Video services

BT Unveils UHD TV Prices in Challenge to Sky

BT plans to charge a monthly fee of £15 (US$23.40) for its new package of TV services, which is to include what it claims will be Europe's first ultra-high-definition (UHD) sports channel, as it looks to mount a stronger challenge to market leader Sky in the UK's pay-TV sector.

The country's fixed-line telecom incumbent said customers would receive 47 premium channels as well as its forthcoming UHD sports channel, which will feature live coverage of major sports events including top-flight European soccer.

The monthly fee of £15 ($23.40) looks extremely competitive next to the £40.50 ($63.10) that Sky is currently advertising for new customers to its Sky Sports bundle, although Sky still boasts a broader selection of channels and sports content than BT Group plc (NYSE: BT; London: BTA).

BT first announced plans for the UHD service in June, indicating it was collaborating with Sweden's Ericsson AB (Nasdaq: ERIC) on the development of the technology, and it will hope the quality improvement gives it an edge over rivals still making do with older display standards. (See BT Preps UHD TV Channel With Ericsson.)

Sky has no immediate plans to introduce a UHD service and may be concerned about investing heavily in new technology when others have failed to generate much excitement among customers.

Although HD has proven popular, 3D TV technology has not garnered the same level of consumer interest despite the initial hype.

Want to know more about pay-TV subscriber trends? Check out our dedicated video services content channel here on Light Reading.

Rivalry between BT and Sky has been growing as the latter tries to build up its broadband business while BT targets a bigger role for itself in the TV market.

Dependent on wholesale agreements with BT, Sky is one of several operators complaining that BT's ownership of most network infrastructure gives it an unfair advantage over its retail rivals.

Recently, it has been arguing that BT should be carved up into separate infrastructure and retail businesses -- a move that regulatory authority Ofcom has indicated it is considering in its latest strategic review of the sector. (See BT Guilty of 'Under-Investment,' Says Sky and Ofcom Could Still Make BT Do Splits.)

In response, BT has been insisting that a lack of pay-TV competition has resulted in spiraling costs and poor experiences for customers, urging Ofcom to do something about Sky's dominance in this area. (See BT Demands Action on Sky's Pay-TV Dominance.)

Although it has spent heavily on sports rights to fortify its TV offerings, BT has failed to make the same kind of inroads into this market that Sky and other broadband retailers have made in broadband. (See BT, Sky Splash £5.1B on Premier League Rights.)

According to its own data, the broadband market now includes four major players and none has a market share of more than 32%.

By contrast, Sky still serves about 64% of all pay-TV customers, says John Petter, the CEO of BT Consumer.

Data published this week by Ofcom also suggests the pay-TV sector is less competitive than other parts of the communications market.

The regulator reckons just 2% of pay-TV customers switched provider last year, compared with 6% of broadband customers and 7% of mobile customers.

Switching in UK communications markets in the past 12 months, year-on-year comparison
Note: Data shows the proportion of bill-paying decision makers that claimed to have switched supplier for each service in the previous 12 months (excluding supplier switches related to moving home).

Source: Ofcom.
Note: Data shows the proportion of bill-paying decision makers that claimed to have switched supplier for each service in the previous 12 months (excluding supplier switches related to moving home). Source: Ofcom.

"We've just introduced an important change allowing people to switch provider over BT's network by only dealing with their new supplier and we're now considering whether similar processes may be appropriate for mobile and services bundled with pay TV, as consumers increasingly buy services this way," said a spokesperson for Ofcom when asked if there was concern about levels of pay-TV competition.

Despite offering TV services free of charge to its broadband users, BT had captured just 1.142 million TV customers by the end of March while boasting more than 7.7 million subscribers in the broadband market.

Sky does not break out customer numbers by product area but claimed to serve about 11.9 million customers across the UK and Ireland in March.

BT's ability to offer some TV services free of charge could also come under threat should Ofcom decide the operator is not leaving a big enough gap between its wholesale and retail prices for rivals to compete effectively.

To BT's chagrin, Ofcom has been including the costs of spending on TV rights in its "margin squeeze" calculations, meaning BT is closer to overstepping the mark than it would be otherwise.

— Iain Morris, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, News Editor, Light Reading

DHagar 7/17/2015 | 4:03:44 PM
Re: TV Ariella, agreed - that gives new meaning to the term "Rat Patrol"?
DHagar 7/17/2015 | 3:59:51 PM
Re: TV IAIN, I agree with Ariella, it does sound complicated - a mess actually.  That's what happens when you give the government the controls through taxes.  Sounds totally dysfunctional to me!
Ariella 7/17/2015 | 12:32:09 PM
Re: TV @ianmorris Wow! People who get all up in arms about the NSA spying here, but having someone actually come to your home looking around would feel incredibly invasive. 
iainmorris 7/17/2015 | 12:29:33 PM
Re: TV There is documentation and they do spot checks, which involves sending people around to your home. If you're found to have a TV and you don't have a license you face a very hefty fine.
Ariella 7/17/2015 | 12:27:57 PM
Re: TV @ianmorris I see it's quite complicated. BTW do they just take your word for it that you got rid of your TV, or is there some kind of documentation of proof process? 
iainmorris 7/17/2015 | 12:03:27 PM
Re: TV It's a great question. As far as I'm aware, you have to pay the license fee for the BBC if you own a TV set, whatever you happen to be watching. The free-to-air channels that come with BT's new service will include BBC channels. However, a number of people are now avoiding paying the license fee by getting rid of their TVs and just watching BBC channels on "catch-up" over the online iPlayer system. It's a controversial issue.
Ariella 7/17/2015 | 11:36:57 AM
TV I'm curious about something about the British system. From what I understand, everyone who has a TV pays a tax that covers the operating cost of BBC. If they subscribe to services like this one and don't watch BBC can they claim exemption from the tax?
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