blog If you were under any illusions about Telstra’s nature as a vertically integrated telecommunications monopoly being wholly intact in Australia, just case your eye over what’s happening with the ongoing attempts by Foxtel to launch its own broadband service in Australia. According to the Financial Review (we recommend you click here for the full article), Foxtel and Telstra have failed to broker a deal which would let Foxtel enter the broadband market … despite a year of talks:
“News Corporation and Telstra have been in secret negotiations to launch a Foxtel-branded broadband service for more than a year but talks are stuck on the price Telstra would charge for access to its network.”
Let’s step back from this situation for a second and look at it from a ten thousand foot view. We have a vertically integrated, former incumbent telco, which simultaneously owns Australia’s copper telecommunications network, as well as being the nation’s largest retail ISP. It has a joint venture with Australia’s dominant media empire on pay TV. Now the joint venture wants to enter the broadband market and compete with its part owner, but the part owner doesn’t want to sell it wholesale telco services at decent rates, because it would be creating a retail competitor. Meanwhile, nobody in the whole situation has bothered asking why consumers would want to buy broadband from Foxtel anyway, given they can already get broadband/telephone/pay TV deals from Telstra and Foxtel, because of the joint venture relationship.
Still with me? Do the words “market failure” ring a bell to anyone? Seriously. Sometimes Australia feels like the biggest backwater on earth, dominated by a clutch of greedy telco and media corporations fighting each other for scraps when they’re not collaborating to screw us out of equitable access to broadband and content. I mean, Telstra part-owns Foxtel, for God’s sake, and it’s not even capable of negotiating with it. You can imagine what kind of hard ball Telstra plays with actual competitors like iiNet.
Image credit: Star Trek