Sunday, 10 February 2008



the effect on consumers and on other participants in the market might be, and whether the
proposals went far enough to minimise the impact of the proposition on the market.
Overall, 93% of respondents considered that we had correctly identified the markets likely
to be affected, although taking just the responses from organisations this figure fell to 69%.
One respondent considered the precise distribution mechanism (i.e. which satellite
“Freesat” uses) relevant. A small number of others suggested that not all future markets had
been identified.
The market review notes the difficulty of accurately defining future markets and impacts in
sectors where technology is fast-changing and future consumer behaviour is highly
unpredictable. The review does attempt to define such markets where possible, in particular
identifying the major telcos/ISPs as potential future competitors, but the analysis suggests
that at present it is reasonable to assume that such other products may not form part of the
relevant market at this stage.
In terms of the distribution mechanism it should be noted that “Freesat” is intended to offer
consumers an improved viewer experience basedlargely around free to view content that isalready in existence, not to create a new satellite broadcasting system. Therefore any large
scale acquisition of satellite transponder capacity for the broadcast of channels and services
is not within the remit of the proposal.
The outcome in terms of the competitive effect for consumers was clear-cut. 92% overall
(and 93% of organisations responding) agreed that launching “Freesat” would benefit
consumers by increasing choice and introducingcompetition in the subscription-free satellite
TV market. Comments included “Yes as Sky is the only company offering such a service at
present. Equipment can be costly [to] purchase through them. Some competition will helpbring prices down” and “It will definitely make the market known and accessible.”
BSkyB welcomed the new competition and thought increased choice for consumers was
positive, but took issue with the fact that, in its view, the Trust appeared to accept without
reservation that it was appropriate “for state-owned entities to be used as instruments of
industrial or competition policy.” Virgin Media made a similar point that they have a “natural
bias against public intervention.”
In addressing these points we have considered the stated objectives of the proposition and
how the proposition fits with the BBC’s public service remit. The public policy issue that the
BBC is seeking to address through this proposal is inadequate access to the BBC’s digital
services in the lead up to switchover. The Trust is satisfied that this is an issue that the BBC
should address. It recognises that the proposals might also benefit competition and
consumers but, whilst welcoming this, the Trust is clear that this is not the main driving
force for the intervention.
BSkyB raised a concern in their response that in marketing “Freesat” the BBC, which is not
subject to Ofcom’s Cross Promotion Code, might not promote digital services on a
platform-neutral basis. The BBC Trust is currently consulting on a draft Competitive Impact
Code on Cross and Digital TV Promotion, which will establish key principles for the cross-

No comments: