Sky furious at Hutton verdict

As was expected, John Hutton has demanded that Sky reduces the size of its stake in ITV down to less than 7.5 per cent, from the current 17.9 per cent. A statement from the Department for Business read:

‘The Secretary of State has decided to make an adverse public interest finding, taking account of the Competition Commission’s decision that this transaction results in a substantial lessening of competition within the UK market for all television.

‘The Secretary of State has also decided to impose the remedies recommended by the Competition Commission to address the substantial lessening of competition identified in their report: divestment of BSkyB’s shares in ITV down to a level below 7.5 [per cent] and behavioural undertakings from BSkyB requiring the company not to dispose of the shares to an associated person, nor to seek or accept representation on the board of ITV and not to reacquire shares in ITV.’

According to the Telegraph, Sky will be given nine months to offload the shares, rather than the traditional three.

At the time NTL, now Virgin Media, publicly lambasted the £940 million share raid, and called for the Government and the competition regulators to intervene. Last month, the Competition Commission found against Sky and said its 17.9 per cent shareholding was uncompetitive, and called for either a full or partial sale.

Hutton’s verdict on Sky/ITV to be announced tomorrow

John Hutton will tomorrow announce his decision on what is to be done with regards to the 17.9 per cent ITV stake owned by Sky.

The Competition Commission earlier advised that Sky hold no more than 7.5 per cent of ITV, but the Business Secretary has the last word on the matter, though he is expected to follow the Commission’s recommendation.

ITV shares have now reached a new low, for which the controversy surrounding the Sky stake is partially to blame. This, ironically, will see Sky suffering a significant loss even if they are only forced to make a partial sale. Last Friday, ITV shares were valued at 72.9p, compared with the 135p a share that Sky paid at the time of purchase.

Since the launch of Virgin Media last year, the gestation of which prompted the Sky ITV share spree, we have seen the cable group greatly stimulate growth and competition in the market place. The launch of Virgin’s 20Mbps services paved the way for ADSL2+ from the likes of Be, O2 and UK Online to do the same.

Virgin’s arrival in the market also saw providers adding increased value services, such as digital TV and mobile phones – BT and Tiscali both pushed to drive customers to their IPTV platforms in 2007 and Sky had a wildly successfully year with See Speak Surf.

All this talk about cable has also stimulated debate about the future of telecoms networks in Britain – BT, along with Virgin, have been trialling next-gen cable services in the south of England, and so-called Dark Fibre pioneers H20 Networks are keen on leading the way by routing 21st Century cable networks through 19th Century sewer ducts.

Tiscali to do a Pipex?

A piece in the Financial Times quoted Tiscali overlord and chief executive Tommaso Pompei saying that Tiscali may well sell off the UK broadband arm of the business within the next two years.

Noting the consolidating climate of the UK broadband market, Pompei states that whilst Tiscali’s UK services are not up for grabs per se, he isnt ruling out a sale either. Predicting a second wave of consolidation within the marketplace, Pompei does not expect that Tiscali will be able to compete as aggressively in the market as they have been. “We do expect to be part of this process,” he told the FT. “This year for sure we’ll be 100% focused on our results, but we are prepared to react should the consolidation take place.”

BT, Orange and O2, all of whom already have or are planning to roll out IPTV would be interested in buying up, as would Carphone Warehouse for the same reason – CW is the only Top 6 ISP that does not have IPTV or has not made mention of setting up a service.

The FT interview also reveals that Tiscali has turned in its first net profit (approximately £15million) since it was founded in 1998 by entrepreneur Renato Soru. Tiscali began life as a fixed-line telephone service provider, becoming an ISP a year later, before going on a trans-continental shopping spree that saw Tiscali having significant brand presence in 15 European countries and South Africa.

If a sale goes ahead, Tiscali would be following in the footsteps of acquiree Pipex, who also opened their wallets for Bulldog and Toucan in 2006 before offering themselves to the highest bidder last year.

Home Hub Hack (version 2.0)

Another vulnerability in the security settings of the BT Home Hub has been apparently been discovered by Adrian Pastor, one half of the dynamic duo who first pointed out a hole in the Hub back in October ’07.

This particular problem is related to VoIP calls, and allows hackers to make calls on a victim’s machine, masking their identity with a false incoming call number, which the hacker can change so that it resembles say, the number of the victim’s bank, and then attempt to retrieve sensitive information.

Ultimately, this type of phishing attack relies on the hacker being able to trick the victim into giving up security details; by insisting that the caller forwards information to you in writing (which will happen, if the call genuinely is from the bank) you can guarantee not to get stung.

However the implications of this bug are worse than just prank calls – the hole in the net allows hackers to bypass the router’s authentication system, potentially allowing access to DNS settings, so that victims can be directed to fraudulent websites.

BT deny any such risk existing, saying that they closed the loophole months ago: “There’s no risk whatsoever of any ‘VoIP hijacking’ in relation to the Home Hub – we closed this theoretical exploit about three firmware upgrades ago and the purported exploit doesn’t work on the latest version.”

If that is the case, then those who have not performed a firmware update on their Home Hub should do so at the earliest opportunity.

ISPA facto – 2008 nominations are in

The majority of nominees for the 2008 Internet Service Providers Association (ISPA) Awards have been released.
The prestigious awards, which have been running since 1999, are divided into categories to recognise the
various innovations, features and business practices of the UK’s leading ISPs.

“Each year the event changes to reflect changes in the sector and to represent the ever broadening nature
of the service provider sector,” says the ISPA’s website. The categories released so far are:

Best Consumer Broadband
Best Business Broadband
Best Portal
Best Business ISP
Best Wireless ISP
Best Consumer Email
Best Business Email
Best Dial-Up
Best Internet Telephony

Among the nominees for best website (“Best Portal”) are, BT, Virgin Media, Orange and Tiscali, whilst Eclipse Internet,
overall winners of last year’s awards, are up for Best Business ISP for their business broadband packages, as are
PlusNet. Eclipse are also up for Best Business Email, and Virgin have also been nominated in the Best Consumer
Broadband category.

Beeb’s iPlayer blasted

Many have been quick to point on the irony (iRony?) inherent in the naming of the BBC’s Mac-incompatible on-demand service, Liberal Democrat MP John Pugh notwithstanding. – last week he issued a letter to BBC chief Mark Thompson, accusing him of indirectly supporting Microsoft, by making the release version of the iPlayer only available to Windows users running Internet Explorer.

In his letter, Pugh stated: “By guaranteeing full functionality to the products of one software vendor [the BBC] is as a public body handing a commercial advantage to that company – effectively illegal state aid!”

The iPlayer allows for would-be viewers to either download entire broadgrammes, or stream them from the iPlayer main site, much like the Listen Again radio service. Currently, users of non-Windows machines can access the streaming service, but as of yet are unable to enjoy downloads.

The BBC Trust outlined the provisional deadline for making downloads available to everyone was two years, which Pugh blasted as not being a “sufficient excuse for past sins or indeed much of an explanation”.

Edited: 16:39PM 22/01/08

Tiscali blocks iTunes

This weekend saw Tiscali surfers unable to access iTunes, newsgroups and p2p sites, with many users not being able download even the smallest files, following a software update that went a bit wrong.

This also saw gamers and other bandwidth-hungry users unable to make use of their services.

A post from a Tiscali spokesperson read:

“We are aware that there is an issue in this area which is currently being addressed… Sorry for any inconvenience caused. As well as having an impact on gaming, this issue is a cause of peak time slow speeds and is currently affecting: iTunes access, VPN/FTP/RDP just to mention a few.”

The issue is now apparently resolved. We would like to hear from any Tiscali users out there who have experienced problems over the weekend.

Broadband boosts Carphone Christmas profits

Carphone Warehouse enjoyed a profitable third quarter, with TalkTalk connecting 118,000 broadband customers, taking its total base to 2.6 million, and raking in £349 million for the company, despite defection from the first generation of 18-monthers.

Even so, Carphone said that there was no increase in levels of churn in the last months of 2007; Charles Dunstone proudly announced that the company had had a “good third quarter”.

Carphone Chief Financial Officer Roger Taylor admitted that high street carriage of Apple’s shiny white hope had something to do with the 13% profit increase, saying ”Our strength in our gross profit in December was undoubtedly assisted by increased footfall as a result of the iPhone.” Like stablemates O2, Taylor kept schtum about actual iPhone sales figures.

Sky granted regulatory reprieve

Despite recent noises to the effect that Sky should reduce the size of their share in ITV, the Competition Commission just granted the media company time to appeal against the government’s decision on the matter – whatever the outcome may be.

Sky originally had until tomorrow to appeal, but the Competition Appeals Tribunal has given it extra time in lieu of John Hutton’s report on January 29. The Commission has said that Sky should reduce its stake in ITV from 17.9% to an amount smaller than 7.5%.

Sky is thought to be waiting for the government’s verdict before deciding whether to appeal, and has said that any appeal would be based on the company being forced into incurring a loss – if Sky is forced to sell its shares in the current financial climate, it stands to make a loss worth of around £200 million. Analysts expect the company will be seeking to offload the stake for the same amount which it paid back in 2006 – £940 million. The stake is currently worth around £720 million.

However, even if Sky end up having to bear the brunt of losing millions, if the main objective of the ITV share-raid was, as many believe, a measure to prevent a Virgin Media takeover, then their mission was a success. Virgin Media’s financial position is weaker than it was this time last year; Charles Stanley analyst Sam Hart talking to msn.com said that “a revival of its previous interest in ITV is now almost inconceivable.”

The investigation is separate from, but closely linked to the ongoing legal dispute between Sky and Virgin Media over the carriage fees farce, and the complaint over a perceived monopoly on sports broadcasting submitted by Virgin, Setanta, Top-Up TV and BT.

BT: Fibre on the streets of Ebbsfleet

It seems as thought south-west England is set to become the UK’s favourite testing ground for next-gen cable deployment.

Yesterday it was revealed that BT are preparing to have set up Fibre to the Home (FTTH) connections to 10,000 new houses currently being built at Ebbsfleet in Kent. The pilot scheme is due to be completed by the beginning of August, and will offer customers maximum connection speeds of up to 100Mbps.

BT will be trialling five different services as part of their ‘Generic Ethernet Access’ scheme, offering download speeds of 135 Kbps and 500Kbps, 10Mbps and 30 Mbps as well as the maximum 100Mbps.

Whilst the first three speeds don’t sound particularly impressive, these are speeds are ‘assured’ rather than ‘up to’ – BT are practically guaranteeing at least this amount. The other two speeds come with the traditional ‘up to’ epithet. The 30Mbps and 100Mbps however, come with an ‘assured’ base rate of 10Mbps, and as such, are listed as ‘add-ons’ to the 10Mbps service on the Openreach PDF. Additionally, there’s not even so much of a whisper or hint or suggestion of anything that could even be remotely construed as relating to traffic shaping or an FUP in the whole document.

The cost for this slice of the future isn’t cheap though. The top 100Mb service costs £530 for 12 months, and comes with a £130 connection charge – this works out at £55 a month. Obviously these prices are for the pilot scheme and they don’t necessarily reflect the cost of 100Mbps broadband when it becomes available across the rest of the country.

In other fibre-trial news, French defence engineering group Thales, along with Eclipse owners Kingston Communications, have been tipped to begin work on setting up a new fibre network in South Yorkshire, thought to be capable of supplying over 600,000 homes with broadband speeds of up to 50Mbps. Virgin Media, have also been trialling cable in Kent, as well as Dover and Folkstone since October 2007.