AN ATTEMPT by Foxtel to offer extra services over the internet exclusively to Telstra customers has angered smaller internet providers, who argue the plan will harm competition and short-change consumers.
By the end of the year Foxtel is hoping to expand its iQ service, which allows customers to access programs on demand, so that it streams content from the internet rather than relying on the hard-drive attached to a viewer's television.
But it wants the new service to be available only to those customers who have a Telstra BigPond internet account, as part of a commercial arrangement between the two media companies. Telstra owns 50 per cent of Foxtel while the remainder is split between News Ltd and Consolidated Media Holdings.
The arrangement, considered "third line forcing" under competition law because consumers will need to buy the Telstra internet service in order to get full benefit from the Foxtel connection, requires the consent of the Australian Competition and Consumer Commission.
In justifying the proposed exclusive arrangement with Telstra, Foxtel argues it would lead to an increase in consumer choice for program content and would result in no download charges for users because of Telstra's agreement to make the service unmetered.
It also argues there is now a competitive market for internet television, citing the example of the fledgling Fetch TV, which is expected to soon bid for the right to sporting events and other programs.
"An (internet service provider) other than Telstra can easily acquire video on demand content rights on a competitive basis," Foxtel said in its application.
But the application is being vigorously opposed by the Competitive Carriers' Coalition, which represents smaller telcos, who describe it as a "brazen example" of how the existing industry structure is failing consumers.
"There is no technical reason why Foxtel could not make this offer available to the customers of any broadband provider," the coalition's spokesman David Forman said. "In fact, it should be in Foxtel's interests to open the offer to customers of all broadband providers."
The group argued that the application was a further reason for the Senate to pass telecommunications reform legislation that would split Telstra's wholesale and retail arms and beef up the powers of the ACCC.
Telstra and Foxtel declined to comment on the issue.
The competition watchdog is accepting submissions until June 18, with a decision due by August.
Frequently Asked Questions about this Article…
What is the Foxtel–Telstra deal proposing for internet streaming services?
Foxtel plans to expand its iQ internet streaming service so content is streamed over the internet rather than from a hard drive, but it wants the new service to be available only to customers with a Telstra BigPond internet account as part of a commercial arrangement between the two companies.
Why are smaller telcos and the Competitive Carriers' Coalition opposing the Foxtel–Telstra exclusive arrangement?
Smaller telcos say the arrangement will harm competition and short‑change consumers. The Competitive Carriers' Coalition describes the proposal as a “brazen example” of industry structure failing consumers and argues there is no technical reason Foxtel couldn't offer the service to customers of any broadband provider.
What does 'third line forcing' mean and how does it apply to the Foxtel–Telstra proposal?
Third line forcing is when consumers must buy one product (Telstra internet) to get the full benefit of another (Foxtel streaming). Because the Foxtel offer would be limited to Telstra BigPond customers, it is considered third line forcing under competition law and requires the consent of the Australian Competition and Consumer Commission (ACCC).
How does Foxtel justify offering the streaming service exclusively to Telstra customers?
Foxtel argues the exclusive arrangement would increase consumer choice for program content and that Telstra has agreed to make the service unmetered, meaning users would face no download charges. Foxtel also points to emerging competition in internet TV, citing services like Fetch TV, and says other internet providers can acquire video‑on‑demand rights competitively.
What ownership ties exist between Telstra and Foxtel that are relevant to the deal?
Telstra owns 50% of Foxtel. The remainder of Foxtel is split between News Ltd and Consolidated Media Holdings, which is why the commercial arrangement between Foxtel and Telstra is notable from a competition perspective.
What regulatory steps are being taken and what is the ACCC's role in the Foxtel–Telstra application?
Because the proposal is considered third line forcing, it requires ACCC approval. The competition watchdog was accepting submissions on the application until June 18, with a decision due by August, according to the article.
What political or legislative changes are smaller carriers seeking in response to the Foxtel–Telstra proposal?
The Competitive Carriers' Coalition urged the Senate to pass telecommunications reform that would split Telstra's wholesale and retail arms and strengthen the powers of the ACCC, using the application as further justification for those reforms.
How have Telstra and Foxtel responded publicly to criticism about the exclusive streaming deal?
According to the article, both Telstra and Foxtel declined to comment on the issue.
Call 1300 880 160
Start a chat
Schedule a call
