Cabletel 'cartel' claim

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The Independent Online
International Cabletel, the only rival to the British Digital Broadcasting consortium of Carlton, BSkyB and the BBC in the race for the 30-channel Digital Terrestrial Television (DTT) franchise, is set to launch a challenge to its opponents before the European Commission.

Cabletel's lawyers were believed to be preparing the ground this weekend for a formal submission to the Commission's Competition Directorate, headed by commissioner Karel van Miert. The company is expected to cite articles 85 and 86 of the Treaty of Rome, which prohibit restrictive trading agreements and abuses of dominant market positions, in its complaint.

Observers believe it would be possible to start proceedings with the European Commission even before the Independent Television Commission (ITC) awards the digital frequencies (known as "multiplexes") for the broadcast of digital terrestrial television, scheduled for some time in the next two or three months.

However, a more likely scenario is that Cabletel would file the challenge if and when the Carlton/BSkyB/BBC consortium - which is acknowledged to have by far the stronger bid - is chosen by the ITC.

According to legal experts familiar with European competition law, the initial foray by Cabletel would probably argue that the concentration of power within the television industry by having the biggest players in satellite and terrestrial TV would amount to a restrictive cartel.

But other industry observers point out that a more promising angle of attack for Cabletel could be the pricing of BSkyB's premium services over the new digital terrestrial frequencies.

BSkyB sells its services to cable companies at a discount, but it insists that the cable companies take its "basic" package in order to benefit from Sky's premium services. Yet when BSkyB sells its premium channels into the DTT multiplex, there may be no room in the 30-channel capacity for the basic Sky services.

Observers believe that any attempt by BSkyB to sell the premium services to British Digital Broadcasting without charging for basic services could be ruled unlawful by the European Commission.