Ofcom remove Sky Sports wholesale obligation

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SKY will no longer have to offer Sky Sports 1 and 2 to rival TV providers at wholesale prices, Ofcom have announced.

The "wholesale must-offer" (WMO) regulation, introduced in 2010, saw Ofcom set the price at which Sky had to offer the two channels to other pay TV providers.

But the regulator says that Sky now offer those channels to those other providers on commercial terms, so there's no need for the regulation to ensure decent competition between them.

The order is most likely to affect BT, who took advantage of the WMO in order to show Sky Sports on their Youview platform.

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BT are, in fact, the only provider who need the WMO to be able to show Sky Sports on their pay TV platform; as Ofcom point out, the other big providers have all come to their own arrangements with Sky for access to the channels.

The conditions of the WMO mean BT are at a slight disadvantage already, as while Virgin and TalkTalk show Sky Sports 1 to 5 and Sky Sports F1, BT can only demand fairly priced access to the flagship channels.

That means they can offer their customers a range of some the most popular events - mostly Barclays Premier League football, cricket, golf, and European rugby - but they don't have access to other popular sporting events, like F1.

BT say they'll continue to offer Sky Sports 1 and 2, and that they "expect Sky to behave appropriately" so they can reach an agreement for future access - but in the meantime they're "considering" their legal options.

For their part, Ofcom say they expect "all providers to engage willingly, constructively and in a timely manner to ensure sport continues to be made widely available to viewers."

Sky are rather pleased with the announcement, saying that they are, "and have always been, more than happy to make our channels available on other platforms" - although a look into the history of the WMO would suggest they've become more willing over time.

A brief history

Before Ofcom's intervention in 2010, the only deal Sky had to supply Sky Sports to another provider was with Virgin Media.

People with any of the other existing pay TV providers - BT, TopUp TV and Real Digital - couldn't access Sky Sports at all.

That, the providers said, gave Sky an unfair advantage, and Ofcom agreed. They ordered Sky to make the channels available to other providers, and at a lower price than Sky were charging.

Sky's unhappiness at the order was further compounded when they took their case to the Competition Appeal Tribunal (CAT), only to be hit with an interim order that upheld Ofcom's WMO regulation.

As a result of the interim arrangement, BT Vision started showing Sky Sports 1 and 2 in August 2010, with Sky Sports 5 added at a later date.

When Youview was launched in summer 2012, TalkTalk had agreed their own wholesale deal with Sky which allowed them to show all the Sky Sports channels on their own Youview platform.

But Sky resisted giving BT access to Sky Sports on the new platform, in a dispute that was only paused when Ofcom extended the terms of the WMO order specifically to cover BT TV on Youview, around this time last year.

'Dominant position'

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Even under the terms of the WMO, BT weren't completely happy with the wholesale deal Sky offered them.

In 2013, they complained to Ofcom that Sky were "abusing a dominant position", saying Sky made the supply of the channels to Youview conditional on BT giving them wholesale access to BT Sport in return; the investigation into the claim is still running.

That said, being able to offer Sky Sports 1 and 2 must surely have added to what could be said to have been a good year for the provider.

Since 2012, BT have spent more than £2 billion on acquiring and expanding the broadcast rights for various sporting events, including a 25% share of live Premier League coverage, and securing exclusive live coverage of the UEFA League.

At the same time as they launched BT Sport Europe to showcase that coverage, they launched the UK's first ultra HD channel - dedicated to sport.

Even BT chief executive Gavin Patterson had to admit that interest in BT Sport Europe has been "better than expected", helping drive record take-up of BT TV in the last quarter.

Sky Q

Between them, Ofcom and Sky may dent that pleasant sense of surprise before long.

In their statement, Ofcom say that live Premier League coverage seriously influences the choice of pay TV provider "for a significant number" of us.

But the real blow is more likely to come from Ofcom's suggestion that "the importance of BT Sport appears unlikely to impact competition", despite the addition of the Champions League and other events.

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Then there's the fact that while BT did indeed beat Sky to getting an Ultra HD channel on air, Sky appear to have taken the long view and combined their own Ultra HD ambitions with the launch of their next generation set top box.

Importantly, they're starting by trying to get people excited about the new kit - with more tuners, features that make Virgin's current generation of Tivo boxes look a bit tired, and ultra HD compatibility built in - but not needed just yet.

After Sky Q becomes available in early 2016, Sky plan to launch their own Ultra HD service later in the year - and including in it a range of sport, movies and entertainment.

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