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UK Regulation of Sky’s Conditional Access

UK Regulation of Sky’s Conditional Access. Introduction. ITC’s role - regulates TV, works closely with Oftel and will soon be part of OFCOM For AGCOM - merger of Tele+ Stream means regulation of Sky relevant Overview background to the UK market and regulation new regulatory guidelines

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UK Regulation of Sky’s Conditional Access

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  1. UK Regulationof Sky’s Conditional Access

  2. Introduction • ITC’s role - regulates TV, works closely with Oftel and will soon be part of OFCOM • For AGCOM - merger of Tele+ Stream means regulation of Sky relevant • Overview • background to the UK market and regulation • new regulatory guidelines • recent determination on ITV’s complaint

  3. Background - Market • CA ensures only those authorised to view content are able to do so • encryption,SMS, SAS, interactive • CA only supplied to third parties using Sky’s DSat platform (6.1m subscribers) • cable networks are closed • SSSL supplies CA for Sky’s platform to Sky, FTA and PPV broadcasters • Sky buys CA for its package

  4. Background - Regulation • Aim to ensure intra-platform competition by maximising entry to platform • inter-platform competition not a focus • Regulate to ensure CA supplied on fair, reasonable and non-discriminatory terms • Applies to all suppliers of CA to third parties (ie not cable) • Only SSSL is regulated in UK • publishes its rate and methodology

  5. Background - Framework • Advanced TV Standards Directive • now Access Interconnection Directive • Telecoms Act and Regulations • soon Communications Act • CA Services Class Licence • soon General Authorisation • Oftel Guidance • policy Statement • new Guidelines

  6. Guidelines - Principles • CA determined by commercial negotiation with backstop appeal to Oftel • ex ante regulation disproportionate • Regulator’s role in a dispute is to determine whether offer is • ‘fair and reasonable’ and • ‘non-discriminatory’ • range of outcomes likely to be FRND • Only 1 complaint in 4 years

  7. Guidelines - ‘Fair and Reasonable’ • Price consistent with competitive market • between LRIC and stand alone • ‘Fair and reasonable’ price is • LRIC + R of R + some common costs • ‘Allowable’ common costs • STB subsidy, marketing for the platform • Higher prices for those with higher WTP • different channels pay different prices

  8. Guidelines - ‘Non-discriminatory’ • Vertically integrated provider not discriminating in favour of its own business • Similar broadcasters buying similar services at similar times pay similar prices • If not providing directly competing services discrimination unlikely to have a material adverse effect on competition • FTA, pay, interactive TV separate • Differences must be objectively justifiable

  9. Guidelines - Other Factors • Other factors to be considered • broadcaster’s WTP • nature of channels • benefits to broadcaster (eg revenues, viewers, channels to package) • value to platform (eg viewers retained and attracted to platform) • Tariff structure not mandated (eg can use charge per broadcaster, related to retail price, per channel etc)

  10. Guidelines - PSB • PSBs should pay a commercial rate for CA as they do for other services • PSBs are not in a separate market to FTA • but access to spectrum reduces WTP • Factors taken into account for determining whether PSB prices are discriminatory • PSB characteristics • competitive effects of discrimination • times CA agreements entered into • CA fills in for must carry on DSat

  11. Determination • SSSL charge to ITV is FRND • SSSL’s charge not excessive • nor discriminatory between PSBs • discriminating on price between pay TV and PSB channels not distortionary • FRND affords CA providers a margin of discretion • not necessarily cost based • Sky ended requirement to take a package to get a subsidised STB

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