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That’s according to iiNet regulatory chief who is fearing the $2bn merger between Foxtel and Austar will spell the death knell for IPTV.

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In a submission to the competition watchdog, the ACCC, Steve Dalby said his telco has “serious concerns” about the deal as it will endanger competition and hand the enlarged Pay TV giant “entrenched market power” in TV and telcoms markets.

“iiNet has serious concerns that that entrenched and unreasonable market power in the hands of Foxtel and its majority shareholder, Telstra, will soon be applied to both subscription television and regional telecommunications, ” it said in its submission to ACCC.

Earlier this month the Australian Consumer and Competition Commission (ACCC) called a halt to the $2bn proposed merger, citing concerns about the market supply of content on subscription TV, broadband and telephone services in regional areas, for non Foxtel players.

The ACCC fear the giant would be able to outbid rivals for IPTV content, although Foxtel have since given a series of undertakings to the watchdog, prevented from entering into exclusive IPTV rights  for channels including Sky News and ESPN, unless another bidder wishes to do so.

However, sports content, which Telstra and Foxtel already have exclusive rights to was not including in the undertakings by Foxtel.

“The proposed undertaking will have little (if any) meaningful effect on the market for the acquisition of compelling content in the event that the merger is allowed to go ahead,” iiNet’s 16 page submission also states, which is co signed by Peter Lee
General Manager, Strategy, Wholesale & Regulatory Affairs.

The proposed meger between regional player Austar and Foxtel announced less than one year ago, if approved, would give the giant 97% of subscription TV services in Oz.

Pay TV giant Foxtel is 50% owned by Telstra and a merger between regional player Austar could threaten rival services including iiNet’s IPTV service FetchTV, as well as Optus MeTV and other similar services which have recently entered the market.

“The merger would allow Telstra access to (as well as a 50% share of) a national subscription television offering with exclusive access to all the content that drives subscriber growth,” iiNet warns.

Read: Why ACCC Fears Foxtel

“Given the emerging subscription TV competition is not yet at significant scale, a merger without appropriate undertakings is extremely threatening to that nascent competition.”

The Perth based ISP believes the best way to support a competitive subscription TV market is placing “obligations on content owners to provide broad wholesale access” citing similar practices in the UK.

 

Foxtel CEO Richard Freudenstein appeared quietly confident the merger would go ahead as planned, speaking at Astra Pay TV conference in Sydney yesterday as did Austar Chief John Porter, although admitted it will be a sad day for the 17 year old regional Pay TV player, when it absorbed by the bigger company.

“The industry is on the cusp of major changes regarding consumer behaviour, and the Foxtel/Austar merger,” he said, acknowledging a scenario may arise where the deal may not be approved.

The ACCC are due to give their verdict on March 29 next.

“We had a strong partnership with Foxtel in 2002…the completion of [the merger] allows the relationship become complete,” said Austar CEO.

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