Ofcom: Pay TV delivers "significant benefits"

Ofcom has opened up the consultation phase of its investigation into the UK's pay television market.

The media regulator announced in March that it would be looking into the state of competition in the broadcasting market after receiving a submission from BT, Setanta, Top Up TV and Virgin Media that urged it to examine Sky's dominant position.

Today, Ofcom said that pay TV "has delivered significant benefits to consumers, growing from almost nothing in the early 1990s to one that now provides services to over 11 million consumers today. It delivers reasonable levels of consumer satisfaction and, at just over £4bn, provides the single largest source of revenue to the broadcast industry".

It added, however, that there are "warning signs, such as areas where consumer choice may be limited".

An initial assessment has led Ofcom to focus on three areas of possible concern: firstly, "whether vertically-integrated firms have the incentive to make their premium content, such as sports and movies, available to other retailers and other platform operators"; secondly, "whether firms are able to compete effectively at the wholesale level for premium content"; and finally, how the "enforcement of buy-through", where consumers must take a basic package before subscribing to premium content, works "at the retail level".

Ofcom plans to use the consultation responses to determine whether there are competition problems in the market that would require "further action". BT, Setanta, Top Up TV and Virgin Media have urged Ofcom to refer the matter to the Competition Commission.