Sky Picnic, a service combining broadband, telephone and a TV service that used freeview with a set-top box may be back on the cards following a ruling from Ofcom on Pay TV channels. Sky originally dropped the Picnic idea back in 2008 after Ofcom had failed to decide whether it would be allowed to proceed with the offering.
Today's ruling will allow Sky to offer pay TV services on freeview on the condition that they offer Sky Sports 1 and 2 on a wholesale offering to other providers, at a price set by Ofcom. The standalone cost for the channels in standard definition will be reduced by 23.4% of the current wholesale price to cable operators. The bundle cost of selling the channels will also decrease by 10.5%. Ofcom will not be setting a price for the high-definition version of the channels as they believe this flexibility will help promote future innovation.
Ofcom will also be consulting on whether they should refer Sky to the Competition Commission over rights to sell premium movies as they believe Sky have a hold on video-on-demand rights, but they cannot adequately address this under their powers.
Of course, Sky are not happy with this decision and are intending to appeal the decision through the courts. Sky's CEO, Jeremy Darroch has put up a video response to Ofcom's announcement.
"There should be no doubt that Ofcom's actions represent an unprecedented and unwarranted intervention.
This is a marketplace where customers are well served with high levels of choice and innovation. Consumers will not benefit if regulators blunt incentives to invest and take risks.
After three years of engagement with Ofcom, we now look forward to a judicial process which will apply impartial analysis and clear legal standards."Sky spokesperson
Interestingly the decision hasn't totally pleased other providers such as BT who were calling for the Sports and Movie channels to be regulated to allow them to be sold competitively on their BT Vision platform.
"Today's decision from Ofcom is disappointing but a step in the right direction. We will at last be able to sell two premium sports channels. We aim to offer Sky Sports1 and 2 at lower prices than those which have been available. We hope to bring them to the market in time for the new Premiership football season but that will depend on Sky now complying with Ofcom's decision.
However, Ofcom should have gone much further than it did. They have dropped movie channels, which should have been included. They should have included all Sky Sports channels, not just two. The wholesale price for the two sports channels is higher than the regulator had previously suggested. Pubs and clubs should also have been offered some help as they have no option but to pay sky high prices. Ofcom has not set a regulated price for HD channels.
Sky may appeal against this decision but Ofcom's remedy should be implemented without delay so that customers can benefit from lower prices."Gavin Patterson, (CEO) BT Retail