'Cut Sky Sports charges' Ofcom tells SkySky Sports to be sold at a reduced price to rivals
31 March 2010
Sky Sports 1 and 2 may soon be available for you to to watch at a lower price from TV suppliers such as Freeview, Virgin Media and BT Vision.
TV watchdog Ofcom says lower costs to watch premium sports channels is a likely outcome of its new ruling today following an investigation into the pay TV market.
Among other rulings, it has stated that Sky must offer to supply Sky Sports 1 and 2 to other TV suppliers - such as Virgin Media, Freeview and BT Vision - at a wholesale price set by Ofcom.
As it stands, Sky has market power in the wholesale provision of premium channels such as Sky Sports 1 and 2 and there are no controls over what it charges rivals to show these channels. Ofcom has found that Sky is exploiting its power by restricting distribution of its premium TV channels to rivals. This in turn prevents competition and limits consumer choice.
Ofcom says its new rulings will mean that premium sport, including Premier League football matches, could become available to millions more homes via Freeview and other TV platforms.
Ofcom has not yet made any rulings on Sky's premium movie channels.
For a great sports viewing experience, check out the best TV sets on the market in the Which? LCD and plasma TV reviews.
Cheaper Sky Sports prices
Ofcom has set a wholesale price of £10.63 per subscriber per month for each Sky Sports channel when sold to rivals on a standalone basis. This is 23.4% lower than the current wholesale price at which the channels are available to other operators.
Most customers currently buy Sky Sports packages which include both Sky Sports 1 and 2. Ofcom has reduced the wholesale price for this bundle by 10.5% to £17.14.
The wholesale prices given by Ofcom are the costs that providers, such as Virgin and BT, will pay to Sky rather than the actual price consumers will pay. However Ofcom says that consumers are also likely to benefit from wider availability of smaller, lower-priced TV packages including Sky Sports 1 and 2, and a greater range of bundles combining pay TV, broadband and phone services.
To see how Sky's bundles compare with other providers have a look at the Which? phone, internet and TV packages review.
Sky Sports in HD
Sky has also been told it must offer Sky Sports high definition (HD) channels to rivals on 'fair, reasonable and non-discriminatory terms'. But Ofcom has not set wholesale prices for Sky Sports HD channels.
This is because Ofcom has accepted Sky's argument that HD services are a recent innovation and that pricing flexibility is appropriate to promote future innovation.
If you want to watch in high definition find out more about your options with the Which? guide to HD TV explained.
Sky to challenge Ofcom
Sky responded to Ofcom by confirming it's intention to challenge their conclusions before the Competition Appeal Tribunal.
A Sky spokesperson says: 'There should be no doubt that Ofcom's actions represent an unprecedented and unwarranted intervention. This is a marketplace where customers are well served with high levels of choice and innovation. Consumers will not benefit if regulators blunt incentives to invest and take risks.'
However Sky's rival BT Vision does not believe Ofcom's ruling goes far enough. Gavin Patterson, CEO, BT Retail, told Which?: 'Today's decision is disappointing but a step in the right direction.
'BT Vision aims to offer Sky Sports1 and 2 at lower prices than those which have been available, hopefully in time for the new Premiership football season. But the wholesale price for the two sports channels is higher than Ofcom had previously suggested, and it should have included all Sky Sports channels, not just two.'
BT also expressed disappointment that Sky's premium movie channels were not included in Ofcom's rulings.
You can read full conclusions of Ofcom's investigation into the Pay TV market on its website.
For more information on pay TV options check out the Which? guide to Free TV and Pay TV services.
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