MEDIA: ITC’s new ’bundling’ rules will open up pay-TV competition

Amid all the hype about hundreds of digital TV channels let’s focus on what is really happening in the marketplace. Since March, four satellite channels have either closed or are about to. The Weather Channel, the Children’s Channel, the Country Music Channel and Sky Scottish have all failed to attract enough support to be viable.

Amid all the hype about hundreds of digital TV channels let’s focus

on what is really happening in the marketplace. Since March, four

satellite channels have either closed or are about to. The Weather

Channel, the Children’s Channel, the Country Music Channel and Sky

Scottish have all failed to attract enough support to be viable.



Yet, quietly, the new National Geographic Channel, backed by the famous

magazine and BSkyB has been making inroads. With its emphasis on

expeditions, anthropology and animals, it is fast becoming one of the

UK’s top ten prime-time basic tier channels and last week signed a

production deal with Carlton TV.



All this is a taster of what to expect - more closures among the weak,

but new launches too. Boom and bust looks inevitable if the Independent

Television Commission’s bold new policy rewriting the rules on the

’bundling’ of pay-TV is implemented this summer. In effect it ends the

system whereby minority channels of indifferent quality could piggy-back

on stronger ones, through monthly subscriptions.



In a shift (assisted by a desire to show it can stick up for consumers),

the ITC has said that it is not in the business of propping up

loss-makers.



This represents a big change from last year’s priorities when it was far

more worried about pursuing any policy which could be construed as

depriving viewers of choice. Now it is insisting that current practice

of lumping together big bundles - premium-priced movie and sports

channels (all run by Sky), with the basic cheaper ones (dependent on a

mixture of subscription and advertising) must end, though it stops short

of allowing consumers to mix and choose a la carte.



The ITC ruling seeks to demolish a concept called ’minimum carriage

requirements’ which Sky has used to force cable companies to supply 80

per cent of subscribers with all Sky’s basic channels, restricting

competition. What has strengthened the ITC’s resolve is that several

cable companies are experimenting with cheap mini-bundles of som e ten

channels, for a modest monthly fee and have been rewarded with above

average growth. It has resulted in take-up rates of around 40 per cent

per franchise, a figure never before attained.



So where does it lead? Oddly, Sky could emerge with its power enhanced

because its network may surge with cheaper ’mini-bundles’. And, unless

an exemption is granted, pure cable channels, such as Live TV, with

contracts guaranteeing carriage may be scuppered. Further down the line,

even premium movies and sports channels may be squeezed if pay-per-view

movies and sports events spread.



I’m with the ITC on this one. Let competition rage. Multi-channel TV

belongs to the leisure sector. It is not an essential utility. Life goes

on without a Weather Channel.



The consumer has voted. Or, as the ITC puts it, current ’bundling

practices’ may be preventing a more rapid spread of pay-TV.



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