Conspiracy theories and wild speculation aside, the idea that Rupert would be worried about the fibre NBN damaging his Foxtel business would have to be given some potential for truth.
At the moment Foxtel controls the delivery mechanism (HFC) and also controls the content through license deals with the providers. Given Foxtel is the only one that is really able to deliver that content, it means the content providers don’t really have a lot of choice who they distribute through.
The argument against this being a concern for Foxtel is that the NBN would actually help them because then they can use it to distribute content to even more people where HFC isn’t available. While this is true, it leaves out one very important point.
Foxtel will no longer be the only means of distribution.
Once a ubiquitous NBN is available on an open platform, content providers would have the option to go “direct” to the consumers. If they are not in a position to do so then opportunities exist for new content aggregators to license that content and distribute themselves. Thinking large ISP’s would be likely candidates here as they already have infrastructure and knowledge in content delivery.
So while an NBN would provide Foxtel with more customers, once existing content license deals ended they would face a lot more competition.
Malcolm Turnbulls argument that a FTTN NBN would be a bigger problem because it will be rolled out faster is actually a bigger joke. As Malcolm has said, he won’t overbuild HFC where it already exists as he figures people who need high-speed internet can already have it through that HFC. Technical limitations aside, he is basically gifting Foxtel an extended “lock-in” option for customers as they won’t have any other options.
In areas where the FTTN is deployed, Foxtel would likely benefit from the extended potential customer base… so what about Malcolm’s claim that they would be more worried?
Rubbish. It comes back to the fact that areas with HFC will still only be serviced by Foxtel. Areas with FTTN will also be serviced by Foxtel. Any other providers that wanted to license and distribute content will be limited to doing so only in those areas where FTTN is deployed. Guess which areas don’t already have HFC? The ones that were not considered profitable enough.
So, as a content provider, are you going to license your content to someone who can only distribute to a small limited group of customers, or the one who has the greatest reach? Which one of those distribution providers is most likely to be able to have the money to pay the best?
OK, so even if people are on HFC, they can still get content from anywhere on the Internet even if it isn’t provided by Foxtel. Sure. Will Foxtel have a problem with this? Probably not. They will still be getting paid for your internet subscription on the cable, and they will be able to do all sorts of wonderful deals with download quotas and traffic shaping and bundling that will make their own offering more appealing than going outside their network.
Under the Coalition, any FTTN that is built will be sold (if it isn’t “gifted” beforehand), and Telstra is likely the only company that would have the money to buy it, and the means to look after it. So after the government has spent all our money building the FTTN, Foxtel is in a round-about way going to inherit it anyway.
So, is Foxtel worried about a fibre NBN? I can’t see how they wouldn’t be.