Advanced Television

Sky deal makes others gamble

May 3, 2010

BSkyB and Ofcom have reached an interim agreement on how to handle the period of Sky's appeal to the Competition Appeals Tribunal for Ofcom's wholesale price regulation order to be suspended.

In essence, the terms of the WMO (Wholesale Must Offer) order are narrowed to specify, for now, the beneficiaries of lower prices as BT, Top Up and Virgin (on cable and DTT). For the period the appeal is in process current prices will be paid by these companies but the premium to the new prices specified by Ofcom will be held in escrow accounts until the appeal is determined. At the conclusion of the appeal, the CAT will determine the distribution of the monies held in escrow.

Sky said: "We are pleased to have been able to put forward an agreement which provides substantial protection against the short-term impacts of Ofcom's decision. We remain fully focused on our substantive appeal, which will be filed with the CAT in due course."

While the move looks like a Sky compromise, in fact it puts the onus on the other providers to decide whether to gamble on launching new lower priced packages not knowing what the ultimate cost to them of those packages will be. They will have to calculate whether launching the services will create a momentum that will make WMO more likely, or whether it's an unacceptable risk without cost certainty.

Categories: Articles, Regulation