Yesterday Ofcom released a consultation paper (PDF) on proposed new guidelines relating to Ofcom’s regulation of “technical platform services”. These would replace the old Oftel guidelines on the terms of supply of conditional access services.

I started writing a comment on the consultation paper for Ofcomwatch yesterday, and then realised I was in serious danger of adding the longest post ever (not sure who the current holder of that title is!). Anyway, to say that I’m not convinced about the direction taken in Ofcom’s proposals would be an understatement. I’ve hosted the comment at my company’s website � it can be download from:

http://www.reckon.co.uk/open/Regulation_of_Sky’s_conditional_access_charges_%7C_viewpoint:_Nic

I’ll therefore try to keep the following brief.

Technical platform services include conditional access services, EPG listing services, regionalisation services as well as various access control services connected with interactive TV. In the UK “Sky” (BSkyB / SSSL) is the regulated supplier of these services. The guidelines concern the interpretation of the “fair, reasonable and non-discriminatory” obligations placed on Sky.

Ofcom’s proposals represent a jump towards the detailed regulation of the terms that Sky can set, as a monopoly provider of technical access services on the DSat platform. Ofcom thinks that current guidelines give Sky too much flexibility by allowing Sky to supply these services through commercial negotiation, subject to broad constraints. Instead, Ofcom prefers a tariff structure which brings transparency and predictability to the terms that Sky should offer. And those terms would be set in line with a cost allocation of Sky’s historic expenditure.

The whole document seems to rest on the misguided belief that Ofcom best meets its duties to citizens and consumers by providing transparency and predictability. Three issues are notable by their absence from the document:

• The distinction between the scope (or ability) Sky has to abuse a dominant position by providing unfair terms for technical platform services and the risk that it will do so.

• The risk that reducing Sky’s flexibility will prevent access to the platform for innovative channels and other services.

• The fact that the implicit revenue control placed on Sky’s platform service revenues actually creates incentives for Sky to engage in anti-competitive conduct (a classic case of unintended consequences of regulation).

The consultation paper only concerns guidelines, not the “fair, reasonable and non-discriminatory” regulations themselves. But the worry is that the detailed micro-management of BT that Oftel developed in the 1990s will now be introduced in the commercial television sector.