Ofcom, the British communications regulator, revealed a number of "warning signs" in the UK pay-TV industry today that may limit customer access to premium content.

The regulator's assessment of the pay-TV market is part of an investigation into the industry, sparked by a complaint by a number of businesses, including BT and Virgin Media against BSkyB, at the beginning of the year.

BSkyB is 39.1 per cent owned by News Corporation, parent company of Times Online.

Ofcom said that its initial assessment of pay TV was that it had "delivered significant benefits to consumers", however, "there are some warning signs, such as areas where consumer choice may be limited".

In particular, Ofcom said that it had concerns over whether companies had an incentive to make their premium content, such as sports and films, available to others and whether businesses were able to compete effectively when buying premium content.

The original complaint charged that Sky had an 80 per cent share of the pay-TV market, which allowed it to charge prices that were higher than in overseas markets, and that there were “structural deficiencies” in the UK market.

Ofcom also said today that there were concerns over the way consumers have to subscribe to a basic package before they can buy premium services.

Pay-TV operators must now wait while the regulator gathers reaction from the industry on its findings before discovering what action Ofcom might take, with a further consultation expected in the spring of 2008.

BSkyB is already facing a ministerial investigation into its £940 million purchase of a 17.9 per cent stake in ITV, plus smaller inquiries into Sky’s plans to create a paid-for version of Freeview and an examination of the wholesale pay-TV market.

Analysts believe that Sky could be forced to make its sports channels available on a supervised wholesale basis to all pay-television operators.

Alternatively, the Competition Commission could restrict Sky's sports rights ownership.

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