Sunday, 10 February 2008



The Trust Unit review recognises that the proposition may exercise a competitive restraint
on competing services (primarily free satellite services but also, to a lesser extent,
subscription services) but concludes that it ishighly unlikely to deter significant levels of
investment or to result in market exit.
As noted in Section 5.7(iii) above, we asked for some further work to be done by the Trust
Unit on the likely impact on Sky. None of that work suggested that the launch of "Freesat"
would deter significant levels of investment and innovation or result in the market exit of
existing market participants, given the likely relative scale of “Freesat” in relation to the
overall market.
We included a specific question in our consultation on thispoint. We asked: ‘Do you agree
with the Trust’s conclusion that whilst launching “Freesat” will affect other participants in
the market, it is not likely to lead to exit from the market of existing participants or to
create a barrier to future innovation? (Any figures for the likely effect on other participants’
revenues would be particularly welcomed).’ We emphasised in our consultation that wewould welcome the views of industry participants on this issue, in particular those of Sky,
NTL and potential entrants. We assured those considering responding that any figures they
were willing to provide would be held in confidence.
No quantitative data as to thelikely effect on other participants’ revenues was received by
the Trust during the consultation, either from the affected participants themselves or from
other respondents. 90% of respondents to the consultation (and 90% of organisations
responding) supported our assessment that “Freesat” would not have a significant effect on
other participants’ revenues.
In these circumstances, the Trust confirms its view that the launch of "Freesat" will not detersignificant levels of investment and innovation or result in the market exit of existing market
(c) Market ImpactThe Trust's consideration of the market impact of the proposition should focus primarily on
the effect on consumers. The Trust Unit review concluded that for consumers the
introduction of the proposal would not have a negative effect on competition in the market.
Indeed competition was likely to be strengthened by the introduction of PSB “Freesat”, as it
provided an alternative supplier of digital TV retail offering to almost all households in the
UK, where a proportion of those households could currently opt for one provider only.
Further, the Trust Unit noted that the impact of competition would be particularly strong in
those areas outside of the current Freeview footprint. The Fathom report also considered
that the proposition would increase competition, with consequent benefits for consumers
(e.g. lower prices, increased promotion of free satellite services). Our view is that the
proposition would introduce a new entrant to a market where there is currently a single
supplier, creating beneficial effects (in terms of choice, increased promotion and potential
price competition) for consumers. Our view is that these beneficial effects for consumers
would not be diminished because the new entrant was publicly supported (and it is relevant
to note that the proposition is to establish a joint venture which the BBC hopes other

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