ITC plans to outlaw bundling on pay TV

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THE INDEPENDENT Television Commission, the broadcasting watchdog, yesterday struck a blow for consumer choice by proposing that the combined sale of large packages of pay-TV channels, known as "bundling" should be outlawed.

After investigating the subject for almost a year and a half, the ITC yesterday concluded that current practices "restrict and distort viewer choice". Sir Robin Biggam, chairman, said that the ITC's proposals would "open up the market and allow retailers to provide viewers with greater freedom of choice".

The ITC's proposals include the abolition of clauses that allow channel suppliers to demand that their channels be shown to a majority of a pay- TV operator's subscribers. These so-called minimum carriage requirements have forced cable TV operators to offer subscribers a large package of basic channels rather than allowing them to choose between several smaller packages.

The ITC also recommended that bundling of more than one premium channel should only be allowed if viewers also have the choice of subscribing to each channel on its own.

The ITC said it would seek comments on the proposals before making a final decision next month.

Television executives broadly applauded the changes. "I naturally welcome anything that gives the consumer greater flexibility," said Roger Luard, chief executive of Flextech.

The abolition of minimum carriage requirements will allow cable TV operators to offer smaller packages of channels at cheaper prices, thereby attracting a greater number of viewers.

Penetration of cable television is currently stuck at about one in five viewers. However, Telewest, the country's largest operator, said that trials with smaller packages in Dunbarton and Newcastle had drastically increased penetration levels.

However, British Sky Broadcasting, the satellite broadcaster, was less enthusiastic. Industry sources speculated that the company would have to adjust its charges in order to protect its margins.

The changes are expected to sound the death knell for several less popular channels, however. Telewest said that, at the moment, most channels are currently watched by less than half of its subscribers.