Optus boss Paul O Sullivan has said that content, in particular entertainment content, is critical in an NBN world. However he has warned Hollywood not to “just play with the people who have the money” which appeared to be a veiled reference to Telstra who he said is set to “bulk purchase the market”.Speaking at the Kickstart Conference on the Gold Coast, O Sullivan said that the $11 billion which NBN Co will pay Telstra to access their ducts and networks will distort the market in the first year allowing them to “bulk purchase content market share in the new fibre world”.
In a later interview with SmartHouse he refused to say whether or not Optus was set to cut a deal with Fetch TV after earlier speculation that Optus had rejected a relationship with Malaysian owned Fetch TV.
He said that while there was a role for content aggregators in Australia, he claimed that consumers using the NBN in the future will search out content from around the world and not necessarily via an “aggregator like Telstra”.
He admitted that Optus is set to re-enter the content world after getting out of pay TV some years. “This time we have to get it right” he said.
He said that content customers in the future will base their decisions on “the quality of service and carriage as opposed to the person who is throwing the biggest amount of money around,” he said.
When it was pointed out to him that Telstra already had 120,000 customers for their BigPond Movie and Telstra T Box service he indicated that these numbers were “masked” and included people who were buying data and were already Telstra broadband customers.
“I believe that a lot of Telstra’s T Box numbers may or may not be new. They are people who already had a contract with the company. This gave Telstra a big “leg up” over the likes of TiVo.
Last month TiVo, who only managed to deliver 78,000 customers in three years before the Seven Network pulled the plug on the service, was at one stage seen as a competitor to Telstra’s T Box service.
“People need to understand Telstra’s strategy with T Box. It is a defensive strategy and what they are trying to do is protect Foxtel of which they have a major share and their broadband base from other players.” He said.
“Optus has a million broadband customers and we are a threat. When we launch our content service we have to make sure that there is a big enough market for us to launch into. We have to make sure that consumers can view content” he said.
“The NBN is going to be a massive pipeline for video and content. We have to resolve our carriage and content issues and no one should lock up content with one carrier. What we are opposed to is people locking up movies or a particular sporting event with one big carrier who has the money. This makes it very difficult for anyone else”. He said.
“The challenge for anyone in the content aggregation market is going to be based around whether they believe they have such good content that consumers will pay for it, and that is going to be difficult for some aggregators” he added.
Prior to the interview with SmartHouse O Sullivan took a major swipe at Telstra and the running of the NBN.
He called for the complete outsourcing of the NBN Co management on a recurring basis. He also said that the NBN could become another Telstra “Monopoly”.
He said “The operations of the NBN itself should be put out to competitive tender sooner rather than later”. Organisations need to compete to run the NBN Co for periods that could be three to five to seven years” he said”.
He claimed that this would subject the NBN Co to what he described as “market pressures”.
He also called for an independent oversight body to be set up to regulate NBN Co. These organisations should not have links to the Federal Government or Telstra.
He compared the sort of oversight body he was proposing to the Reserve Bank which he said operated outside of Government.
In a stab at Telstra he said that when the contract between the NBN Co and Telstra is finalised “Telstra shareholders should have the right to sign off on that deal and so should all Australians,” he said.