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Ofcom has published a further consultation as part of its pay TV market investigation, and proposes that Sky should be required to offer its premium channels to other broadcasters on a wholesale basis at regulated prices.

The ongoing investigation follows complaints from BT, the now redundant Setanta, Top Up TV and Virgin Media in early 2007, a quartet who argued that Sky's dominance in Premier League football and premiere movies leaves them unable to compete.

Commenting on top-flight sport and first-run Hollywood movies, Ofcom's investigation suggests that "Sky has market power in the wholesale supply of channels containing this attractive content, and that it is acting on an incentive to limit the distribution of these channels to rival TV platforms."

Ofcom states that Sky's actions are hampering consumer choice and adds that a study has revealed that Sky is earning higher returns on its wholesale business than its retail business. Ofcom's concern is that those earnings will be reflected in high prices for consumers.

The UK communications-regulator's remedy is a proposal that would require Sky to offer its premium channels to rival broadcasters at regulated prices. By doing so, the regulator believes other broadcasters will be able to offer Sky's premium channels - leading, theoretically, to improved choice and innovation.

Sky, as expected, has hit out at Ofcom and states that it "fundamentally" disagrees with the regulator, adding that it will "use all available legal avenues" to counter Ofcom's proposal.

The investigation continues, and Ofcom is expected to publish a final verdict later this year.

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