LONDON (Alliance News) - BT Group PLC on Thursday upped the stakes in its battle with Sky PLC as the head of its consumer arm called on UK media and communications regulator Ofcom to amend the scope of its Digital Communications Review to include pay-TV, claiming high prices and poor outcomes for consumers arise from a lack of competition in the sector.
Speaking to the Broadcasting Press Guild, BT Consumer Chief Executive John Petter drew comparisons between the UK broadband market and the pay-TV sector, hitting back at calls Sky has made recently for a break-up of BT and claiming this push is a "smokescreen" designed to obscure the failings in the pay-TV market, which Sky dominates.
BT said it believes consumers are paying close to GBP50 per year more than the European Union average for basic pay-TV channels, and potentially up to GBP75 a year more to get sports and movies packages. The group also cited figures from Ofcom which showed that the cost of pay-TV has remained broadly flat, while broadband costs have fallen.
Petter said that while in the energy market, the Big Six players in that sector have been criticised by regulators over a lack of competition, Sky has a 64% stake of the pay-TV space. He also said that switching in pay-TV is 50% lower than in the broadband market, "so it is clear we aren't seeing the rights levels of competition for Sky".
Petter's comments come after Sky at the end of June called for Ofcom to launch a full investigation of the UK broadband market, saying it believes the issues with competition and quality of service are "sufficient" for Ofcom to ask the Competition and Markets Authority to conduct an inquiry.
In particular, Sky argues that historic under-investment in BT's Openreach business has led to problems with service quality, and expressed concerns about future competition in the market.
Openreach is BT's infrastructure division, which installs and maintains BT's network. BT was formerly a state monopoly that controlled all of the UK's telephone network and was the only provider of services. But it was made to form Openreach by Ofcom in 2006 as part of measures allowing rival operators to access BT's network.
In its submissions to Ofcom's strategic review of digital communications, Sky said that whilst regulation has supported effective competition and new entrants have challenged BT, superfast broadband services are regulated differently and as a result there is a risk of reduction in competition as the UK transitions to services based on the new superfast technology.
Sky said there is "limited scope" for competitors to BT to deliver superfast broadband services through their own infrastructure. It also argues that Openreach "does not deliver 21st century quality of service", citing an excessive number of faults, failures to reach targets for repairing faults, long waits to have new lines installed, missed appointments and incomplete jobs.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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