Cable TV operator Foxtel has asked the nation’s competition regulator to let it provide what appears to be a new internet video service through its iQ and iQ2 set-top boxes on the condition that customers have a broadband connection with its part-owner Telstra.

Foxtel has long had partnerships with Telstra – the company is 50 percent owned by the telco, with 25 percent each being owned by News Corporation and Consolidated Media Holdings. The payTV service’s digital video services are delivered over Telstra’s HFC cable network, as well as over satellite services and via Telstra’s Next G mobile network. But Foxtel has also long had a content sharing arrangement with rival payTV provider Optus.

In a submission to the Australian Competition and Consumer Commission this week, Foxtel asked for permission to provide “a wide variety of content such as movies and television programs from a content delivery network” that would be delivered to subscribers iQ boxes through a Telstra broadband connection.

“Foxtel will only make the proposed service available to persons who have a Telstra BigPond broadband connection,” Foxtel stated, noting that the condition may breach the Trade Practices Act, which — in plain English — prohibits one company from requiring a customer have a relationship with another company before selling them a service.

It is possible that Foxtel wants to supply the content — such as BigPond TV and BigPond Movies — that Telstra will shortly launch to its own customers through its T-Box set-top box. Telstra will only retail the T-Box to its own broadband customers – although the content will also be made available to those with certain brands of televisions which support internet video.

One key stipulation of the deal between Telstra and Foxtel is that those who take up the offer — if the ACCC gives it the go-ahead – will not be charged for data downloads from Telstra’s network for use of the content. This, also, is a feature of the Telstra T-box.

In its submission, Foxtel noted that the current market for the supply of audiovisual content was “highly competitive”.

It noted, for example, that customers could already watch free to air television (including online episodes known as ‘catch-up TV’), DVDs, online video services offered through the TiVo and Apple TV platforms, online video services offered through iTunes, YouTube and the ABC’s iView application, and subscribe to other payTV offerings from rival providers Austar, Optus and SelecTV.

Foxtel also highlighted the imminent launch by Telstra telco rival iiNet of its own internet video service through IPTV specialist FetchTV. And it even noted that online television network joint venture Hulu could come to Australia.

And Foxtel also claimed its new service would encourage competitors to offer similar internet video services to its own, so competition in the market would actually increase due to its Telstra deal.

“As noted above, FetchTV is expected to enter into the Australian market in the very near future and is currently working with iiNet and Internode in order to do so, but is expected to also enter into agreements with a coalition of other, smaller ISPs,” wrote Foxtel.

Image credit: Ry Young, royalty free

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1. Sean Kaye
   Posted 04/06/2010 at 9:14 am | Permalink | Reply

   I might be wrong, but isn’t this request just a formality? I’d read somewhere that Telstra have built their own CDN in Australia, so Foxtel’s request is to provide extra service (which makes use of that CDN) to the people who can access it – Telstra broadband customers.

   Am I missing something here? Hardly seems nefarious. Certainly nobody could think Telstra would build a CDN and open it up for their competitors to use.

   • Renai LeMay
     Posted 04/06/2010 at 9:17 am | Permalink | Reply

     I think it is contentious because Optus has a content sharing arrangement with Foxtel, and also because of the Trade Practices Act — it means that Foxtel would require people to have a contract with Telstra before they could be using a service that Foxtel would provide, which as I understand it would not normally be allowed.

     I do, however, believe that Foxtel has a point when it says there is ample competition out there. There are about a bajillion ways you can get audiovisual content to your house, I don’t see why Telstra should have to provide this to everyone. Of course, it would be great for customers if they did.

     • Sean Kaye
       Posted 04/06/2010 at 9:37 am | Permalink | Reply

       The reference you make to the TPA is called “third line forcing” and because Telstra own 50% of Foxtel I dont’t think it applies. I’m not an expert in TPA, but that’s my simple understanding.

       Secondly, I doubt Foxtel would propose a deal that breached another contract. I bet the Optus deal covers traditional services only over cable and satellite. Mind you, I’m just guessing. Look at the Xbox deal, it’s only really open to people who have an Xbox.

       Finally, I still think it is just mechanics. Foxtel are providing a “new service” and because of their market dominance along with Telstra’s it is probably not a bad idea to get the view of the ACCC or it could be part of some pre-existing covenant.

2. yellek
   Posted 04/06/2010 at 1:16 pm | Permalink | Reply

   The issue here is not so much one of the trade practices act but the creation of separate “internets” for the purposes of consuming content. If you want the Foxtel content you need to be on the “Telstra internet” and not on another internet. This is creating a walled garden which, taken to it’s logical extreme, will fragment the internet as we know it and take us back to the days of Compuserve and AOL.

   Really are Telstra broadband services that uncompetitive that they need to offer exclusive content to incent people to become customers?

3. Darryl Adams
   Posted 05/06/2010 at 8:25 am | Permalink | Reply

   This shits me because I would pay for this service, but I use iiNet.

   While we are a foxtel subscriber, I do not watch much of it as we only have one box, and the rest of the house does not appreciate my scifi and hitler channel obsession. IPTV would scratch my itch, but the old media wants to protect its market. If you make your content vendor neutral, you gain more marketshare.

   This is what the ACCC was created for, to prevent monopoly moves like this

4. Jim
   Posted 20/09/2010 at 7:11 pm | Permalink | Reply

   I would object against the idea that i would be reqd to sign up with Telstra to get the full foxtel service, unless of course they discount the current service and offer an option which we know won’t happen……

   But in reality I already have Xbox and PS3 for movies as well as Foxtel box office so who cares about Tbox…..

5. Pete
   Posted 09/02/2011 at 2:12 pm | Permalink | Reply

   Price?