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Ofcom to consult public on BskyB plan for pay-TV channels


28 June, 2007:

Ofcom, media regulator of the United Kingdom, is to consult the public on plans by British Sky Broadcasting Group PLC (BskyB) to launch pay-television services on the country’s free-to-air digital TV platform.

BSkyB, which is Britain’s dominant pay-television operator, had said in February 2007 that it planned to replace its existing three basic free channels on the Freeview service with four paid channels to show soccer, films, entertainment and news.

Ofcom, which has previously suggested that the move could “unacceptably diminish the appeal” of the free-to-air platform, has now said that the plans “raise a number of important issues, including a consideration of how Ofcom can best ensure fair and effective competition for the benefit of consumers.”

Ofcom will begin a 10-week consultation with the public and other interested parties in the autumn before issuing its decision in 2008.

BSkyB had originally planned to use newer MPEG4 compression technology for the four channels, which would have required many viewers to buy new set-top boxes. However, Ofcom said the other day that BSkyB told the regulator in a submission that it would not use MPEG4 at this stage.

BSkyB, which is 39% owned by Rupert Murdoch’s News Corp., is already under scrutiny by several British anti-trust authorities over its dominant position in the domestic pay-TV market.

Ofcom is conducting a separate inquiry into the competitiveness of the industry after complaints from companies, including Richard Branson’s Virgin Media Inc. and Irish broadcaster Setanta, which said that BSkyB sometimes acted anti-competitively.

In another investigation, the Competition Commission is investigating whether BskyB’s 17.9% stake in ITV PLC, the largest free-to-air commercial broadcaster, breaches competition rules.

The United Kingdom’s House of Lords has already launched an inquiry into media ownership and the news, following an increasing concentration of ownership in the media.

The inquiry will look at several areas of the industry, including how public interest should be protected and defined in terms of news provision and whether or not some of Ofcom’s public-interest considerations were enough to ensure what the House of Lords termed as a “plurality of debating voices” in Britain’s news media.

The inquiries are the first major test of the influence held over the British media by Murdoch, BskyB’s chairman as well as its largest stockholder.




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