Tuesday July 7, 05:58 PM
UPDATE 2-Watchdog hits Orange's exclusive TV broadband deals
By Cyril Altmeyer
PARIS, July 7 (Reuters) - Orange's ambition to use exclusive TV content to retain and draw customers suffered a setback on Tuesday after France's competition watchdog imposed a limit of one to two years on such offers.
Orange has invested heavily in premium television series, films and League 1 soccer matches but the regulator recommended that it gave access to its content to a wider pool of customers than just its own existing broadband subscribers.
The watchdog said the telecoms operator, part of France Telecom (Paris: FR0000133308 - news) , should distribute its TV content to users of other platforms after an initial period of one to two years, threatening its closed-circuit business model.
France Telecom shares closed down 2.05 percent at 15.97 euros.
The watchdog's decision comes after British regulator Ofcom recommended last month that British broadcaster BSkyB (LSE: BSY.L - news) give access to rivals to some of its pay-channels.
In May, Orange won a court appeal that gave it the right to sell subscriptions to its Orange Sport channel only to its triple play subscribers - getting television, high-speed Internet and telephony services.
Pay-TV group Canal Plus (Paris: FR0000125460 - news) and telecoms group SFR, part of Vivendi (Paris: FR0000127771 - news) , have attacked the exclusive nature of Orange's television broadband offers.
The French competition watchdog said Orange's 'closed ecosystem' limited customers choices.
'Exclusivity must remain an exceptional solution, strictly limited in time and scope,' France's Competition Authority said in a statement.
It added it was concerned about the possible emergence of a duopoly between Orange and Canal Plus/SFR.
The competition watchdog also called for the creation of a wholesale market for premium films and sports events which would undermine exclusive deals struck by Canal Plus and Orange with content providers.
The entrance of new players into the broadband TV market hinges on the creation of a regulated wholesale market, it said.
'This recommendation will lead us to adapt the model of our content services,' a spokesman for Orange said.
Canal Plus did not wish to comment, arguing that a pay-TV wholesale market existed already.
In December 2008, Orange launched Orange Sport based on its rights to major soccer matches such as the Saturday evening League 1 match, as well as cinema packages in an exclusive deal with Warner Bros, HBO, Gaumont (Paris: FR0000034894 - news) and Fidelite Films.
By the end of March, Orange had 363,000 subscribers to its television packages, of whom 112,000 were for Orange Sport.
A spokesman for SFR said the group was pleased with the ruling on Tuesday.
The government had asked the competition body for its advice, and the watchdog in return said lawmakers had to clear up the rules.
The watchdog still has to rule on a complaint by Canal Plus and SFR against Orange claiming that Orange is selling the soccer matches below cost.
(Writing by Astrid Wendland and Marcel Michelson; Editing by Hans Peters) Keywords: FRANCE ORANGE/
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