Yes this is the type of service expected from sky.
The £48 you pay for sky is for the channels you receive and not the SKY box. As the Box is not rented from sky it is your responsibility and not Sky's to pay for a replacement after 12 months.
You paid for a out of warranty service call this includes 3 months service cover incase the box fails or any thing else fails. If the sky engineer finds the box to be faulty they will only replace with a refurbished box and not a new one.
This will not help you now as you have already paid for the service call but suggesting that you will cancell your subscription sometimes gets a free service call.