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Update Tiscali, Virgin Media welcome Ofcom report - 28-June-2009, 02:50

Tiscali, Virgin Media welcome Ofcom report

By Andrew Laughlin

Virgin Media and Tiscali have welcomed Ofcom's latest pay TV consultation as outlining some solid measures towards improving competition in the market.

The watchdog's report, which was published today, has particularly focused on the dominant market position of Sky.
Ofcom has said that the satellite firm is "acting on an incentive to limit the distribution" of its premium movie and sports channels, which is harming consumer access and hindering new developments on non-Sky platforms.
Therefore, the regulator has proposed a wholesale must-offer model to free up distribution of Sky's premium channels to rival operators under a regulated pricing structure.

In response to the report, Virgin Media chief executive Neil Berkett said: "We have always argued that the pay TV market is not working in the interest of consumers.
"Ofcom's statement appears to be an exhaustive analysis of the problem and we're pleased the issue is getting the careful scrutiny it deserves. We will continue working with Ofcom to bring its investigation to the quickest possible conclusion."

DS has learned that Virgin Media is pleased with the strong language in the consultation, which potentially indicates the watchdog's intent to take firm action on the issue.
It is also understood that the cable operator is particularly happy with references to Sky's dominance of subscription video-on-demand (SVoD) rights for movies.

Ofcom has said that while Sky currently owns all SVoD rights for the major Hollywood studios, it does not fully utilise them on its platform.
The watchdog has, therefore, proposed to separate SVoD rights from standard subscription rights to potentially free up new movie services, with a particular reference to these being offered on IPTV or cable.
Meanwhile, Tiscali has also welcomed the report, especially in terms of the possibility of getting cheaper wholesale access to Sky's premium sports and movies in the future.

A Tiscali spokesperson said: "While we do offer our customers premium Sky Sports and Movies services, it is important for us to have access to these services at the same price as cable.
"We also welcome any recommendations that might reduce the wholesale cost, as both of these measures together would stimulate more competition and offer better value for the consumer."

The closing date for responses to the report is September 18, with Sky already stating its opposition to the "unwarranted intervention" being suggested.

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