The Office of Fair Trading is to extend its investigation into the possibility that BSkyB is abusing its dominant position in the pay-TV market, keeping wholesale prices for its channels unnecessarily high.
Sky has been subject to informal investigation since the beginning of the year over whether it is keeping the promises it made in 1996 to open up the market to rival operators such as ONdigital, NTL and Telewest.
That investigation is coming to an end but the OFT now plans to launch a more formal probe under the Competition Act.
Sky, under chief executive Tony Ball, recently announced a wholesale deal with NTL for its premium channels, such as Sky Sports and Sky Premier, but ONdigital has complained that the prices charged by BSkyB are too close to the full retail.
When Sky increased its charges by an average of £2 a month earlier this year, ONdigital reiterated its claim that it was impossible for the channel to make a profit from subscribers taking only one or two of the premium channels.
BSkyB expects its SkyDigital service to have five-million subscribers by the end of the year, compared to ONdigital’s anticipated one million. The OFT’s investigation is expected to take six months to investigate the issue fully, and the maximum fine that could be imposed is 10% of the broadcaster’s annual UK turnover.
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