UK media regulator Ofcom has today (Thursday) removed the regulation requiring pay-television broadcaster Sky to offer Sky Sports 1 and 2 on a wholesale basis, stating the decision has been made as the company is now widely supplying these channels to rivals on commercial terms.
The ‘wholesale must-offer’ regulation was introduced in 2010 to promote choice and innovation for consumers through greater competition in the pay-television sector. Last year, Ofcom began a review to determine whether regulation remained appropriate.
In a statement today, Ofcom said: “Following consultation and evidence from stakeholders, Ofcom has found that Sky is now supplying sports widely on commercial terms outside of the regulation. Given the evidence of Sky's supply arrangements, Ofcom is lifting the wholesale must-offer regulation. However, Ofcom will continue to monitor closely market developments and, if necessary, will quickly step back in.”
Sky makes Sky Sports available through commercial wholesale arrangements with its pay-television competitors, including telco BT, for its BT Vision service, TalkTalk and Virgin Media. Sky Sports channels are also available on Sky's internet-based Now TV service.
Ofcom highlighted that the only supply arrangement for Sky Sports 1 and 2 under the wholesale must-offer regulation is with BT for its YouView service. The regulator added: “Ofcom expects all providers to engage willingly, constructively and in a timely manner to ensure sports continues to be made widely available to viewers.
“Ofcom continues to monitor the pay-TV market closely. Should evidence emerge of practices which we consider to be prejudicial to fair and effective competition, we will quickly reassess the need for regulation. In particular, Ofcom wants to be sure that consumers continue to have access to, and a choice of, packages and services containing Sky Sports 1 and 2.”
John Petter, head of consumer for BT, in July said current wholesale arrangements were inadequate, claiming sports fans want access to the full Sky Sports package, not just two channels. Earlier in the month, the regulator rejected a call from BT, which operates pay-television broadcaster BT Sport, to include a full investigation into the country’s pay-television market as part of Ofcom’s ongoing digital communications review.
BT today said it is considering legal action over Ofcom’s decision. “BT is very disappointed that Ofcom has proposed the removal of the wholesale must offer obligation on Sky,” a spokesman told The Guardian newspaper. “We will consider our legal options in the light of this decision. We still believe that effective remedies are essential to address the failure of competition in the pay-TV market, in which Sky has had around 75 per cent share of retail subscription revenues for more than 10 years.”
A spokeswoman for Sky said: “We are pleased that Ofcom has decided to remove the ‘wholesale must-offer’ condition. As the evidence demonstrates, we are, and have always been, more than happy to make our channels available on other platforms.”
Ofcom is continuing to examine how pay-television content is bundled with telecoms services as part of its wider Strategic Review of Digital Communications. Ofcom is considering responses to its July discussion document and initial conclusions are expected to be published at the turn of the year.