BSkyB warned to play fair on digital television

Any attempts by BSkyB to unfairly control digital television services to viewers through its controversial set-top box technology would be curbed under new guidelines for the multi-channel television era announced yesterday by Don Cruickshank, the telecommunications regulator.

Though he accepted BSkyB, Rupert Murdoch's satellite channel, was likely to have a dominant position in the delivery of programmes to consumers, Mr Cruickshank promised to stamp out any discrimination between Sky programmes and the offerings of other broadcasters.

However it emerged that Mr Cruickshank's powers to curb any anti-competitive behaviour by BSkyB could be watered down if British Telecom wins a legal challenge against similar powers over its telephone services. BT's lawyers have been in the High Court this week contesting the legality of new license conditions which give the regulator the ability to ban any moves by phone operators which he fears could be designed to thwart competition. Judgment in the action is due this afternoon.

Though BT has accepted the new powers, which take effect from 31 December, the company has claimed it was obliged to challenge their legality in order to protect shareholders' interests.

Mr Cruickshank is planning to introduce the same condition to regulate BSkyB and though he refused to speculate on what would happen if he lost the BT case, he admitted the fair trading proposals were "an important part" of yesterday's digital television guidelines.

BSkyB is working to start digital satellite services, offering up to 200 television channels, by late 1997. Contracts are likely to be awarded in the next few days to set-top box manufacturers, including Sony and Pace Micro Technology.

The move gives BSkyB a lucrative headstart over the cable industry, which has pledged to provide its own digital delivery system and over the digital terrestrial services planned by the BBC and ITV using the conventional TV ariel network.

The boxes could be sold forpounds 200 but will cost some pounds 400 to make, with the difference subsidised by a Sky-organised consortium.

The vision spelt out by Mr Cruickshank involved the probability of just "one or two" systems available to bring programmes into homes, but with separation of the technical delivery mechanism from programme making.

The guidelines oblige companies to provide separate accounts for the delivery businesses and to provide information about prices. If they fail to comply, Oftel, the watchdog, can make an enforcement order or take operators to court.