We all know a media giant when we see one, but did you know they could fight?  Well in the UK over the past week, there has been a battle royal waging between two of the biggest.  In the red corner, Sir Richard Branson and his newly minted "Virgin Media" (born out of NTL/TeleWest's £950m purchase of Virgin Mobile) and  in the blue corner,  Rupert Murdoch's BSkyB which markets the SKY satellite service.  And in the middle of the ring, under the feet of both of them - poor down-trodden consumers.  Let me give you the background.  As one journalist commented, "The only thing missing in this drama is sex."  In case you are wondering - these are two vertically integrated schizophrenic media giants.  Both have their own exclusive distribution networks and both see their fortune coming from using those networks to sell to their consumers, services and 'content' - some of which they own outright and some of which they buy in from others on a wholesale basis.

And that's where the problem begins.  A major disagreement has arisen over how much Virgin Media, the cable group, should pay BSkyB for being allowed to broadcast its core channels - Sky One, Sky Two, Sky Sports News and Sky News.   When protracted negotiations failed to materialise in a deal, the channels were promptly withdrawn from the Virgin cable network, with each side blaming the other for the breakdown in negotiations.  The real losers are the end users who are deprived of the chance to watch programmes that include The Simpsons, Battlestar Galactica and Lost.  No wonder they are up in arms!   This dispute between Branson and BSkyB, where Rupert Murdoch is chairman and his son James is chief executive, is not of their making.  And it is even getting petty and nasty like Virgin amending their electronic programme guide to show "SKY Snooze".  Alienating your customers like this can end up being both expensive and bad for business.   It remains to be seen which company suffers more, but the stakes are high.   Virgin could haemorrhage subscribers at a time when it is trying to establish a reputation for reliability.   Sky will lose income, possibly as much as £60m if the dispute drags on for a year, both from a loss of "carriage fees" but also because the resulting lower audience numbers will negatively impact their advertising revenues.  And Sir Richard Branson has stated to BBC News 24 that Virgin Media will buy the rights to programmes and Virgin Media will set-up channels that would rival Sky One.   For companies that never miss an opportunity to talk about how much they care about customer service, this slug-fest is an absurd way to carry on.

But hold on, maybe there is something more fundamental going on here.   On 27th February the following was contained in a lengthy statement issued by SKY:

"If Virgin Media believes that Sky's basic channels are not worth around 3 pence per day to its customers, Sky has made an alternative proposal that would ensure that Virgin's customers would nevertheless continue to enjoy access to the shows they love.  At no cost to Virgin Media, Sky would retail its basic channels directly to cable customers on the Virgin Media network. This initiative would operate in a similar way to the means by which third-party broadcasters enjoy open access to Sky's digital satellite platform.  Sky believes that a decision by Virgin Media to provide access to its platform would indicate a willingness to compete and to provide choice to customers.   At present, the only means for third-party broadcasters to reach customers on Virgin Media's network is through a wholesale channel supply agreement with Virgin Media."

How very interesting.  Are Rupert and James at last beginning to glimpse the potential benefit to them of an 'open access' delivery infrastructure?   As the serious shortcomings of a satellite based network (no symmetry and poor latency) become ever more apparent to SKY, and especially as they seem to be embracing the P2P appetite of their customers by taking seriously the whole social networking phenomenon, maybe they are beginning to see the need to change the rules of the game!  We watch and wait.

While all this was going on, I was in Munich speaking at the Münchner Kreiss conference, "Infrastructure and Services - The End of a Connection?".  At this gathering, the chasm between those favouring 'open access' and those clinging to the old models of vertical integration was never wider.  I have come to the conclusion that the many eminent and respected economists and academics at that event that cling to the idea of competing local infrastructures and integrated network and services, just do not have a clue about the fundamantal imperatives of the underlying technologies of abundance of the digital world.  One such person was Professor Dr. Ingo Vogelsang, now of Boston University, USA who, although speaking in German which meant I had to rely upon the excellent simultaneous translators, said, "When there is no scarcity - economists are redundant".  Now I know why academic tenure is on the way out!