Foxtel deal puts onus on Telstra

PAY-TV group Foxtel will make more of its services available to independent pay-TV channels after yesterday reaching a landmark agreement with the competition regulator that lands a blow against Foxtel's 50 per cent owner, Telstra.

PAY-TV group Foxtel will make more of its services available to independent pay-TV channels after yesterday reaching a landmark agreement with the competition regulator that lands a blow against Foxtel's 50 per cent owner, Telstra.

The Australian Competition and Consumer Commission has accepted its first final undertaking on telecommunications infrastructure access terms and conditions since it was given that power in 2003.

Failure to agree to a similar undertaking with the ACCC was cited by Telstra as the reason for ditching plans for a $4 billion fibre-to-the-node (FTTN) network, even though it would have delivered super-fast broadband internet access across Australia.

Only this week Publishing & Broadcasting chairman James Packer urged the federal Government to use regulation to encourage Telstra to develop a high-speed broadband network.

But Telstra has always cited the lack of a final undertaking and the length of the undertaking process as evidence the ACCC's pre-approval process does not work.

In the case of the FTTN, Telstra was seeking an undertaking which would have set the price, terms and conditions which would have been used by its rivals to access the FTTN network.

The ACCC originally agreed to an access undertaking with Foxtel in 2003, but that was appealed by the Seven Network to the Australian Competition Tribunal.

The appeal succeeded, and Foxtel was required to enhance the undertaking.

That undertaking, accepted yesterday, ensures independent channels are also given access to Foxtel's interactive services and electronic program guide.

ACCC commissioner Ed Willett said the ACCC had begun similar negotiations with Telstra on the FTTN early last year.

"This demonstrates that if we had started that whole process with a reasonable access undertaking from Telstra, then by now we would be well down the track," he said.

"If it (the undertaking) was genuinely reasonable we could deal with it quickly, which is what this matter has demonstrated."

But Telstra spokesman Rod Bruem maintains the process remains flawed, as even this undertaking could be appealed, meaning rivals could seek access on uneconomic terms.

"In the case of Telstra's plans to invest more than $4 billion on a new broadband network, the risk is too great," he said.

Mr Willett confirmed parties had 21 days to appeal to the Australian Competition Tribunal, but said all regulatory systems required appeal processes.

While Seven appealed the last ACCC-Foxtel undertaking, it would not confirm yesterday if it would appeal the latest ruling.

"Today's decision reaffirms the position of Foxtel as the gatekeeper for all pay-TV services into Australian homes, whether through Foxtel or its de facto provider, Optus," spokesman Simon Francis said.

"Seven will continue to explore every avenue to deliver competition in subscription TV services in Australia."

But a Foxtel spokesman said there was nothing in the new undertaking to stop Seven starting a pay-TV channel and gaining access to Foxtel. Foxtel's original access undertaking was given as part of its decision to invest $600million to upgrade to digital technology in 2002.

It proceeded with its investment even though the access undertaking was not finally agreed.

It was also a condition the ACCC placed on its approval of Foxtel's content-sharing agreement with Optus.

Foxtel chief Kim Williams said the new undertaking gave third-party pay-TV channels access to Foxtel's customers on fair terms.

"We are pleased the ACCC has accepted Foxtel's special access undertaking because certainty over Foxtel's pricing methodology and access terms and conditions is critical to our future," he said.