Labour urges BSkyB 'monopoly' inquiry

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The Independent Online

Media Editor

A senior Labour MP last night called on the Government to refer Rupert Murdoch's subscription-TV service, BSkyB, to the Monopolies and Mergers Commission.

The move follows a campaign by UK cable operators to end what they call BSkyB's "abuse of its monopoly position" in the supply of pay-TV programming on satellite and cable.

In a letter addressed to Deputy Prime Minister Michael Heseltine, and copied to Ian Lang, President of the Board of Trade, Labour's shadowspokesman on competitive- ness and regulation, Richard Caborn, called Mr Murdoch's pay-TV monopoly "a serious threat to the development of the UK's broadcast and communications industry".

Mr Caborn complained that, despite complaints from the cable industry, the Office of Fair Trading "seems unable to reach any final decision" concerning BSkyB's dominant position in the market place.

With the introduction of digital television, he added, "independent cable and satellite companies could be squeezed out of the market for new digital services and products, if BSkyB's stranglehold is transferred from the analogue to the digital environment".

Several cable companies, led by International CableTel, Videotron and Bell Cablemedia, have lodged complaints with the OFT and with competition authorities. They claim that BSkyB's control of encryption technology used to scramble and unscramble broadcast signals, along with its long-term agreements for the supply of movies and sports, make it impossible to compete.

Specifically, the cable companies have complained that long-term supply agreements between BSkyB and the two biggest cable operators, Nynex CableComms and Telewest, are anti-competitive, and had made it impossible for the cable industry to develop pay-per-view sports and film programming to compete with BSkyB.

The OFT said last summer that it had demanded changes in the agreements but has yet to announce the new contract terms.

BSkyB, which operates satellite channels and provides programming for cable through contracts on an a la carte basis, had no comment last night.

The OFT spokesman said: "The contracts are very complicated, and we are still considering the arrangements." He added that there was no timetable for a decision, and that consultations continued.

The competition watchdog has already ruled on BSkyB's competitive practices, overturning arrangements between the satellite broadcaster and the US- based Disney Channel earlier this month. The OFT had aimed to end the "bundling" of BSkyB's movie channels with Disney, and only available to subscribers who take both premium BSkyB services.

Although the bundling arrangement has been revised, the OFT said yesterday it continued to monitor the situation.

Earlier this year, BSkyB agreed to informal undertakings on the supply of programming to the cable industry. But many smaller companies complain that the agreements have not improved competition.

Mr Caborn's intervention follows several high-profile complaints from senior media executives, including Channel 4's Michael Grade and Leslie Hill, chairman of Central Television, about the role BSkyB plays in the supply of pay-TV programming in the UK.

"My letter reflects my concerns about the lack of competition policy we have in this country," Mr Caborn said.