John Petter, CEO of BT’s Consumer Division has called on UK comms regulator Ofcom to broaden the scope of its Digital Communications Review (DCR) to include pay-TV, citing high prices and poor outcomes for consumers arising from a lack of competition in pay-TV.
Speaking to the Broadcasting Press Guild, Petter compared the falling prices, rising speeds and strong international performance in the UK broadband market with the high prices and bad outcomes for consumers suffered by UK pay-TV subscribers.
Welcoming the Review, he suggested it needed to go much further, addressing the UK pay-TV sector, specifically the lack of competition and poor treatment of customers in this sector “This is a long-term problem which the current regulation doesn’t address,” he contended.
He suggested that Sky – the dominant player in the UK pay-TV market with over 64 per cent of the subscribers – had been “very shrewd” in its approach to the Review. “They’ve gone to great lengths to try and keep the focus of Ofcom’s review away from pay-TV They’ve done that by raising concerns abut the UK broadband market; mounting attacks on BT; even calling for us to be broken up.”
He suggested this was “just a diversionary tactic; a smokescreen to distract the regulators and the wider world from the real issue: their dominance in pay-TV.”
He compared the UK broadband market, where there were four large providers, no dominant player; easy consumer switching between providers and a fair, equal and non-discriminatory wholesale market, with pay-TV, describing the contrast as “startling”.
“There we see one dominant player and little competition; restrictive wholesaling by that dominant player; very low levels of switching arising from poor switching processes, and ever-rising prices which were high by international standards.
Noting BT’s entry into the premium sports rights arena had prompted Sky to put its prices up, he suggested that the confidence with which the Sky management had talked about passing some of the increase in what it was paying for sports rights to its customers should give Ofcom “pause for thought”.
He said the contrast between the rhetoric from Sky on broadband with the reality of its position as “a virtually-unregulated monopolist” on TV was shocking. “Sky are clearly hoping the louder they shout on broadband, the harder it will be for Ofcom to hear the cries of distress from UK pay-TV customers.”
Noting that James Murdoch had once called for Sky to have “a level playing field and to have competition policy applied with an even hand”. When it came to competition in pay-TV, the message seemed to be “Talk to the hand. So I’m asking Ofcom to keep Mr Murdoch happy and use the DCR to give the UK a pay-TV market that is competitive and fit for the next decade,” he concluded.
In response, a Sky spokesman suggested the reality was that, in a competitive market, customers were choosing Sky in greater numbers and staying with the broadcaster for longer because of the quality and value that it offered.
“It is strange to hear BT talk about high prices when they are about to increase the price of BT Sport for Sky TV customers by 48 per cent. This looks like an attempt to deflect attention from the real problems that exist in broadband, where consumers are suffering because of BT’s under-investment and there is concern about competition in the future.”