Media regulator Ofcom has launched a consultation into the operation of the pay-TV market, amid potential competition concerns.

Inviting submissions on the issue, Ofcom said its initial assessment of the sector had suggested the pay-TV sector delivered "significant benefits" to consumers, providing services to more than 11 million people.

But the industry watchdog said it had identified some "warning signs" within the market, including areas where consumer choice might be limited.

Ofcom's decision to examine current conditions in the pay-TV sector comes after rivals of BSkyB, which is the dominant force in the UK, accused the satellite television giant of attempting to quash competition in the market.

In a joint submission to the regulator earlier this year, telecoms firm BT, cable operator Virgin Media, Irish broadcaster Setanta and freeview pay service Top Up TV claimed competition within the UK's pay-TV industry was not working effectively.

The submission, which called for the matter to be referred to the Competition Commission, suggested BSkyB was refusing to provide third party pay-TV retailers with access to its premium channels on "economically viable terms" – thus placing its competitors at a disadvantage.

Earlier this year Virgin Media lost access to several Sky TV channels after a row with BSkyB concerning the failure of the two companies to agree a new contract governing the supply of the services.

In response, BSkyB claimed the complaint filed by Virgin Media and other competitors contained "a number of serious factual inaccuracies" and "flawed" arguments.

The company insisted its rivals had failed to provide evidence to prove consumers were being put at a disadvantage by current market conditions and stressed it also faced competition from free to air television services.

Ofcom's initial consultation into the operation of the pay TV market will end in February, with a further consultation expected in the spring of next year.

The regulator said: "Ofcom welcomes views and comments on our initial assessment of the operation of competition in the market and the effect on consumers.

"The responses will help us to examine whether there are competition problems that require further action," Ofcom added.

18/12/2007 11:21:54