BT on Thursday called on the U.K. communications regulator to include the pay TV sector in its ongoing strategic review, hitting out at Sky’s dominance of the market.
The telecoms incumbent noted that the broadband market in the U.K. is characterised by falling prices and increasing speeds, while the pay TV market brings high prices and "bad outcomes" for consumers.
"Relative to EU averages Sky customers are paying around a half a billion pounds more per year for the basic packages of pay TV channels," said John Petter, CEO of BT’s consumer business, citing data from Analysys Mason.
"Switching in pay TV is 50% lower than the levels seen in broadband, so it is clear we just aren’t seeing the right levels of competition for Sky," he said.
Petter’s comments come less than a fortnight after Sky petitioned Ofcom for a full Competition and Markets Authority (CMA) investigation into the broadband market, in particular BT’s Openreach division, which it accuses of under-investment and poor service to consumers. Such a probe could lead to the full separation of Openreach from BT, something Sky and other rival operators have been seeking for some time.
At the time, BT accused Sky of "engaging in selective spin rather than constructive dialogue." On Thursday, in a speech to the Broadcasting Press Guild, as reported by BT, Petter described Sky’s actions as a "smokescreen". The satellite TV is company is trying to hide the failings of the pay TV market, where it is the dominant player, BT said.
"The broadband market has four major players but none with over 32% market share," BT said. "This is in stark contrast to the pay TV market with one dominant player with a 64% share leaving major barriers to entry for new players."
Amongst other things, BT pointed out that the process of switching supplier is unregulated in the pay TV market, and that wholesale obligations in the sector are weak compared with the broadband space and only apply to Sky Sports 1 and 2.
Petter also noted that BT Sport has 2.4 million viewers who were not previously Sky Sports viewers. This, the company claims, is evidence that there is demand from an unserved segment of the population that is unable or unwilling to pay Sky’s prices.
"We think Ofcom should…give the U.K. a competitive pay TV market that is fit for the next decade," Petter said.
Ofcom announced its new strategic review in March. Its previous review concluded a decade ago and brought about the functional separation of BT’s networks arm, Openreach.
