Foxtel Telstra Content Monopoly Now In The Making

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COMMENT: When Foxtel wanted to announce their recent Olympics package they deliberately chose media partners like News Ltd and NineMSN along with key marketing media as opposed to technology and lifestyle media.

When Foxtel wanted to announce their recent Olympics package they deliberately chose partners like News Ltd and NineMSN along with key marketing media as opposed to technology and lifestyle media.

The move was deliberate, as they are desperate to not only raise marketing and advertising dollars to fund their upcoming Winter Olympic coverage, but introduce additional revenue raising by trying to charge Australians to watch a sport that will feature very few Australians.

Instead Australians will be asked to spend $50 on top of their monthly Foxtel fee to pay to watch a bunch of Swiss, Austrian, Canadian and Italian nations speed down a hill in a series of Winter Olympic events.
While this will not appeal to most rugby and cricket fans Foxtel is hoping it will appeal to a niche market of skiers and boarders, and if it works Foxtel will have a model that will result in Australians being charged to watch Football, Rugby, Cricket and in fact any event that they can pump across their network in the future.

In other words this is a real acid test for Foxtel which is a lucrative monopoly 50% owned by Telstra.

They have access to Telstra databases and in October they will launch Powerline technology, including an extender that will allow PC’s and other devices to be connected to the Telstra/Foxtel network so that content over an IP network can be delivered into Australian homes.

The plan is to charge Australians for access to movies, sporting events and a host of other content that in the past has been free.

 

A key player in this space is Cisco who currently makes 60% of the set top boxes sold in the US market. They are also a big player and early developer of Powerline technology under the Home Plug alliance.
 Currently Telstra is doing a lot of development work in an effort to deliver content into homes along with Foxtel. They want to sell home security over the network, content, broadband, music as well as a shopping capability.
Currently there is no competition for Foxtel and coupled with Telstra’s databases, billing system and technical clout Australians could be in for a rough ride.

What Foxtel is now lobbying for is basic deregulation of the current regulations relating to big sporting and entertainment events. Currently these have to be offered to free to air TV stations first and if not taken up Foxtel can then bid for the rights.

However if the market is deregulated and restrictions on the use of content are removed Foxtel will move in and bid big for the TV rights. Once they have this they will be able to charge massive fees for events like World Cup Rugby, Soccer and even Rugby League.

By having a monopoly coupled with a billing system and a content network Foxtel could well starve millions of Australians of being able to watch their favourite sport. And if you are thinking of going down to the local pub to watch the event, expect to be charged for the privilege.

Currently several Cinema Chains in Australia are installing digital projectors from the likes of Sony. This will allow them to show live “charged for” sporting events from the Foxtel network in their cinemas.
Foxtel and Telstra will also charge you to watch content on a mobile phone, or a new OLED display tablet linked to a NextG network, that by next year will be running at 100mbs. And this is before we have a new National Broadband Network that could well cost consumers up to $100 a month.

 

So should Foxtel and Telstra be allowed to grow Foxtel into a monopoly? And should they be forced to spilt Foxtel out as part of the Telstra retail separation that so many people are calling for?


Come October Foxtel will move into the world of IP content where consumers will use the internet to view Foxtel content. In the future a show like Desperate Housewives or Underbelly could well be owned by Foxtel with consumers having no option but to pay $5.99 an episode.

And if only 500,000 people watch the show compared to the millions that now watch it on free to air TV. Foxtel will have netted $2.9 million for the hour and that’s before they have sold one single advertisement.   

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