Select Committee on Culture, Media and Sport Minutes of Evidence

Examination of Witnesses (Questions 160 - 179)



Mr Bryant

  160. If the Government goes forward with analogue switch-off that will give an enormous dividend to you, will it not, because you have a monopoly in large areas of the country on digital television?
  (Mr Ball) Yes, we have nearly 100 per cent coverage, absolutely right; satellite has nearly 100 per cent coverage.

  161. So you are in favour of an early date for analogue switch-off.
  (Mr Ball) I am ambivalent.

  162. I cannot understand why you would be ambivalent if the likelihood is that the Government is effectively giving you literally millions of clients.
  (Mr Ball) That is nonsense. They are not giving us millions of clients, are they? You can address those areas by satellite, but I am not necessarily selling my pay services into those areas. If the only way to get those services into areas which cannot be covered by DTT or cable is indeed satellite, the free-to-airs exist on satellite, I do not have a benefit from those free-to-air channels. There is no economic benefit to Sky. There is an opportunity, I grant you, that you may be able to sell those customers up into other services, but there is no guarantee.

  163. Presumably that then is why, because there is no incentive to you to advertise the free-to-air offer which exists and this has now stopped, has it not?
  (Mr Ball) The free-to-air offer is there, but we charge for the box now.

  164. When did that start, beginning of December or January?
  (Mr Ball) I think it started at the beginning of January.

  165. I went into Dixon's the other day to check about where advertising has got for even the basic package. When I took out the basic package it was £7 and then two days later I got a letter from Sky saying it was going up to £10.
  (Mr Ball) You would have waited a year for that price rise.

  166. Yes, but I ended up paying it a year later. Dixon's could not advise me of the basic package being available at all. They said that there is no basic package available.
  (Mr Ball) That is really a question for the retailers, not for me. There are 30 channels available free-to-air on Sky.

  167. All the material which is provided through Dixon's and all the others comes from you. It is your marketing material and the basic package is not listed.
  (Mr Ball) Indeed; absolutely right. I am in business to sell Sky channels on the Sky platform. The Sky platform carries free-to-air which is great and it adds to the variety, but clearly I am going to spend my subscriber acquisition budget on acquiring people who take Sky services. That is exactly why I am in business.

  168. If vertical integration of the platform and the channels is one of your major economic advantages.
  (Mr Ball) I do not think I said that. Did I just say that?

  169. You just said that your aim was to get more people to watch Sky channels by virtue of having the platform.
  (Mr Ball) Yes. They watch Sky. I am very for people watching Sky channels on other platforms.

  170. That was not the point you just made.
  (Mr Ball) Okay.

  171. Let us look at the area where vertical integration obviously is potentially a problem and I do not know whether it genuinely is or it is just potentially one, and that is in the rate card. I was not quite sure from what you were saying earlier whether OFTEL has specifically approved the prices on the rate card.
  (Mr Ball) There are several rate cards. I think you are mixing rate cards. The rate card OFTEL approves is the rate card for conditional access.

  172. That is exactly the one I am referring to, the SSSL managed one. Have the prices there been specifically approved by OFTEL?
  (Ms Cassells) OFTEL regulates a published rate card which actually sets a ceiling on the prices. We then go off and make negotiated agreements with the channel providers. We have 185 such agreements. There has only been a complaint about one. Even on the basis of that one complaint, the price which was negotiated was considerably less than the published rate card price. OFTEL does not actively intervene in every price negotiation. That would be very intrusive regulation.

  173. So the price that Sky pays for Sky One for instance is not an approved price by OFTEL.
  (Ms Cassells) It is a price which is agreed on an arm's-length basis within Sky and set according to fair, reasonable and non-discriminatory terms.

  174. Under that rate card you have mentioned, the SSSL rate card, how much does BSkyB pay for conditional access for a Premium Sport subscriber or a Sport subscriber and how many channels does that mean you are able to get to that Sport subscriber?
  (Ms Cassells) That is not information we have to hand. I am sure we can write to you about it later, if that would be helpful.

  175. Would there be any difference? How much would ITV pay for conditional access for a Sport subscriber and how many channels would they get in return for that?
  (Ms Cassells) That largely depends on whether ITV wishes to retail ITV Sport itself or wishes it to be retailed by Sky. This is information we can come back to you with; we do not have it with us.

  176. Presumably if there is a difference between those two, then that would show that there is not such a thing as fair, open and non-discriminatory access under the vertical integration which BSkyB and SSSL have and that you are therefore profoundly anti-competitive.
  (Ms Cassells) No, you have to be quite careful about the use of the term discrimination which is actually about applying different terms to similar people in similar circumstances. The circumstances can vary quite easily from one channel to another so many factors go into the negotiation. I just re-iterate. We have 185 agreements. Anyone can complain to OFTEL. There has been one complaint. ITV can go to OFTEL in respect of ITV Sport if it wishes. It may do so after it has reached a negotiated price, as was the case with ITV1.

Mr Doran

  177. You have been very successful with what is obviously a very committed but aggressive approach to building up your business. All of us recognise that and particularly the scale of your penetration. One of the things which concerns me about the paper you have submitted is that you avoid completely what is probably the central issue in the Government's proposal and that is the whole question of ownership. Do you accept that there is a fairly sizeable selection, at least of the political population, which would be very concerned about any major expansion in your company's operations, for example to terrestrial television or deeper into radio broadcasting?
  (Mr Ball) No, I do not accept that.

  178. What are your views on how the whole issue of ownership should be approached.
  (Mr Ball) It should be governed by competition law.

  179. Do you think that would be sufficient protection?
  (Mr Ball) Yes, in my view.

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