Why the NBN probably won’t kill Foxtel



blog If you’ve been watching the brouhaha between News Corporation and senior Labor figures such as Kevin Rudd over the past several days, you’re probably aware that there’s a theory out there that the rollout of the National Broadband Network is a massive threat to Foxtel. However, as I write today on the ABC’s The Drum site (we recommend you click here for the full article), there really isn’t a huge amount of reason right now to believe this. A sample paragraph:

“So do Foxtel executives stay up late at night worrying that the NBN will unleash a flood of rivals, all determined to eat the pay TV giant’s lunch? I’d say the company has definitely given Australia’s NBN-enabled future a great deal of thought. But right now and for the foreseeable future, there’s no grim disaster on the horizon for the bouncing baby boy birthed by News Corporation and Telstra.”

The article is part of a trio I would recommend you read on the whole Foxtel/NBN/News Corp imbroglio this week, to get a higher level of background knowledge and education on the situation — going beyond the current level of media hype and getting to the underlying fundamentals. Of course you can also check out my Delimiter 2.0 yarn (paywalled), where I argue that Murdoch and Foxtel’s management have demonstrated that they don’t want to kill the NBN, but also this extensive piece on Murdoch published by David McKnight, a professor of journalism, on The Conversation.

Image credit: Foxtel


  1. Will the NBN Kill Foxtel of course not.

    Will it allow a more level playing field causing some competition meaning Foxtel have to reduce prices Probably and this affects their bottom line.

    Telstra currently have internet rights to all AFL and NRL games which cost $89 (AFL) for a season and foxtel can not play ALL games through their IPTV service 1 Game per week of AFL is Telstra only and CAN NOT be watched on foxtel play or foxtel go!
    This is not advertised on the Foxtel Website but I found out the hard way though I would get Foxtel on Xbox to watch the AFL and only saw 2 out of 4 games.

  2. It was a good, if somewhat pessimistic, read. It sounds like the future is going to get worse for the consumer – the non-Foxtel subscribing consuner anyway.

  3. It was a good, if somewhat pessimistic, read. It sounds like the future is going to get worse for the consumer; the non-Foxtel subscribing consuner anyway.

  4. After the election … LNP review the “nbn” … not cost effective to do it…. so don’t even proceed with their own plan … win for rupert.

  5. The only way the NBN won’t severely damage Foxtel is if large scale content exclusivity and region locking is put in place. Or, if Foxtel finally compete on price out of necessity.

  6. Will Labor’s NBN destroy FoxTel? Of course not.
    Will it ruin a perfectly good monopoly, delivering to cable TV to a small but important captive market? Obviously. How could it not? Once Labor’s NBN enters an area those homes will have access to other IPTV suppliers using multicasting.
    Let’s not forget that Turnbull has consistently stated he thinks overbuilding HFC is a bad idea because it delivers 100Mbps. P9 of his policy states he will tell NBNCo to prioritise ‘inadequately served areas’. So Murdoch’s FoxTel monopoly has little to fear from the LNP NBN because of that clearly stated priority of isolating the HFC areas from upgrade.

    It’s not just the technology, it’s also how it’s implemented.

  7. I hope MUrdoch gets help for his Paranoid personality disorder in thinking The NBN, well damaged Foxtet.

    Paranoid personality disorder (PPD) is a mental disorder characterized by paranoia and a pervasive, long-standing suspiciousness and generalized mistrust of others. Individuals with this personality disorder may be hypersensitive, easily feel slighted, and habitually relate to the world by vigilant scanning of the environment for clues or suggestions that may validate their fears or biases. Paranoid individuals are eager observers. They think they are in danger and look for signs and threats of that danger, potentially not appreciating other evidence.[1]

  8. PS So The Opposition NBN won’t damaged Foxtel? I guess when with The Opposition and MUrDoch are in each others pocket, you don’t attack each other.

  9. For some reason I can’t comment on the Drum website at the moment; I read the article and I felt you made some very good points; but reading the comments, you missed a few of the best points against your conclusion: Murdoch’s current monopolistic profits, and content partners (sports) cutting out the middle-man in an NBN world.

  10. Renai, I’m putting this comment here in the hope that you’ll actually see it. I followed the link from the Drum article, and I must say that I am dissapointed in your gross oversimplification.

    The simple fact is the FTTP NBN is a massive threat to Foxtel. You point out that a HD stream only uses 6mbit of bandwidth….. that’s great, but with the coalition’s single 25mbit connection, 2 people watching 2 different programs destroys the bandwidth for everyone else in the house that wants to use the internet.

    With the FTTP NBN, netflix, FetchTV, Foxtel and any other entrant will be able to become a RSP, providing streaming services via the NBN UNI-D port, completely seperate from the internet. And with their own wireless set top boxes and routers, they can provide a FULL HD multi-room, multi channel experience. Essentially, this means that the government is rolling out a massive cable tv network that ANYONE can use, just by paying for access. This will annihilate Foxtel’s monopoly on the market. Their cable network will be worthless, and nobody will want a dish on their roof when they’ve already got a NBN fibre connection.

    Further, this will enable more “On Demand” services, and Ala Carte channel selection, which will eat into foxtels “package deal or nothing” bottom line.

    • “a HD stream only uses 6mbit of bandwidth”

      A video stream delivered over a 6Mb/s stream may be at purported HD resolutions but it will most definitely NOT be HD.

      A DVD streams data off the disc at about 28Mb/s. This has already been highly compressed from the 1Gb/s data rate that is raw HD (1024 x 768 pixels x 24 bit colour x 50 frames/second) and artifacts are noticeable at that.

      The BBC was flooded with complaints when they dropped from 16Mb/s to 9Mb/s.

      The simple truth is that the FTTN data rate of 25Mb/s is already inadequate for DVD quality streaming and that is assuming just one user watching one channel with no other internet usage what-so-ever.

    • Did Rick do any research before replying?

      If he did, he would see there is already FetchTV provided by ISP.

      So why haven’t we seen complaints from MUrDoch and his supporters like Rick especially the claim it well destroy or damage Foxtel?

      • ummmm, I’m well aware of FetchTV. Their service is currently provided by ISP’s over the internet, so the quality of the service is bandwidth dependant. You can only watch one channel at a time, there’s no multi-room possible at all.

        With a FTTP NBN, they can become a RSP in their own right.They can compete with foxtel head to head, on the same terms.

        And try reading my post again…… there is no way in hell I’m a murdoch/abbott supporter.

  11. The FTTP provided by NBNco delivers a 2.444Mb/s stream to each and every house it is connected to.
    The reduction to plan data rates is done in the box on the wall.

    There is no reason at all why a second port could not be configured on the box to provide a 1Gb/s broadcast link for a cable tv operator. It would be very cheap, they need only buy 1Gb/s of backhaul and they would have sufficient bandwidth to provide a flood of true, BD quality movies direct to the home.

    How could Foxtel hope to compete with this?

  12. I think that a false dichotomy has been presented. Either:

    a) the FTTP NBN will kill Foxtel, or
    b) Rupert Murdoch has nothing against the NBN

    Obviously this argument is not correct.

    I also am yet to be convinced that HD television needs for Australia into the next couple of decades will really be met by FTTN. For everyone who asserts that it will only need one kilobyte per year, another will assert that it will need a terabyte per nanosecond.
    Even if we go with a hypothetically low number then we forget just how many devices are connected in a modern household.

    My own house could easily have 3,4 even 5 people wanting to consume content simultaneously, while I download a game on Steam. This need wont be met by FTTN, and while my example might seem to be an exception right now – will it be the exception in the coming decade? Probably not.

  13. The NBN won’t kill Foxtel any more than opening ADSL to competitors killed Bigpond. It will, however, kill their monopolistic pricing. Murdoch will try to protect it by any means necessary and anyone that says otherwise is either gullible or has a political interest in the outcome.

  14. Considering Foxtel is the only real revenue source left in the new News Corp Australia, It’s no wonder Rupert would be protective of how much it can make.

    Anything that effects Foxtels revenue will just bring on the demise of his beloved papers even faster…

    While a fibre NBN means Foxtel can spread it’s wings to IPTV (as it is doing currently), the fact that it also allows other companies (Quickflix, FetchTV, etc, etc) to compete directly, means Foxtel will need to consider reducing pricing/profit levels.

  15. The NBN – (in either form) – will not kill Foxtel.

    I say that in pure mathematical terms.

    Currently, since its merger with Austar, Foxtel is permitted to sell subscription television services to 100% of the Australian population.

    It does so with a combination of DTH satellite capacity it leases from Optus – (on the C1 and D3 satellites) – and the existing HFC cable network that has been around – (predominantly) – since 1995.

    If the Telstra HFC cable runs down your street, your Foxtel is delivered on that cable. If it doesn’t run down your street, they throw a satellite dish on your roof.

    If Foxtel were to switch to NBN delivery, they would only be able to do so for 93% of the population.

    Under the ALP plan, they would get 93% FTTP, and under the LNP plan they would get 22% FTTP and 71% FTTN.

    Either way, they still have to find a way to service the remaining 7% of the population, and the only way they can do that at the moment is via the existing DTH satellite service.

    Whatever happens within the 93%, they still need a different solution for the final 7%.

    Foxtel could equally do 100% coverage with the same satellite deal they have now. They could simply stop using the HFC cable, and put everyone on satellite, and their satellite costs would be the same.

    In fact, doing so would reduce their day-to-day operational costs, as they wouldn’t have to maintain the local cable headend sites to pump the channels off the satellite into the cable network in the capital cities. There would be no need for them anymore.

    Of course there would be an upfront cost to move existing cable customers over, so they’d have to weigh that up if they were to consider such a change.

    So exactly how the NBN rolls out does not necessarily have to kill Foxtel. What they do however it rolls out, is entirely up to them. Their destiny is in their own hands.

    However they choose to deliver their service is – (largely) – irrelevant to the end user. Sitting in front of your television, you don’t care if The History Channel is coming up out of the ground through a piece of coaxial cable, or being beamed at you from 36,000 kilometres in the sky.

    It looks the same.

    What Foxtel must do is recognise the market has changed.

    Before the NBN, a subscription television service like Foxtel was the only way to get this kind of content in Australia.

    Though services like Fetch TV have done a fair job of trying to capture the IPTV market over the internet, they just have the scale to have the financial clout to do the major content deals that a company like Foxtel can do.

    If you want to watch certain sports in your home, right now, Fox Sports is your only option. That’s just the way it is. If you want to watch certain niche content – (like TV shows the FTA networks don’t carry) – you have to go without, or illegally download it.

    People are starting to no longer accept that.

    When decent ubiquitous bandwidth becomes available in this country, the content providers – (who, lets be honest, get shafted on the money they get from the Foxtel’s of the world) – will start selling their individual channels, direct to people, bypassing Foxtel.

    So Foxtel need to change, or they will fail. If they fail, it will be their own fault.

    What they need to do is leverage their content deals, and sell them over the NBN. Let people pay $15.00 a month for their suite of sports channels, and their sports channels only.

    Let people pay $10.00 a month for the movie channels, or the news channels, or the general entertainment channels.

    Or charge people $1.00 a month for individual channels and make them choose a minimum of 30 channels. Or 20 channels, or whatever.

    To get all the channels I want to watch, I have to pay for a certain package that gives me dozens more channels that I never watch. So why do I have to pay for them?

    Let me choose what I want.

    Let content providers sell direct to customers. HBO would make a killing if they had their own private NBN-streamed channel in Australia.

    The network might change, but it’s their customers who’ve changed more.

    No, the NBN won’t kill Foxtel.

    Only Foxtel will kill Foxtel. It’s up to them.

    They have to adapt, just like any other business has to adapt to changes in the market.

    Cry me a fucking river Rupert.

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