The Great Debate UK

Ofcom summons up courage to tackle BSkyB

- Steven Barnett is professor of communications at the University of Westminster, and a writer and commentator on broadcasting issues.  His first book, published in 1990, was on the relationship between television and sport. The opinions expressed are his own.-

Today is a historic day for British television: the first time in its brief six-year history that the supposedly uber powerful Ofcom has been prepared to flex its muscles to tackle the brute force of BSkyB’s overwhelming dominance in pay television.

It is an issue that has blighted the television industry for years, disadvantaged consumers, put companies out of business, and sent competitors, regulators and politicians running for cover.

Finally, after three years of exhaustive analysis, the regulator has had enough: BSkyB has been ordered to lower the prices at which it sells its premium rate channels to other platform operators such as Virgin and BT.

Consumers may even be able to buy sports and movie channels without being forced to pay for a bundle of countless other unwanted channels.

We can now expect a blaze of carefully orchestrated outrage not just from the hugely influential head of BSkyB itself, James Murdoch, but from its formidable number of friends and allies. For the power and influence which this single corporation exerts on British public and political life is quite extraordinary.

We have already heard the first rumblings from powerful sports bodies, threatening legal action and warning of “serious consequences” for sport.

from Commentaries:

Orange squeezes the UK’s mobile competition

Merging T-Mobile UK with Orange will bring 3.5 billion pounds of value to shareholders, and "substantial benefits to UK customers." Goodness, why on earth didn't they get together years ago? A merger that simultaneously enriches shareholders and customers is rare indeed, and one to be treasured - if this really is one of those seldom-seen beasts.

While the 3.5 billion pound figure is credible, the second claim, from Timotheus Hottges, the finance director of Deutsche Telecom, T-Mobile's parent, is harder to believe. The immediate reaction from other shares in the sector rather gave the game away, with retailer Carphone Warehouse down on the prospect of fewer suppliers, and Vodafone up on the hope of less competition in Britain's mobile phone market.

Mixing Orange with T-Mobile's garish purple would create a business with 37 percent of that market, rising to 42 percent if Virgin Media, which piggy-backs on T-Mobile, is included. Britain's Competition Commission, fresh from being bludgeoned into accepting a bank merger which breaks all the rules, will be itching for a look. It's only one thicket in the regulatory maze which Deutsche and France Telecom, the owner of Orange, will have to negotiate. The deal will go to the European Commission, and Britain's Office of Fair Trading can ask for it back (to send it to the CC) while Ofcom, Britain's telecoms regulator,  is also on the line.

It's not immediately obvious why this deal should be allowed. There are currently four substantial UK mobile operators, with the awkwardly-named 3 a distant fifth. It hasn't a hope of making money, but it has dictated lower prices to the others. The worry for UK consumers is that if T-Orange is allowed, 3 will fold, and that five would become three.

Aside from the standard boiler-plate about investing more to make Britain a more communicative place, the new venture can offer one significant sop to the regulators. The sale of the next slice of radio spectrum is overdue, and an undertaking not to ask for more would allow the other two to promise more investment in "digital Britain" in return for a lower purchase price.

If the regulators can somehow be persuaded, the future's bright. The merger is presented as a genuine 50-50 affair, but Orange is the stronger brand, thanks to the legacy of its inspired marketing a decade ago. A joint venture also spares Deutsche from being forced to recognise T-Mobile's market value on its books; from initial hopes of a 4 billion pound sale, it's become clear that neither Vodafone nor O2, Telefonica's British arm, was prepared to pay more than a fire sale price.

As they sketched out their route to the broad sunlit uplands, the new partners were keen on Tuesday to emphasise improved network coverage, better use of the combined spectrum, and the lovely savings from closing overlapping shops, marketing and radio sites. It all sounds wonderful, but the history of joint ventures is not a happy one. Besides, it's one thing for consumers to pay up voluntarily for the delights of evolving technology and quite another to be forced to pay more because competition is cut.

Regulatory changes needed to end Heathrow hell

- Rupert Darwall is a guest columnist. The views expressed are his own. A London-based strategist, he is author of Reluctant Managers, a study of Whitehall performance (KPMG, 2006) –

If April is the cruellest month, then July can be awful for people using Heathrow. Business travel is still humming and the holiday season is getting into full swing.

Even with Terminal 5, Heathrow can’t take the strain. Its two runways are used at 98.5 percent capacity and there are simply not enough gates and stands. A ten-minute delay is programmed into Heathrow’s schedule. Because there’s no spare capacity, when things go wrong, the slightest change — even in the weather — can lead to aircraft being held in stacks and flights being cancelled

You’d have thought that the UK government’s review of the way Heathrow is regulated, consultation on which ended last month, would want to root out what causes Heathrow to be so congested, but you’d be wrong.

Although the Competition Commission believes that the way the Civil Aviation Authority (CAA) regulates Heathrow stifles competition and contributes to the airport’s poor performance, the government seems reluctant to do anything about it.

Perhaps it feels that enough is already being done by forcing BAA <FER.MC>, which owns London’s three main airports, to sell two of them. But that on its own won’t make life any easier for the millions of passengers who are forced to endure Heathrow misery each year.

from The Great Debate:

Bank rally ready to be marked-to-market