Virgin Media 2013 Annual Report Download - page 15

I - 13
U.K. Regulatory Authorities
Ofcom is the key regulatory authority for the communications sector in which we operate. It is responsible for furthering the
interests of consumers by promoting competition. In particular, Ofcom is responsible for regulating the behavior of providers of
electronic communications networks or services that have significant market power in identified markets which may have a harmful
influence on competition and consumers. A provider is deemed to have significant market power if it has a position of economic
strength affording it the power to act independently of competitors and customers within a given market. Currently, the U.K.
Office of Fair Trading (OFT) also has jurisdiction with respect to competition matters. Pursuant to the Enterprise and Regulatory
Reform Act 2013, effective April 1, 2014, the competition functions of OFT together with those of the Competition Commission
will be transferred to a new U.K. competition authority, the Competition and Markets Authority. The Competition and Markets
Authority’s primary duty will be to promote competition, both within and outside the U.K., for the benefit of consumers.
Broadband Expansion
The U.K. government has attempted to drive the deployment of super-fast broadband and the provision of basic broadband
to 95% of the population of the U.K. by 2017 using money from the publicly funded BBC Licence Fee, under-spend from the
Analogue TV Switch-Off Project and other sources of public investment to stimulate private investment. Two key projects are
under way: (1) the Broadband Delivery Programme, which is focused on delivering broadband to areas that the market will not
serve of its own accord (mainly rural areas); and (2) the Urban Broadband Fund, which is aimed at establishing “super connected”
cities with internet capabilities of between 80 Mbps to 100 Mbps and comprehensive mobile broadband coverage. In 2013, the
U.K. Government announced the Superfast Extension Programme, which is designed to support the roll-out of broadband with
download speeds of 30 Mbps or higher to 99% of the population of the U.K. by 2018.
We lodged a formal challenge against the European Commission’s decision to approve a project involving the deployment of
a state-subsidized broadband network in the city of Birmingham in 2012. Based on assurances received from the U.K. government
that no Urban Broadband Fund monies would be used to deploy telecommunications infrastructure in the U.K., such that
Birmingham could not implement the network for which it had received European Commission approval, we requested and were
granted a stay in proceedings until December 31, 2015.
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 (TLCS) licenses are granted and administered by Ofcom.
Under these 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.
ATVOD is the independent co-regulator for the editorial content of U.K. video on-demand services that fall within the statutory
definition of an “On-Demand Programme Service” (ODPS) under the Communications Act.
As a provider of an ODPS, we must 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 our request, and in conjunction with other affected operators, Ofcom initiated an investigation into
the U.K. pay-TV market. In its final statement in March 2010, Ofcom found that BSkyB has market power in the wholesale supply
of certain premium sports and premium movie channels. To remedy the concerns around premium sports channels, Ofcom imposed
a wholesale must offer (WMO) regime for regulating the terms of supply of Sky Sports 1 and 2 SD and HD. This decision was
appealed by a number of parties, including us. In August 2012, the Competition Appeal Tribunal, or CAT, overturned Ofcom’s
decision, ruling that the competition concerns on which Ofcom based its decision were unfounded. BT appealed certain aspects
of the CAT’s judgment to the Court of Appeal. In February 2014, the Court of Appeal upheld BT’s appeal. The matter will now
be referred back to the CAT for further consideration.
In 2006, Ofcom also initiated a review of the terms under which operators of digital television 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.