Broadband bundles in triple play
Foxtel will start selling retail broadband and telephone services for the first time next year after signing a commercial deal with one of its parent companies, Telstra.
After years of speculation, Foxtel confirmed on Monday it would soon become a wholesale customer selling broadband over Telstra's ADSL copper wire network and fibre-optic cables where NBN services were available.
Foxtel cannot sell broadband over Telstra's hybrid-fibre coaxial [HFC] cable network even though it delivers subscription television over this cable, because it was not available to any other wholesale customers and Foxtel must acquire broadband on the same terms as other wholesalers, a spokesman said. Customers outside the HFC footprint can still access Foxtel through satellite.
"This is a transformative event for the Foxtel business," chief executive Richard Freudenstein said. "It will enable us to greatly enhance the breadth, quality and value of the services we offer to customers while opening up significant opportunities for growth. International experience demonstrates that triple play and broadband bundles have been hugely popular with consumers and have allowed operators to boost take-up of subscription TV services."
Pricing is not yet available.
Foxtel did not put the broadband and phone services out to tender but negotiated the deal with Telstra over the course of 2013, a spokesman said.
Negotiations started around the same time Rupert Murdoch's News Corporation increased its stake in Foxtel from 25 per cent to 50 per cent in late 2012 through the purchase of Consolidated Media, and after Telstra chief executive David Thodey said he would have no problem with Foxtel competing for internet and phone customers.
Mr Freudenstein previously worked at another of Mr Murdoch's companies, BSkyB, in Britain.
Foxtel's so-called triple play could be a threat to Telstra's retail customer base. Rather than buying Foxtel services as an add-on to a Telstra internet and phone package, consumers would be able to access services through Foxtel without having any direct relationship with Telstra.
InvestSMART FORUM: Come and meet the team
We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.
Want access to our latest research and new buy ideas?
Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.Sign up for free