BT Calls on Ofcom to Tackle Sky
The CEO of BT’s Consumer Division, John Petter, has today hit back at Sky (Sky Broadband) for calling on Ofcom to launch a competition review of the operators BTOpenreach division. BT has now similarly demanded that the regulator include Pay TV into its Digital Communications Review and tackle Sky’s “dominance“.

At the end of June Sky formally called upon the national telecoms regulator to launch a competition review of BTOpenreach (here), which manages BT’s underlying broadband and phone infrastructure. Sky, which wants to see Openreach being completely separated from BT, complained that the telecoms giant was “failing” broadband consumers and not investing enough into their underlying infrastructure.

Naturally BT wasn’t going to take that lying down and in a speech to the Broadcasting Press Guild the embattled Petter described Sky’s move as a “smokescreen” designed to obscure the “real market failings in pay TV” where Sky is still broadly dominant, although the rise of Netflix and YouView based services may be eating into that dynamic.

In his speech Petter suggested that Sky’s Pay TV services were overpriced and that related customers are paying close to £50 a year more than the EU average for basic pay TV channels and potentially sums greater than £75 a year more if they opt for premium sports and movie packages. Mind you it probably doesn’t help when both BT and Sky are bidding silly money on sporting rights (here).

By comparison Petter pointed out that broadband prices are falling, although anybody reading the last few weeks of news (lots of price rises) will be forgiven for scratching their heads over that one. Lest we not forget the way that providers also like to shift rising costs onto Phone Line Rental too, despite the underlying wholesale cost holding fairly steady.

John Petter, BT Consumer CEO, said:

Whereas in the energy market regulators have criticised the Big Six operators, in pay TV Sky has a 64 per cent share, so there is really only the Big One. Relative to EU averages Sky customers are paying around a half a billion pounds more per year for the basic packages of pay TV channels*. Switching in pay TV is 50 per cent lower than the levels seen in broadband, so it is clear we just aren’t seeing the right levels of competition for Sky.

We think Ofcom should heed the call of Sky’s biggest shareholder. James Murdoch once said in relation to Sky that 21st Century Fox fought for ‘a level playing field and to have competition policy applied with an even hand’. But when it comes to competition in pay TV, the message from Sky seems to be ‘talk to the hand’. We think Ofcom should make Mr Murdoch happy and give the UK a competitive pay TV market that is fit for the next decade.”
Petter also noted that the broadband market has four major players, but none with over 32% market share, yet in the pay TV market he claimed that there’s still one dominant player with a 64% share (Sky) leaving “major barriers to entry for new players“. Petter also wants to see tougher wholesale obligations, so that Pay TV is treated more like broadband provision.

Mind you Ofcom are already known to be looking at the issue of Pay TV, albeit primarily focused upon Premier League sporting rights. But the last time they attempted to intervene in that market it resulted in years of legal battles and history might yet repeat itself.