve these concerns. Where similar issues arise with a number of individual
retailers we would expect Sky to update and re-issue the Minimum Qualifying Criteria
accordingly.
Security issues and subscriber audit
9.218 We said in our Second Pay TV Consultation that we would expect Sky to be able to
impose conditions on other retailers to ensure that the platforms being used to retail
that content are secure, and that adequate processes are in place to protect against
content piracy. We noted the risk of using security as a pretext to withhold content
from specific retailers, and mentioned the possible need to establish some form of
dispute resolution process. We set out three options for minimum security
requirements (MSRs):
i) Sky, as the wholesale channel provider, defines the MSR by specifying which
Conditional Access (“CA”) technology must be used by each retailer. In this
scenario Sky would be fully responsible for the integrity of the CA system and as
such would also be liable for any breaches of that security system.
ii) Sky negotiates with each prospective retailer to agree the CA technology used
and how liability for any breaches of security would be shared.
iii) Sky defines a set of technology and platform agnostic MSRs and retailers select
a CA technology which they consider best fulfils these requirements.