Broadcast regulator Ofcom is to launch an investigation into the pay-TV market following the public row between BSkyB and Virgin Media.
It said it would look into competition issues in the pay-TV industry, which includes cable, digital terrestrial television, satellite and TV through broadband, known as TV over DSL.
The decision comes after it received a number of complaints regarding the loss of BSkyB channels on Virgin Media’s pay TV service, including one from the National Consumer Council.
Ofcom has also been asked by other broadcasters, such as BT, Setanta, Top Up TV and Virgin Media, to look at the market to see if competition rules have been broken.
Ofcom is currently holding an inquiry into BSkyB’s £940 million raid on ITV shares in November to see if Sky’s acquisition of a 17.9 per cent stake in the broadcaster led to a ‘change in control’.
The watchdog is due to report its findings to Trade and Industry Secretary Alistair Darling by April 27.
At the same time, it is also looking into complaints from Virgin Media, which accused Sky of acting ‘anti-competitively’ after the Sky deal blocked a takeover attempt by the cable company then known as NTL.
Separately, BSkyB has unveiled plans to launch a new pay-TV service on Freeview, the digital terrestrial television platform.
Ofcom said a public consultation would be needed for a licence for such a service to be approved, but added that the implications of Sky’s entry into the sector, including the impact on customers, would fall as part of the investigation into the pay-TV industry.
The regulator will begin the investigation by gathering information from those involved in the industry, after which it will decide whether to refer the case to the Competition Commission.
The investigation process could take a number of months.
Virgin Media said today that it welcomed the announcement by Ofcom.
It added: ‘This investigation, while in its early stages, is an opportunity for Ofcom to ensure that fair and effective competition is introduced into the UK’s pay TV market for the benefit of consumers.’
A spokesman for BSkyB said: ‘The marketplace for entertainment and communications services is fiercely competitive and changing fast.
‘Customers have never had a broader set of businesses competing for their time and custom.
‘We note the reference in Ofcom’s statement to Sky’s proposed pay-TV service on the DDT platform and the dispute with Virgin Media regarding the availability of Sky’s basic channels.
‘In any market investigation, we’d 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.’
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