Virgin Media 2010 Annual Report Download - page 24

Regulation of Television and Video On Demand Services
We are required to hold individual licenses under the Broadcasting Acts 1990 and 1996 for any television
channels (including barker channels) which we own or operate and for the provision of certain other services on
our cable TV platform, such as electronic program guides. These television licensable content service, or TLCS,
licenses are granted and administered by Ofcom. We operate a number of barker channels and administer an
electronic program guide and therefore under the licenses, each covered service must comply 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.
In relation to on-demand programming, ATVOD is the independent co-regulator for the editorial content of
U.K. video on demand services that fall within the statutory definition (under the Communications Act) of an
“On Demand Programme Service”, or ODPS. As a provider of an ODPS, we have to comply with a number of
statutory obligations in relation to the ‘editorial content’ and notify ATVOD of our intention to provide an
ODPS. Failure to notify ATVOD or comply with the relevant standards in relation to editorial content may result
in the imposition of fines or, ultimately, the prohibition on providing an ODPS.
In March 2007, following receipt of a request from us, in conjunction with other affected operators, Ofcom
initiated an investigation into the U.K. pay television market. Our joint submission outlined certain features of
the U.K. pay TV market which, we believe, distort effective competition within this market and, in particular,
favor the pay TV provider BSkyB. In its final statement on the pay TV market, issued in March 2010, Ofcom
found that BSkyB has market power in the wholesale supply of certain premium sports and premium movie
channels and acts on that market power to restrict supply and prevent fair and effective competition.
To remedy the concerns around Premium Sports channels, Ofcom imposed a wholesale must offer, or
WMO, regime for regulating the terms of supply of Sky Sports 1 and 2 SD and HD. Sky has supplied us with
offers for regulated terms of supply for these channels, and we continue to engage with Ofcom to ensure that
Sky satisfies its regulatory obligations. We are involved in a number of appeals of the Ofcom decision:
• We have appealed the Ofcom decision, arguing that the remedy did not go far enough in terms of
pricing and scope. BT has taken a similar position. We filed a notice of appeal in May, 2010, a revised
notice of appeal in September 2010, and a submission in support of BT’s appeal in September 2010.
• We are also supporting Ofcom against Sky and the FAPL’s appeals, to ensure that Ofcom’s main
findings, around Sky’s market power and incentive to withhold supply, are upheld. We filed a
submission in support of Ofcom on December 21, 2010.
Instead of imposing a WMO regime for movies, Ofcom decided in August 2010 to refer the linear and VOD
movie markets to the U.K. Competition Commission (CC) for a 2-year market investigation. We have submitted
responses to information requests and a Statement of Issues from, and continue to engage with, the Competition
Commission.
Ofcom also initiated a review in 2006 of the terms under which operators of DTV platforms in the U.K.,
such as us, allow access to their platforms for third-party television channels and content providers. However,
this review has not progressed beyond its initial stages. We are therefore unable to assess the likely outcome of
this review and resulting impact on our activities in this sector at this time.
Regulation of Telecommunications Services
In order to operate in the telecommunications sector, a provider must comply with general conditions
imposed by Ofcom. These general conditions cover a broad range of issues, including interconnection standards,
number portability, deployment of telephone numbers, access to emergency services, and sales and marketing
standards. Any breach of these general conditions could lead to the imposition of fines by Ofcom and, ultimately,
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