The perils of success for Sky

Great film.

From time to time regulatory bodies consider sealed (or mostly sealed) complaints, but as with IKEA plastic pipes – leaks are inevitable. A while back the Independent reported on one such complaint OFCOM is looking into but there has been silence since. This story should and will reappear.

In essence, Virgin Media, BT Vision, Setanta and Top Up TV have suggested that OFCOM look again at pay TV regulation – which they should do anyway given the recent denial of Virgin Media the air supply of Sky owned content.

‘Structural’ remedies have been suggested. In the first instance, OFCOM should simply demand that Sky create some kind of internal separation between retail and wholesale, much like BT’s Openreach in an attempt to ensure competing operators are dealt with fairly.

Sky is only just now facing some serious rivals, but from a position of great strength. It has much of the content people want and has been very well marketed and managed. However, the arrival of a merged cable group and BT (though the idea of squeezing video down a tiny DSL pipe makes me suspicious) mean that competition is now possible – if the content playing field is levelled. There should be a free market in channels and content – and exclusive content is a great tool for getting and keeping customers, but with Sky holding 90% of the cards a method of fair, enforced sharing with rivals is sorely needed.

Whatever happens, advertisers and marketers of all kinds should keep a close eye on events. Only one major, healthy pay tv outlet means less leverage when planning and buying media and necessarily much less innovation in the kinds of platforms out there for us to use in the first place.

The wisest dominant firms in any market watch their step carefully as they self identify monopoly-like characteristics long before any competitors can reach for the lawyers. Intel is a good example and BT have been prodded by regulators into a similar state of corporate self-knowledge. Sky should follow suit before a backlash sets in amongst policymakers.

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