back to article Sky bangs on Ofcom's door – demands BT competition probe

Blighty's communications watchdog declined this morning to comment on Sky's demands for an in-depth competition probe of BT's broadband biz. Sky has argued in its submission (PDF) to Ofcom today that the regulator should ask the Competition and Markets Authority to intervene with a full inquiry into BT's strong grip on the UK' …

  1. Anonymous Coward
    Anonymous Coward

    Time for an inquiry into the monopoly Sky has on paid TV channels.

    1. Anonymous Coward
      Anonymous Coward

      Unfortunately, it doesn't have a monopoly on paid TV channels, it just pays more to get them on the platform. However BT has a near monopoly on in-ground fixed line infrastructure (ducts etc), whether or not investors paid the correct value for it at floatation.

      1. Bunbury

        The difficulty for the regulator in this field is that there are two "network effect" markets in collision here - TV delivery to viewers and terrestrial telecomms. Getting anything like a properly functioning free market in the classical sense is a big ask.

        Sky has a very strong position in delivery of TV channels to customers - you need only look at the millions of homes with a sky dish, and satellite distribution is pretty much one big asset so that once you've covered that cost everything else is gravy.

        I suspect if the regulator was starting with a clean sheet of paper both these companies would get a roughly similar amount of regulation. But because one comes from a nationalised background and one from free market they have very different levels of competition regulation. Otherwise, you'd have Sky having to open up it's satellites and receiving dishes (and VM it's cable) to competitor services in the way that BT has had to with it's lines, exchanges etc.

      2. Anonymous Coward
        Anonymous Coward

        If you look at the ownership structure of all the premium TV channels in the UK, Sky owns or has a stake in virtually all of them. I'm not counting repeaters like UKTV Dave etc.

        Virgin shouldn't have been allowed to sell off Flextech to Sky

  2. lsces

    WHO is paying for fiber investment?

    In Worcestershire it's the council who are upgrading SOME of the cabinet, Not BT. And our cabinet is not even on a list to be looked at as it's 'uneconomic' despite our only being a mile for the exchange and a few hundred yards from the nearest already converted cabinet ...

    1. Anonymous Coward
      Anonymous Coward

      Re: WHO is paying for fiber investment?

      "And our cabinet is not even on a list to be looked at as it's 'uneconomic' despite our only being a mile for the exchange "

      You'll be delighted to hear that most of Redditch and Kiddy have been done with FTTC, despite the fact that these towns have had cable for years. You might want to ask your councillor why they are spending public money that doesn't sort out lack of high speed access for the notspots, but are happily giving assets to BT in areas already well served.

      I think that despite Redditch being fed via VM's Bromsgrove switches, they originally didn't cable-up Bromsgrove town. Might be on the new VM investment plan, but there's something else for the County Council numpties to go and ensure happens.

      1. Steve Davies 3 Silver badge

        Re: WHO is paying for fiber investment?

        So your locaity has had 'cable' for years.

        Now that you have FTTC then there is er.. um... competition. Isn't that what Sky/Talk-talk etc want?

        Perhaps some of the residents in your area are fed up with VM?

        Now they can move to another broadband supplier AND get some decent speeds.

        That's exactly what has happened up my street. 9-% were on VM but the internet in the evenings was unusable because VM wouldn't replace the 20+ yr old Coax with nice new fibre. So when FTTC came along those of us savvy enough moved from VM to another provider.

        So BT (or whoever) is laying Fibre near you.... You should be cheering instead of griping. Don't forget that you don't have to give BT a penny directly.

        1. chris 17 Silver badge

          Re: WHO is paying for fiber investment?

          @ Steve Davies 3

          The Virgin network is a FTTC type system, the connection from your home to their street furniture is coax, not fibre, i suspect from their street cab to the up stream distribution point is fibre.

          I wish OFCOM would ensure VM make that clear on their adds instead of letting them say their service is Fibre Optic, when its not to/from the home.

          1. Anonymous Coward
            Anonymous Coward

            Re: WHO is paying for fiber investment?

            @Chris 17

            VM current TV ad shows Coax and Docsiss 3

      2. Anonymous Coward
        Anonymous Coward

        Re: WHO is paying for fiber investment?

        Several villages have it as well. If you look at Worcestershire's details it actually to cover areas not deemed financially viable and does not cover commercial areas i.e. towns and cities.

    2. Alan Brown Silver badge

      Re: WHO is paying for fiber investment?

      "it's the council who are upgrading SOME of the cabinet, Not BT. "

      This is _precisely_ the reason that the New Zealand govt forced Chorus (Their version of Openreach) to be cleaved from Spark (Their version of Brutish Telecom).

      The doomsaying pre-splitup turned out to be accurate - but not for Chorus. Spark is in deep doo-doo and now claiming that regulated line charges (which are substantially lower than what rivals paid when it owned Chorus) are too high to turn a profit - despite those charges being based on figures they provided to the regulators (pre split-up) about how much it cost to run the lines network.

  3. Pen-y-gors

    Without supporting Sky in any way...

    ('cos Murdoch is 100 times more of a shit than BT)...

    Openreach do need a kick up the arse.

    We were originally due to get FTTC last December. Then they moved it to March. Then to June. Then in early June they moved it to September. (Although the boss told the local AM that it would be Xmas - left hand/right hand?) At this point correspondence revealed that there was a problem in installing new cabinets, allegedly a question over whether they could install them on a trunk road(WTF?) How could they get to three weeks from live date and suddenly discover they hadn't actually installed the cabinets? We've had Openreach engineers digging up roads for months! Where on earth do Openreach get their 'project managers'?

    1. Bunker_Monkey

      Re: Without supporting Sky in any way...

      Probably from the same place that the Government gets them. Overpriced and usually with a complete misunderstanding of IT themselves, hence the usual cock-up.

      "Those that cannot 'do anything specific' or 'teach'; Manage IT projects"

      1. Anonymous Coward
        Anonymous Coward

        Re: Without supporting Sky in any way...

        "Overpriced and usually with a complete misunderstanding of IT themselves, "

        In all forms of construction related activity, there's currently a desperate shortage of good project managers, what with Crossrail, Network Rail's enormo-programme, Highways Agency mid way through hosing £11bn on roads, housebuilders unable to keep up with demand, vast investments in crappola wind farms and solar PV, distribution networks looking to spend £17bn in the next five years on wires projects, etc. And it won't get easier any time soon, given the misbegotten plans for Hinkley Point, HS2, and the additional runway for Gatwick or Heathrow.

        The best PM's gravitate to complex projects where they can earn big bucks, meaning that anything with a regional or rural dimension or tied to a soiled brand like BT will struggle to find good ones. Easy to find cheap, inexperienced or incompetent ones, and I suspect that's the problem. Along with the fact that this combines basic civils work with network design and install. Investments involving "IT + anything" are rarely a good combination.

        The most galling thing about BT's FTTC roll out (which doesn't affect me, on glorious, glorious 100 Mb/s cable) is the apparent disconnection between different projects, leading to a failure to predict and quickly resolve problems that repeat time and again across the programme. You'd have thought that the scale of the project would mean that they'd be able to plan the damned programme well, and then operate a cookie cutter approach for the projects, like having resources like a KB for problems like "trunk road wayleaves" and for every other problem they've encountered.

        My name is Sam Tyler. I had an accident and I woke up in BT's project planning team. Am I mad, or in a coma or back in time? Whatevers happened it's like I've landed on a different planet.

        Oooh, and did I mention my 100 Mb's pipe?

        1. Ragarath

          Re: Without supporting Sky in any way...

          Oooh, and did I mention my 100 Mb's pipe?

          Yes, yes you did you complete and utter ********!

    2. AndrueC Silver badge

      Re: Without supporting Sky in any way...

      ('cos Murdoch is 100 times more of a shit than BT)

      Murdoch does not Sky. The old boy doesn't even have a controlling interest at the moment.

      1. Bluenose

        Re: Without supporting Sky in any way...

        But I note that young James is there as a non-exec and 21st Century Fox owns just under 40% of the shares. Since young James is also a director of 21st Century Fox I think Rupert baby has sufficient indirect control over Sky.

        1. Anonymous Coward
          Anonymous Coward

          Re: Without supporting Sky in any way...

          Since young James is also a director of 21st Century Fox I think Rupert baby has sufficient indirect control over Sky.

          Look at the boy James! No talent, but Daddy's got a business, and he can be gifted a job that he'd never get on talent in a million years. Sounds good, until you consider that if dad is anything to go by the future holds only vast and undeserved wealth, a sad personal life, unpopularity and skin like a turtle.

          I think I'll stick with being happy, having a life, and a very mediocre salary.

    3. Alan Brown Silver badge

      Re: Without supporting Sky in any way...

      "Where on earth do Openreach get their 'project managers'?"

      Likely the same place they get their linesmen (and why the fuck are they called "engineers"? They're barely-trained monkeys for the most part)

      The culture of compartmentalisation within Openreach means that different groups don't talk to each other, let alone anyone outside Openreach (They're now 5 months late installing a fibre run into $workplace), but the dead hand of BT head office looks down on the maze and sees all the little mice running around their sections in confusion, sending them scurrying off in random directions when it suits them to frustrate anyone not buying everything as an all-inclusive package deal from BT.

    4. Alan Brown Silver badge

      Re: Without supporting Sky in any way...

      "We were originally due to get FTTC last December. Then they moved it to March. "

      The FTTC cabinet here was _finally_ installed just under 3 years after the originally posted date.

      6 months later they turned it on (I park my car next to it, so made a habit of listening for the fans).

      3 months after _that_ they started accepting orders.

      5 months after that (and 13 failed Openreach visits later - 11 of them didn't bother showing up at all) I finally got my VDSL going.

  4. walatam

    A possible solution?

    Dear Sky,

    Rather than expend your energy complaining about BT, why not build something to compete against them? I appreciate that BT are particularly annoying because they have the clout to compete with you in your traditional areas too but, you know, just get on with the job of doing something better than them and making people realise that you are better.


    The Free Market

    1. Anonymous Coward
      Anonymous Coward

      Re: A possible solution?

      why not build something to compete against them?"

      They did. A fairly comprehensive (leased?) satellite infrastructure, plus a highly popular TV service. Problem for them is that BT have decided to go into TV rather than sorting out the infrastructure that only they can.

      Not that I'm defending Sky - I won't have anything to do with them whilst that ghastly leathernecked old buzzard and his equally ghastly family have any financial interest in the company.

      Oi! Murdoch! Hurry up and croak!

      1. Anonymous Coward
        Anonymous Coward

        Re: A possible solution?

        BT were banned from TV until 2001, it wasn't until 2006/7 that BT Vision got going. So it's not as if it's a recent decision to do TV distribution.

      2. AndrueC Silver badge

        Re: A possible solution?

        They did. A fairly comprehensive (leased?) satellite infrastructure

        Not really. I think there was a time when one of the two original companies had shares in one of the satellite operators (Hughes?) but that was a long time ago. These days Sky just lease capacity on a couple of satellites (Astra 2xx and Eutelsat 28 (formerly Eurobird) but there's plenty of other companies do that (the BBC, ITV, C4, Discovery, Nat Geo etc. etc). Selling capacity on their transponders is what satellite owners do. Renting capacity doesn't mean you own or control satellite infrastructure.

        I think I'm right in saying that Sky developed the groundstation uplink software used by broadcasters so they probably own the rights to that. They also own the rights (after some legal footwork) to the encryption used for PTV and FTV channels. And of course they own the rights to their set top box design (although they now run someone else' software stack).

        Bottom line: Sky do not have a monopoly in satellite broadcasting. They broadcast one of the most popular satellite EPGs and sell the corresponding set top box but most of the channels carried on their platform are actually owned and operated by other companies. They just have an agreement with Sky to be listed on their EPG.

    2. Test Man

      Re: A possible solution?

      Possibly because to match BT they'd have to throw more money than several multinationals would collectively have in order to duplicate the UK-wide network. Remember, BT only has the network it had because it was built up over decades by several companies. For one company to do that now would be prohibitive and also a collosal waste of money when there is already a UK-wide network in place - the government just needs to make it totally open to everyone.

      And no Virgin Media isn't another example - they were a result of a merger that was a result of a ton of mergers between a ton of smaller companies that built up local cable networks. In other words Virgin Media didn't build a national network from scratch.

      1. Richard Jones 1

        Re: A possible solution?

        VM are somewhat less of an example of success than the chocolate fire guard. At least that can be eaten and enjoyed.

        While the pre VM local cable co made a right mess of the main roads they have offered nothing to the side roads they pass. In a candid moment (I saw them about a job!) they admitted they got out a map and drew the shortest line past the greatest number of dwellings until they met their planned 'passing' targets. So nothing doing if you were not a block of small flats - even though some of them got 'passed' but not serviced.

        As far as I know Murdock vision only leases satellite capacity and while they do pay out to lease access to a range of events they then package bundles of junk together in the manner of a US banker selling junk mortgages! They carefully split anything they think worth having so you have to take on several bundles.

        Now they expect to get something else for nothing by trying to arm twist BT, who are the ONLY service option for far too many people.

        While I hold no candle for Open Reach who appear to be allergic to having any sort of effective management, Sky remind me of a Mafia boss with a big dog and not a lot more, or am I being rude about Murdock and his family, I hope so! As for their idea of customer service,

        "oh you have had that connection for more than twelve months you will have to buy a new one, got any cable?"

        That used to be their level of customer service for CPE.

    3. Oh Matron!

      Re: A possible solution?


      Sky have the opportunity to get on the Balloonbroadbandbandwagon (TM) and the Satellite one that the ESA is rolling out. And yet, they are not.


    4. Alan Brown Silver badge

      Re: A possible solution?

      Sky have a point. BT can and do leverage their monopoly in one area (lines in the ground) to try and establish a controlling presence in another (supply of entertainment services)

      Likewise, BT have a point. Sky are rather large in the Entertainment business, to the point where they can say "that's a nice enetertainment business model you have. It'd be a shame if someone set something up in competition with it. How about buying space on our EPG?"

  5. Bob McBob

    Pot Kettle Black

    Typical brass cheek from $ky.

  6. chris 17 Silver badge

    OfCom should let Sky should merge with VM on the proviso that they build out the network to match BT's universal coverage & they permit others to use their infrastructure. Permit Tax Breaks for 80% of the works to be completed in 3 years and permit another 3 years tax breaks just for the last 20%. We will then have 2 competing national operators for TV & Broadband & non of this blaming the other lot. May see some truly innovative solutions like high speed internet via the incoming mains (with a free smart meter), or street light wimax.

    UK Gov don't want OpenReach in foreign hands.

  7. Bluenose

    Why Splitting OpenReach off from BT won't work

    There are strong economic reasons why splitting OpenReach from BT is a bad idea. The fact that BT retains a majority position in both the fixed line telephone and broadband markets means that there is value for them in investing in OpenReach and pushing out new infrastructure to areas where the likes of Sky, TalktTalk and others don't want to play.

    For BT, this means that there is money in putting in new cabling, cabinets, etc. via OpenReach as there is a return on their investment since they will pick up pretty much all the customers in the remote and rural areas which whilst not massively profitable to offer additional margin and revenue which is cheap to capture in terms of marketing and also cheap to retain. The situation also means that the Govt can put pressure on BT to deliver services to the more rural and remote areas of the UK by threatening to take away OpenReach.

    If OpenReach is taken away then Sky, Virgin, TalkTalk and BT will focus all their investment where they will make money, cities, towns and larger village conurbations and say sod off to all other communities. The current obligations on BT to provide a Universal Service will also need to be removed as it would be unfair to force such conditions on one supplier when they no longer have the benefit and responsibility of the network to support such a Service. OpenReach of course would still have the obligation but will struggle as it would have have limited power to force the service providers to deliver the Universal Service unless the Govt makes it mandatory to a far greater level than is applied by Ofcom on Talktalk and Sky today. OpenReach will probably also find investment to build infrastructure in areas where the telecoms vendors refuse to play in any material way and so will park all their vans in the financially sound areas (won't be able to move in some towns for their vans) and smaller towns and villages will screwed.

    The Govt will then shout and scream but as the "MARKET" is the key to ecomomic success, etc. the companies will simply tell them to get stuffed. Of course the Govt could legislate to resolve this as an issue but one can imagine the response they will get from the big pension companies, Rupert and others who will complain that the Govt is overriding competition and trying to create a new nationalised industry.

    1. Anonymous Coward
      Anonymous Coward

      Re: Why @Bluenose

      There's so many points where your argument is flawed that I'm at a loss as to where to begin.

      The role of distribution ownership can be separated from content sales without any harm at all (in the same way that Sky don't own either the satellites or the dishes). And the role of distribution operator would definitely benefit from being divorced from content (which is in large part what net neutrality is all about).

      I'm more than happy for BT to buy EE. I'm more than happy for them to go into TV. But if that's the focus of their management attention, they should get out of the asset ownership business because their cost of capital will be too high, because they won't give it enough priority or resource, and because of the total lack of transparency and effective regulation by OFCOM.

    2. Alan Brown Silver badge

      Re: Why Splitting OpenReach off from BT won't work

      "There are strong economic reasons why splitting OpenReach from BT is a bad idea. "

      With the greatest of respect, you are completely and utterly full of shit.

      The arguments being raised by BT against splitting off are almost identical to those raised by Telecom New Zealand to the splitting off of its lines side 4-5 years ago.

      EVERY SINGLE ONE of those arguments proved to be flawed.

      Once the handcuffs were off the lines company has turned out to be vibrant and responsive and the mothership on extremely shaky ground as customers abandoned them in droves.

      The New Zealand market is 1/10 the size of the UK, with a much lower population density and much more difficult terrain and yet somehow, despite your doomsaying (and those of other anti-split agitators) it's remained not only profitable, but has started employing more staff to keep up with demands.

      Bear in mind that New Zealand split its Phone company and lines company precisely BECAUSE of the observed market abuse in the UK (Telecom NZ was trying to advocate the UK model as an anti-splitup case)

      Chorus New Zealand (The lines company) is not not only approachable, but actively seeks out LLU customers to sell bandwidth to, sells dark fibre and leases duct space - things which like the UK were unheard of when under Head Office diktat. In addition, the marketplace has exploded in diversity thanks to removal of anticompetitive practices (such as dictating that leased circuits _must_ have BT NTUs on the ends, resulting in extra unnecessary tail charges).

      The truly ironic thing about the New Zealand split up is that Spark NZ (Formerly Telecom NZ) is now complaining loudly about regulated circuit charges being "too high" despite them being set based on figures it provided to the NZ Ministry of Commerce (They now pay the same charges as everyone else, which are significantly lower than they used to be - everyone else is happy with the arrangement, but Spark claims it can't make money at the rates it effectively devised for the market)

  8. Red Bren

    Breaking up is never easy

    When the wholesale arm of a company sells a service that is consumed by the retail arm and its competitors, there's a disincentive to price the service competitively, because the losses of the retail arm are recouped by the wholesale arm, while the competition (and new entrants in particular) are priced out.

    So BT should be broken up. Without the disincentive, Openreach will push its service to as many takers as it can, to maximise its ROI, while BT Retail will have to compete on price and customer service, instead of having relying on holding a virtual monopoly.

    And Sky should be broken up for the same reason. It has a long track record of using exclusive content to attract punters to its platform, or overcharging other platform operators to show its channels. Split Sky into a content arm and a platform arm, and the content will be pushed to the widest possible audience, while the platform arm will have to innovate to differentiate itself from BT and VM.

  9. Anonymous Coward
    Anonymous Coward

    Pension costs

    BT wont be broken up for the simple reason they have a massive massive pension deficit and if they go bust the taxpayer is on the hook for it. Its essentially a public sector unionised organisation pretending to be a private company.

    1. Red Bren

      Re: Pension costs

      BT has a pension deficit of £7Bn, but made a profit last year of £3.17Bn. Perhaps it should live within its means and pay off some debts?

    2. Alan Brown Silver badge

      Re: Pension costs

      Funnily enough Telecom NZ used a similar argument and threat against the NZ government to try and avoid being broken up. It held the govt off for 15 years too, until too many people found out about it.

      In that case it was "We are the single largest company traded on the stock exchange. You have a huge chunk of govt pension fund money invested with us. Other pension funds do too. If our share price drops, you'll be on the hook for the losses and we will make sure it impacts the value of the NZ dollar"

      That the same scaremongering is being used here doesn't surprise me, but politicians here should look at what's happened to both the state of the market (vibrant) and the state of the companies (Lines company going from strength to strength - all copper likely to be gone by the end of the decade, dialtone company up shit creek - and it's the lines company which employs most people, so pensions aren't a major issue.)

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