BT, Virgin: 'Sky could avoid pay TV model'

Virgin Media and BT have urged Ofcom not to allow Sky to use any loopholes to avoid the proposed wholesale must-offer model for its premium content.

The media watchdog is currently consulting on whether to force Sky to free up wholesale access to its premium sport and movies content to rival operators at cheaper prices.

Ofcom has received an "extensive response" to the consultation, including a joint Virgin Media, BT and Top Up TV submission warning that Sky could use loopholes to avoid the new regulation arrangement.

"This proposed approach seems to be clear in respect of platforms which used established cable, DTT [digital terrestrial television] or satellite distribution technologies," said the submission, reported by The Guardian.

"Ofcom should, however, clarify how the remedy would apply in the event that Canvas (or other DSL-based services) were to be widely deployed. For example, Ofcom must ensure that Sky cannot avoid the wholesale must-offer obligation through remote use of DRM [digital rights management] within a third-party DSL platform."

Sky has proved highly critical of BBC, BT, Channel 4 and Five joint venture Canvas, which aims to create a new technical standard for broadband-enabled set top boxes.

The satellite firm is concerned that the venture would use public money to distort competition in the nascent market for IPTV. In response, it has moved to make its Sky Player service available on Xbox 360 and IP Vision's Fetch TV service.

In response, Virgin, BT and Top Up TV called on Ofcom to take a firm line on Sky's approach to IPTV platforms, especially if its currently on-hold Freeview offering Picnic is ever given approval.

"If Picnic is authorised, it will result in increased scope for Sky to prevent competition in the retailing of premium pay TV channels," said the submission.

"If Ofcom is still minded to authorise Picnic, it must formally consult on the actual conditions which it is intending to impose on Sky in respect of Picnic."

However, the submission warned that wholesale prices for Sky's premium content should be pegged "at the bottom of the range" mooted by the watchdog. The three companies also want Sky Sports 3 and Sky Sports Xtra to be included in any new system of regulation.