Virgin Media 2008 Annual Report Download - page 25

subject to further conditions, and to keep these markets and any other relevant markets identified by
Ofcom under regular review. This resulted in BT being found to have SMP in a substantial number of
markets and, as a result, being made subject to further regulatory requirements in both wholesale and
retail markets. Virgin Media, like all fixed line operators, has SMP in the market for termination on its
own fixed network. Ofcom is about to undertake a review of the fixed narrowband wholesale and retail
markets in 2009 but at this stage it is too early to predict the outcome.
Next Generation Access
In September 2007, Ofcom commenced a consultation process to consider whether changes to
current regulation were required in order to stimulate investment in, and thereby the deployment of,
high-speed broadband networks and infrastructure, referred to as Next Generation Access, or NGA.
This initiative is being undertaken in conjunction with other governmental (and EU) policy initiatives,
with Ofcom due to publish its conclusions in the spring of 2009. Given the early developmental stages
of NGA within the U.K., we currently expect the conclusions to be in the form of broad principles
rather than specific prescribed regulation.
Cable TV Regulation
Although we are no longer required to hold individual licenses to provide electronic
communications networks and services, we are still required to hold individual licenses under the
Broadcasting Acts 1990 and 1996 for any television channels which we own or operate and for the
provision of certain other services (e.g. electronic program guides) on our cable TV platform.
We therefore hold a number of Television Licensable Content Service Licenses, or TLCS licenses,
under the Broadcasting Act 1990 for the operation of television channels and for the provision of our
electronic program guide.
TLCS licenses are granted and administered by Ofcom. The licenses require that each licensed
service complies with a number of Ofcom codes, including the Broadcasting Code, and with all
directions issued by Ofcom. Breach of any of the terms of a TLCS license may result in the imposition
of fines on the license holder and, ultimately, to the license being revoked.
Holders of TLCS licenses are required to pay an annual fee to Ofcom. The fees are related to the
revenue earning capacity of each television service and are based on a percentage, set by Ofcom, of
revenues from advertising, sponsorship, subscriptions and interactive services, with special rules applying
to shopping channels.
In October 2006, Ofcom commenced a review of the various ways and the terms on which
operators of digital TV platforms in the U.K. (including ourselves) allow access to their platforms for
third party TV channels and content providers. This review has not yet progressed beyond its initial
stages. It is not possible, therefore, to predict the outcome of this review and whether access to digital
TV platforms in general or to specific platforms in particular, will become more heavily regulated as a
result.
Pay TV Market Investigation
In January 2007, we made a joint submission to Ofcom with BT, Setanta Sport Holdings Limited
(Setanta) and Top Up TV Europe Limited (Top Up) indicating that there are a number of features of
the U.K. pay TV market which result in competition being prevented, restricted or distorted and that
BSkyB is able to exploit these features to marginalize and even foreclose competitors at all levels of the
pay TV market value chain.
Following this submission, Ofcom announced in March 2007 that it would be carrying out a study
of the U.K. pay TV market to determine whether the market was functioning effectively. We made a
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