The pay-television market in the United Kingdom is to be investigated for evidence of anti-competitive behaviour. A separate inquiry is being launched into the use of premium rate phone lines in television programmes. However, viewers still value the main public service channels, says their first annual report.

The communications regulator Ofcom is responding to competitors to BSkyB, the leading provider of subscription television services in the UK. It follows an increasingly acrimonious dispute between cable operator Virgin Media and Sky over the carriage of their respective channels. This has led to the loss of Sky channels on cable.

BSkyB has also announced plans to launch a new pay-television service on digital terrestrial television.

In a submission that apparently predates this announcement, Virgin Media, BT, Setanta and Top Up TV have appealed to the umpire and asked Ofcom to consider whether to refer the matter to the Competition Commission.

Ofcom has therefore decided to investigate the pay-television market as a whole. It will also consider whether any concerns might be addressed under other legislation such as the Competition Act.

The regulator is already investigating the acquisition by BSkyB of a stake in the leading commercial broadcaster ITV.

A wider review of pay television will cover not just satellite, but also cable, terrestrial and broadband services.

For its part, satellite broadcaster BSkyB observed that its competitors have a commercial interest in preventing Sky from increasing consumer choice by developing a new pay-television service on terrestrial television. It also notes that cable is a closed network.

While Virgin Media is promoting competition on price, Sky is suggesting that it is a question of access.

Ironically, a review could conclude that there is evidence of vigorous commercial competition in the pay-television sector. It might even suggest that cable should provide channels on the same non-discriminatory terms as satellite.

Phone lines
In a separate inquiry, Ofcom is to investigate the use of premium rate telecommunications services in television programmes. It follows a number complaints suggesting systematic failure by broadcasters to comply with consumer protection requirements.

The inquiry will be led by Richard Ayre, a former BBC executive, with input from the premium rate services regulator, ICSTIS, which is already conducting several investigations.

The Ofcom inquiry will examine consumer protection issues and audience attitudes, the benefits and risks, and the compliance and editorial responsibilities of broadcasters, producers and service providers. It will also propose recommended actions to restore confidence and trust. Ofcom expects a report to be completed by the early summer.

Public service
Revenue from subscription services has more than doubled since 2000, overtaking declining advertising revenues as the main form of funding and considerably exceeding the value of the licence fee allocated to television.

In its first annual report into public service broadcasting, Ofcom concludes that the main national channels remain important to viewers, who value their individual strengths.

However, its survey of 7,500 viewers shows that less than half of their viewers think these channels show enough new programmes made in the UK. Less than a third of their viewers think they provide innovative programming.

Public service broadcasters as designated by Ofcom are the BBC, ITV1, GMTV, S4C and Teletext. The BBC and Channel 4 scored particularly high among viewers in terms of appreciation.

Public Service Broadcasting: Annual Report 2007 is published by Ofcom and is available from their web site.