Virgin Media 2011 Annual Report Download - page 21

As a provider of an ODPS, we have to comply with a number of statutory obligations in relation to ‘editorial
content’ and notify ATVOD of our intention to provide an ODPS. Failure to notify ATVOD or comply with the
relevant statutory obligations 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, or pay TV, 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
BSkyB 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, a submission in support of BT’s appeal in September 2010, and a
reply to Ofcom’s defence in February 2011.
• We are also supporting Ofcom in opposing BSkyB and the Football Associations Premier League’s, or
FAPL’s appeals, to ensure that Ofcom’s main findings concerning BSkyB’s market power and
incentive to withhold supply are upheld. We filed a submission in support of Ofcom on December 21,
2010.
• These appeals were heard by the Competition Appeal Tribunal between May 9, 2011 and July 15, 2011
and a judgment is pending.
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 for a 2-year market investigation. In August 2011, the
Competition Commission provisionally concluded that there was an adverse effect on competition, and is
currently considering appropriate remedies. We have submitted responses to the Competition Commission’s
consultations on appropriate remedies, 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, to the suspension
or revocation of a company’s right to provide electronic communications networks and services. Ofcom also
undertakes periodic reviews of the various economic markets within the telecommunications sector to establish
whether any provider has SMP warranting the imposition of remedies. The UK Government is soon to undertake a
review of the Communications Act. It is unclear at this stage exactly what aspects of the Act might ultimately be
amended, but we intend to be closely involved in the review. We expect a Green Paper setting out proposals for
comment to be published in the first quarter of 2012.
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