BT challenges BSkyB over Premier League

BT has issued a direct challenge to rival television platform BSkyB by saying it expects to be able to offer the full Sky Sports Premier League package at a cut price to BT Vision customers by the start of the 2010-11 football season.

The claim was made by the incoming chief executive of BT Vision, Marc Watson, and follows the findings of a review of the pay-television market by Ofcom, the media regulator. The watchdog suggested that BSkyB should cut by up to 30 per cent the wholesale prices it charges rival platforms such as Virgin Media, BT Vision and Top Up TV for its premium-content channels. At the time of the Ofcom announcement last month, BT Vision said the regulator's comments were "welcome", while BSkyB promised to "use all available legal avenues" to challenge the regulator, and industry commentators predicted a protracted argument.

But Mr Watson has told The Independent that he expects to introduce Sky Sports to BT Vision by next year. "I want to add Sky Sports to our offering, there's no question about that," he said. "I would hope to have them by the beginning of season 2010-2011. It would be one of the things that would give us a step change in terms of our proposition. As you can imagine, lots of our customers ask about it, and we'd like to be able to offer it to them." BT Vision was previously restricted to offering its customers the limited Premier League matches for which the broadcasting rights were owned by Setanta before that company's collapse. Those rights have now been taken on by Disney's sports channel, ESPN.

Mr Watson, a qualified barrister with a background in negotiating deals for the rights to broadcast football matches, claimed Sky would benefit from BT Vision offering Sky Sports to a new market. He said he hoped to build a closer relationship with the broadcaster, whose largest shareholder is Rupert Murdoch's News Corporation.

"We are looking forward rather than back in terms of our relationship with Sky," said Mr Watson. "We have a great deal of respect for [BSkyB] – both in terms of their corporation and their executives, we have very good personal relationships there. I think what we need is a grown-up, commercial, sensible relationship with them, going forward, in which we can sell their products, make them some money and make ourselves some money, too." Ofcom has proposed dropping the cost of buying Sky Sports from the current wholesale price it charges Virgin Media of £13.48 a month to between £9.41 and £11.24. If the channels were made available to BT Vision, the charge to the customer could be as little as £15 a month, compared with Sky's current price of £35.50, meaning the broadcaster would be under pressure to cut its prices. Ofcom believes Sky will gain from a wider take-up of its premium sports and movie channels, and that the cost of low wholesale prices will be "more than offset by additional wholesale revenues associated with market expansion".

BSkyB, which depends on its premium content as a key driver for its nine million-subscription customer base, is deeply unhappy that the regulator appears to be giving a competitive advantage to a rival that has not invested in television content. A source said: "It seems unfair that Ofcom will step in to protect the position of BT, who don't make any contribution to the UK creative industry or UK sport."

BSkyB estimates its expenditure on premium content at £1.3bn a year. It is also unhappy that BT complained to Ofcom over the state of the pay-television market rather than attempt to negotiate with BSkyB over wholesale prices of its premium content.

Ofcom has deferred its final decision on the issue, pending a further consultation, until 18 September and Watson appealed to the regulator to stick to its guns. "We think that's a very good step forward, and what we would say to them is that they need to hold their nerve and act swiftly to get that framework in place."