As Telstra starts to roll out their new BigPond Movies service, which is linked to a broadband package, their rivals have started to moan to the Australian Competition and Consumer Commission.
The competitors, whose recent lobbying of the Federal Government over the National Broadband Network deal with Telstra fell on deaf ears, now want the ACCC to step in and take action against the national broadband carrier despite the fact that Telstra costs are higher than their own.
The rivals have accused Telstra of using anti-competitive practices to poach their clients.
In submissions lodged with the Australian Competition and Consumer Commission, the rivals, who include iiNet, which recently launched their Fetch TV offering, and Optus, claim that a recent deal which offers Foxtel content exclusively to Telstra’s broadband customers, was a blatant attempt by Telstra to exploit its Foxtel interest in order to protect its broadband market share.
According to the Sydney Morning Herald, the Optus submission said: ”Optus forecasts that it will lose existing and future customers, since consumers who wish to purchase Foxtel’s proposed service will have no choice but to purchase broadband services from Telstra. This proposal should be seen as a thin end of the wedge for Telstra’s ability to use its control of content to establish a broadband monopoly.”
ISP providers’ iiNet, Internode and Adam Internet, all members of the coalition that lobbied against an NBN Co deal with Telstra have surprisingly submitted similar claims. Their submission says: ”Our clients have no doubt that Telstra’s intention is to encourage Foxtel customers that are connected to other ISPs to churn to BigPond on the basis that they will be able to download Foxtel content,” said the submission, prepared by Herbert Geer.
The Sydney Morning Herald claims sensitivities over the issue have been heightened by the recent peace pact between the government and Telstra. Under the pact, it would receive $11 billion in benefits in return for co-operating with the build of a $43 billion national broadband network.
Retaining market share before migration to the network will be critical for all companies, and Telstra is playing catch-up.
Recent reports show that Telstra who have stuck with their premium pricing policy for their BigPond offering have steadily lost market share in mobile and broadband to rival providers. However insiders are tipping major price cuts in the cost of Telstra services, as the carriers try to build their customer base prior to the roll out of the NBN.
It is also tipped that Telstra is working on several new services such as home and business security monitoring and new digital home services.
Telstra says that the deal to offer Foxtel content exclusively to its broadband subscribers was ”conducted at arm’s length” and has nothing to do with the telco’s 50 per cent stake in the pay TV provider.
The SMH said that in its submission to the ACCC, Telstra said only a ”small proportion” of customers who can potentially gain access to the service are not at present with Telstra, making it ”unlikely that there could be any material impact on competition”.
Telstra and Foxtel both said other broadband providers could gain access to content similar to what will be offered under their exclusive agreement.
The Geer submission emphasised that ”premium sports and new release programming” is driving the demand for pay TV services, and not ”last year’s movies or re-runs of TV shows”. ”This premium content is largely already sewn up in exclusive agreements by Foxtel and Telstra.”
