Oftel reconsiders digital TV pricing

Should Sky should pay more than BBC?

Oftel announced today it is to review how digital TV companies pay for "conditional access services" i.e. things like encryption and user identification which allow subscribers to view certain programmes but others can't.

Currently there's a free market approach but Oftel is considering setting the prices of the services, and making it cheaper for "public service broadcasters" - meaning those on terrestrial TV from BBC1 to Channel 5 - and "commercial broadcasters" such as Sky and ITV Digital.

While the current system lets companies argue their own prices and terms & conditions, Oftel is worried that the situation is getting out of hand and that it is losing its ability to control the market at the same time.

This could result in small players being knocked out of the market and companies losing their incentive to produce "quality" programmes rather than mass-appeal programmes.

Hence Oftel suggests that it sets the prices and splits them into two, accounting for the fact that Sky etc. make a lot more money from their programmes and so should be charged more.

It is looking at two basic options: one, a company is charged on the number of channels in puts in a certain package sold to consumers; or two, the cost of the conditional access services varies according to how much the consumer is charged for the service.

Oftel is inviting comment- the deadline is 25 January next year.

Head boy of Oftel David Edmonds said: "Digital television has been a great success in the UK. Consumers can choose between three different networks and a huge number of channels, with 40 per cent of UK households subscribing to digital TV - a higher level than in Europe or the USA. The current regulatory regime gives companies the flexibility to negotiate terms and conditions..." etc etc.

BTW, while we have rarely covered digital TV on The Register, we figure it is becoming an increasingly important topic and so are considering getting to know the industry. Is this an example of great foresight or just a waste of time? Let us know - click here. ®

Related Link

Oftel's full report

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