IPTV services and the delivery of content to TVs is the future for broadband suppliers like iiNet who today acquired AAPT claims the CEO of Fetch TV Scott Lorson.
A former senior executive at Optus and later Consolidated Press Holdings, Lorson claims that broadband sales have peaked in Australia and that most ISPs, including Telstra, are now managing “churn” while implementing new content strategies in an effort to lure customers to their network.
Fetch TV, who is a manufacturer of set top boxes and content aggregator, is 40 per cent owned by Malaysian company Astro All Asia Networks. They already have a relationship with Perth-based iiNet to deliver entertainment content and services which Lorson claims will deliver for Fetch a significantly bigger audience after iiNet’s acquisition of AAPT from Telecom New Zealand last week.
The acquisition will give iiNet approximately 113,000 additional broadband subscribers and over 251,000 data service customers. Added to iiNet’s existing broadband subscriber base of 652,000, the acquisition will see the company marketing their Fetch TV content service to more than 1,326,000 consumers.
IiNet chief technology officer Greg Bader said its partnership with FetchTV was part of a strategy “to disrupt” and reduce customer churn. He said Telstra and its $299 T-Box, launched last month, was his competition.
Lorson whose service is delivered via multicasting over a broadband network with content stored on a set top box in a home vs the Telstra model which is on demand, claims that Fetch TV is delivering a significantly superior service in Australia than his competitors.
“We can actually deliver a Full HD experience, we have better picture quality and faster delivery than our competitors” he said.
“We have a superior set top box with three tuners, a Broadcom Chipset, 1TB of storage and 512K of RAM. We are more PC than a lot of our competitors,” he added.
Currently iiNet is charging consumer a $99 set up fee and $29 a month to get access to the Fetch TV service, which Lorson claims will give consumers access to content from some of the biggest movie studios in the world including Paramount, Universal, Disney, Warner, Hopscotch and two additional studios who have just signed onto the Fetch TV service.
“ISPs have nowhere else to go, the broadband market has peaked, and to grow ISPs have to deliver new services like content,” he said.
Among those that are under pressure is Optus who late last month refused to discuss their content options during the introduction of a new fast Wireless broadband service on Telstra.
Also coming under pressure is Foxtel partner Austar, who last week reported a 42 per cent drop in first-half profit to $20.7 million, with its bottom line hurt by a ”challenging subscriber environment”.
For the six months to June 30 Austar added 3389 customers, less than half the number expected, and customer churn increased despite the introduction of the MyStar digital video recorder.
Lorson also believes that Foxtel and Austar will come under pressure as ISPs move to new content, data and mobile and IP based phone services. He claims that current contracts between Foxtel and Telstra restrict Foxtel from selling broadband or mobile phone services in Australia, a move that will restrict their growth going forward unless the contract is changed.
He pointed out that Sky in the UK, which is a similar organisation to Foxtel, is a major supplier of broadband services.
“Their service (Foxtel) is seen as being expensive despite having exclusive access to sporting content. As more operators come into the market consumers are going to assess the cost of service vs the content offering. Content is set to be a key decider,” said Lorson.
“We are not going to compete directly with Foxtel who already have 30 per cent of the market. We are working with ISPs to deliver a low cost network of good content,” he added.
During the next few weeks Fetch TV is expected to announce several new ISP partners. Lorson has admitted that he has held talks with Optus.
Another area targeted by Fetch TV is foreign language TV (see separate story). “This will be big for us,” said Lorson.
He admitted that his Malaysian backer had given him the green light to bid aggressively for content and sports rights with Fetch TV bank rolling any deals in partnership with ISPs.
In a direct reference to sporting content spanning AFL, NRL and ARU which is currently out for tender, Lorson said: “If our partners want us to go after sporting content we are in an excellent position to do so both locally and at an International level. This decision is up to our ISP partners”.
FetchTV currently offers 15 channels, including CNBC Australia, BBC World News and MTV, as well as five video-on-demand and internet applications such as Facebook and Twitter.
