Ofcom pay-TV probe stirs up Sky and Virgin

Ofcom is investigating BSkyB's proposal to launch a pay-TV service on the DTT platform

The news that Ofcom is planning an investigation into the pay-TV industry has sparked a war of words between companies in the industry.

Ofcom launched the investigations after complaints by BT, Setanta, Top Up TV and Virgin Media that offences were occurring which should lead to a referral to the Competition Commission under the Enterprise Act 2002.

In particular, consumer groups and others have complained about the actions of BSkyB in pulling its channels from Virgin Media's pay-TV platform. Sky channels are also being removed from the Freeview digital TV service.

"Separately, BSkyB has announced a proposal to launch a new pay-TV service on the DTT platform, based on new set-top box specifications," said the regulator in a statement.

"On receipt of a licence application, Ofcom would consult on whether to approve the licence variations needed for such a service.

"In the meantime, the implications of the possible entry of BSkyB into the pay-DTT market, including any impact on consumers and emerging competition, will be part of the market investigation announced today."

But BSkyB has come out fighting, alleging that Virgin Media also needs an examination by the regulator.

"BT, Top Up TV and Setanta all have a commercial interest in preventing Sky from increasing customer choice by developing a new pay-TV service on the DTT platform," said a BSkyB spokesman.

"Recent events have also drawn attention to the fact that cable is a closed network with substantial protections.

"In any market investigation, we would expect Ofcom to look at the physical and legal barriers and business practices that shield Virgin Media from true competition and prevent consumers from enjoying lower prices in broadband and telephony and greater innovation and choice in television."

BSkyB is already under investigation for its acquisition of 17.9 per cent of the shares in ITV's terrestrial services. The investigation was launched at the request of the Secretary of State for Trade and Industry and a decision is expected on 21 April.