Sunday, March 11, 2007

Virgin Media, BSkyB, and network monopolies

The recent spat between Virgin Media and BSkyB is partly a battle of billionaire egos between the bruising Rupert Murdoch and the self-styled plucky underdog Richard Branson. It's resulted in customer anger as Virgin Media's cable (previously NTL) stopped serving Sky TV channels, in a disagreement over fees.

Now the regulators are stepping in, and they have some very interesting questions to ponder. Should cable companies be forced to open up their distribution networks to competitors?

Of course, this is a question that applies in many industries. Should gas, water, or electricity companies be forced to open up their national networks to competitors? Should telecoms companies be forced to open up their national communications networks?

It's all about preventing monopolistic behaviour. And its a delicate balance - often, for example with water utilities, the technology seems designed to lead to natural monoplies.

But now the interent is starting to shake up the TV industry. It's the new distribution method for video (and much else), and it's very first principle is that anyone can request any URL. So, despite BSkyB buying up ISPs, they can't prevent their customers from accessing YouTube or And anyone using Virgin Medias' broadband will still be able to access Sky TV online.

I've already argued strongly that the industry will split between content generation (e.g. Sky TV) and content distribution (e.g. your local ISP). I just can't see what the synergies are for vertical integration.

So perhaps the regulators can afford to overlook the Sky TV spat, in the knowledge that the internet will soon recast the whole problem.

And more importantly, the consumer can look forward to the day when all media is available online, and the media companies won't be able to do anything about it.

1 comment:

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