Austar, Foxtel deal may create monopoly

Summary:The merger of Foxtel and Austar will give Telstra an unfair advantage in the telecommunications market and set the company up to monopolise the subscription television market, according to the Australian Competition and Consumer Commission (ACCC).

The merger of Foxtel and Austar will give Telstra an unfair advantage in the telecommunications market and set the company up to monopolise the subscription television market, according to the Australian Competition and Consumer Commission (ACCC).

In a Statement of Issues (PDF) released today, the ACCC said that if the proposed $2.5 billion merger goes ahead, Telstra would be able to use its 50 per cent shareholding in Foxtel to gain an unfair advantage in the telecommunications market by providing bundled content services that other providers could not. It noted that Telstra is already supplying Foxtel services as part of telecommunications bundles.

Telecommunications providers and internet service providers (ISPs) have previously indicated that being able to provide bundled services such as fixed voice, broadband internet, and television would be an important issue as the National Broadband Network (NBN) is rolled out.

Optus is one provider that has already voiced its concerns, with its general manager of regulatory affairs Andrew Sheridan previously stating that the merger may have adverse implications for competition on the NBN, and asking the ACCC to investigate.

The ACCC seems to have taken these concerns into account, with its statement of issues saying that "other telecommunications providers and ISPs are concerned that because they lack corporate or commercial links to subscription television providers of substantial scale, they will be at a disadvantage relative to Telstra in being able to provide consumers with a bundle of services".

At the moment, Austar and Foxtel are the two largest subscription television providers in Australia. The ACCC indicated that the merger would essentially create a monopoly in the subscription television market and increase the barrier to entry for prospective competitors. Additionally, it would diminish any competing power that smaller providers may have, by using its clout to establish exclusivity to content.

Austar has noted the ACCC's statement, and has said that although it remains committed to effecting the merger, it will continue to work with the Commission and other relevant authorities and regulators to resolve these issues.

Topics: NBN, Broadband, Government, Government : AU, Telcos, Telstra

About

A Sydney, Australia-based journalist, Michael Lee covers a gamut of news in the technology space including information security, state Government initiatives, and local startups.

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