David Prosser: Cheaper television? Maybe, but all the fighting makes for a blurry picture
Friday 02 July 2010
Outlook BT and Sky are at it yet again. Anyone who thought the deal reached in the aftermath of Ofcom's ruling that BSkyB should make its content available to rivals more cheaply would put an end to the feud between these two clearly underestimated the depth of the animosity between them.
Sky's latest complaint is that BT's launch of Sky Sports 1 and 2 yesterday at prices well below its wholesale rate undermines the case the telecoms company has been making to Ofcom these past few years, that it could not make money by selling on these channels to its own viewers. BT, meanwhile, is cheesed off that Sky chose yesterday to put its own retail prices up, which enables it to charge more on wholesale too.
It is all good knockabout stuff, of course, but let's try to move past the rhetoric. The truth is that BT is a telecoms company trying to break into TV. So it is offering a cheap deal on its television service that will be paid for by revenue from its traditional businesses (check the small print on the broadband deal that BT expects customers to sign up to). Similarly, Sky is a TV company that wants to break into telecoms. Thanks to all those subscribers, Sky is able to offer phone and broadband services that are just as cheap as BT's television offer (and rely on its network just as BT has to use its content) – the cross-subsidy works the other way round, in other words.
All the shouting really reflects is that both Sky and BT would like the competition appeals process on which they are embarking following the Ofcom ruling to offer a regulatory compromise that cuts them a better deal. Fair enough – it is their prerogative to jockey for position – but let's not pretend there is some fundamental injustice being perpetrated here, on either of the parties that are feigning injury.
The problem with all the rowing – and the way Ofcom approached the pay-TV inquiry in the first place, in fact – is that it blurs the debate for consumers wondering where to source the services that BT, Sky and others offer.
For all the talk of who offers Sky Sports, a phone line or broadband at the keenest price individually, the business model of the main players in these markets is now to offer them as a bundled package. Look at any one of the services in isolation – either as a consumer or a regulator – and you will get a misleading picture.
For what it's worth, BT says that on a comparable bundle, its latest deal will work out at around £200 a year cheaper than Sky's. Maybe so, but the bundles aren't comparable, since BT's overall television offer is less comprehensive and requires longer contracts.
The point is not that BT is seeking to mislead, any more than Sky is, but that while we hear lots of noise about price wars and regulatory interventions to protect consumers, this has become a supremely confusing marketplace. And all the public sniping only adds to the puzzle.
Diving in at the deep end is no excuse for shirking the style stakes
- 1 Game of Thrones author George RR Martin says 'f*** you' to fans who fear he will die before finishing Westeros saga
- 2 Loom bands: Bids for dress made from colourful rubber pass £170,000 on eBay
- 3 Why I'm on the brink of burning my Israeli passport
- 4 L'Oreal cuts ties with Belgium supporter Axelle Despiegelaere after hunting trip photographs
- 5 The true Gaza back-story that the Israelis aren’t telling this week
Game of Thrones author George RR Martin says 'f*** you' to fans who fear he will die before finishing Westeros saga
Loom bands: Bids for dress made from colourful rubber pass £170,000 on eBay
Supermoon 2014: When and why will the moon look bigger and brighter this summer?
Tommy Ramone dies: Last surviving founder and drummer seminal punk band The Ramones dies aged 62
Gaza-Israel conflict: The terrible price Palestinian children are paying for Israel’s war with Hamas
Sustained immigration has not harmed Britons' employment, say government advisers
War is war: Why I stand with Israel
7/7 memorial defaced on anniversary of 2005 attacks with ‘Blair lied thousands died’ graffiti
Australia facing international condemnation after turning around Sri Lankans at sea
Even when it brutalises one of its own teenage citizens, America is helpless against Israel
Socialist Worker called to apologise over ‘vile’ article saying Eton schoolboy Horatio Chapple's death is ‘reason to save the polar bears’
iJobs Money & Business
£70000 per annum: Harrington Starr: Information Security Manager (ISO 27001, A...
£75000 - £85000 per annum + ex bens: Deerfoot IT Resources Limited: Biztalk Te...
£60000 per annum: Harrington Starr: Trade Desk Specialist (FIX, Linux, Windows...
£35000 per annum: Harrington Starr: Service Desk Analyst (Windows, Active Dire...