The investigation was triggered by a joint complaint made in January by Sky's pay-TV rivals -- BT, Setanta, Top Up TV and Virgin Media. They want Ofcom to refer the market to the Competition Commission.
Ofcom has now invited these companies and Sky to respond to its initial findings, but it stressed that it has not yet decided whether there are any competition problems as such.
In a 133-page report, it said the market has delivered "significant benefits to consumers", but it has identified three areas of concern relating to:
- Whether vertically integrated firms [such as Sky] have the incentive to make their premium content, such as sports and movies, available to other retailers and platform operators;
- Whether firms are able to compete effectively at the wholesale level for premium content;
- The enforcement of buy-through (the practice of requiring consumers to purchase a basic package before they are allowed to buy a premium service) at the retail level.
Ofcom's second area has attracted intervention in the past, when the European Commission forced the Premier League not to sell TV rights on an exclusive basis, which opened the door for Setanta.
Ofcom's report suggests this helped overcome an important barrier to entry in the pay-TV market enjoyed by first movers such as Sky.
In October, Sky disputed the complaint from its rivals in a response to Ofcom saying it believed competition in the market is effective.
The industry is also waiting for the result of a separate Ofcom consultation on Sky's plans to withdraw its free-to-view channels on Freeview in favour of launching pay-TV channels on digital terrestrial television. If approved, Sky will launch the service, branded Picnic, with Sky One, Sky Sports 1 and Sky Movies 1.
This article was first published on brandrepublic.com