ACCC should act on Austar/Foxtel: Optus

Optus chief executive Paul O'Sullivan has requested the nation's competition regulator intervene in the proposed $1.9 billion merger of pay TV giants Austar and Foxtel.

Optus chief executive Paul O'Sullivan has requested the nation's competition regulator intervene in the proposed $1.9 billion merger of pay TV giants Austar and Foxtel.

O'Sullivan repeated his earlier warnings that the next battlefield for Australia's telecommunications sector in a National Broadband Network world would be "open access" to content and applications.

Foxtel and Austar revealed the merger plans last week to coincide with Austar's annual general meeting. Foxtel (a joint venture between Telstra and Consolidated Media Holdings) said if the merger went ahead, it would create a new media titan in Australia, with over 2500 full-time equivalent employees and anticipated revenues of $2.8 billion.

The news comes as Foxtel and Telstra have been deepening their ties over the past several years, with content from the pay TV operator's stable making its way onto both Telstra's T-Box set-top box and the mobile phones on its Next G network. Typically to access the content, customers need to be using Telstra's network services; although Foxtel has also opened up some content more broadly through its partnership with Microsoft's Xbox platform.

Speaking at the CeBIT trade show and conference series in Sydney this morning, O'Sullivan said he applauded the way that Communications Minister Stephen Conroy was reforming the telecommunications sector; especially the Labor stalwart's vision for the operational separation of Telstra and his setting up of the National Broadband Network Company as a wholesale-only concern.

"He has been the most reformist of ministers since de-regulation," the Optus chief said, referring to the landmark 1997 reforms pushed through by the then-Howard Government.

However, O'Sullivan said, it was time for "a far more rigorous debate in Australia about how we ensure there is a level playing field in competition for applications and content".

The Optus supremo said there was "a real threat" that Australia would allow "those with deep pockets" to tie up content and applications to create new walled gardens, fuelling new content monopolies that would restrict the flow of information and entertainment.

Countries like the UK, France, Italy and Spain had started looking at these areas of regulation, O'Sullivan said, adding that even Optus' parent SingTel was subject to similar restrictions in its home country of Singapore. The Optus chief said that as the incoming wave of fourth-generation mobile networks was constructed, network investment needed to be supported with a corresponding "investment in regulation".

"We are particularly concerned that the proposed merger of Foxtel and Austar will create a competitive barrier to block open access to content," he said, stating that the Australian Competition and Consumer Commission must mandate "content-sharing provisions", which would cover news and entertainment content, as well as sport and applications.

It's not the first time O'Sullivan has warned publicly of the dangers of ignoring content and applications regulation.

In early March this year, the executive warned device manufacturers like Apple were "trying to create closed ecosystems", while other companies like Google and eBay had achieved a "winner take all" dominance over the internet.