Quote:
Originally Posted by sherer
does anyone else think OFCOM have create yet another loophole for whole. if the wholesale price is linked to the Sky price then all Sky need to do is increase that.
Surely the wholesale price for VM \ BT etc should be different to the Sky price as it all comes from different streams
|
No, because Sky raising their prices for their customers means that other providers can STILL offer competitive pricing, they're still able to undercut Sky.
There's only really two ways for Ofcom to dictate pricing, cost plus, where it's worked out on the cost price of delivering the channel with an added margin, which is extremely difficult to work out, or retail minus, where the retail cost is taken, and a margin removed from it, which is the route they've taken. Both of them mean that competitors can still undercut Sky, or at the very worse offer equivalent pricing. Anything else will either result in Sky being able to cut their pricing to levels below what competitors can charge, or competitors paying less than what it actually costs Sky to deliver the channels so Sky could in theory lose money on it.
The current deal is actually punitive to Sky, because if someone undercuts Sky they can't cut their retail pricing to compete because that'll result in cutting the wholesale price and meaning their competitors can then cut their prices again. In theory Sky can never win a price war on their own channels if a competitor is happy to not make money on them and just to offer them at close to wholesale pricing.
You have to remember that this is all about relative pricing, the pricing competitors can offer relative to Skys. If Sky puts up their retail price then it doesn't change the situation other than meaning all consumers are paying more. It doesn't make Sky any more attractive.
The issue here is that if BT honour their advertised pricing they'll be losing money, and if they have to redo all their advertising to reflect the new pricing they'll lose money. This is really BT's fault because the final pricing deadline was exactly when Sky announced the price rises, so it was entirely foreseeable.