BT’s "ability to bid aggressively in the forthcoming auction of Premier League football rights is at risk from new Ofcom proposals that will help competitors make a profit when using its superfast fibre network," according to Thomas & Aglionby of the FINANCIAL TIMES.
The U.K. telecom regulator "is proposing a minimum margin between the price at which BT sells access to its network to competitors and the price it charges consumers for its own services."
Analysts expect the proposed rules "will affect BT’s ability to outbid Sky for sports rights or force the company to raise its prices for customers." The tender document for the forthcoming auction of Premier League matches -- which BT gives away with broadband packages -- "has been sent out to prospective bidders."
Ofcom has ordered BT "to include the costs of its expensive foray into sports broadcasting into its pricing structures." The group has spent about £2B ($3B) so far in acquiring exclusive rights to football games in the Premier League. It will start broadcasting Champions League football matches as part of a three-year, £900M ($1.4B) agreement. Ofcom has also asked that TV sport costs "be calculated on those customers taking television services rather than spread across all of BT's retail customers who could." Citi analysts said, "This will increase the weight of TV sport in the cost side of the calculation and mean that its contribution will rise proportionally more with any heavier spend on the rights by the incumbent." A BT spokesperson said that it "could seek to challenge Ofcom's 'misconceived' decision through an appeal." The company said, "We do not think our sports costs should be part of any assessment and we reject the notion that Sky and TalkTalk require further regulatory assistance. They have more than 40 percent of the broadband market between them compared to BT's 31 percent" (FT, 1/15).
