Break up Telstra and force it out of Foxtel, says Optus

Stuart Corner
Wednesday, 03 June 2009 17:18

IT Industry - Strategy

However Optus' submission goes beyond issues of network ownership and network regulation and into issues around content, arguing that "Telstra's Foxtel investment [50 percent] represents the most significant threat to competition."

It notes that, in the past the ACCC has said "Telstra's partial ownership of Foxtel provides it with the incentive to: foreclose supply of pay TV channels by Foxtel to other networks competing with Telstra for the supply of telecommunications services; prevent other pay TV businesses or channels from gaining access to Telstra's HFC network."

Optus contends that this problem will be significantly magnified with the migration to higher speed broadband services such as those to be offered on the NBN, because IPTV and associated content are likely to be key drivers for the take-up of those services. "Control of content will become increasingly critical, since it will become a crucial factor in customer's purchasing decisions...There is increasing recognition that control of content could have significant impact on the future development of competition," Optus says.

Forcing Telstra out of Foxtel will, however not solve this problem entirely because it could still enable those controlling premium content to wield significant power in the broadband services market.

Optus has not come up with any clear solution, but suggests that "Government considers how best to ensure that ownership of premium content cannot be used to undermine broadband competition. This could include providing the ACCC with the power to investigate and impose access rules to address any concerns."