The Australian Competition and Consumer Commission today announced it will not intervene at this stage to block a proposal by Telstra to 'bundle' pay TV and telecommunications services under certain conditions.
The decision means Telstra Pay TV (a wholly owned subsidiary of Telstra Corporation) can offer Foxtel pay TV services at a discount to retail residential customers who also buy telecommunications services from Telstra Corporation.
Telstra already offers discounts to customers who bundle fixed line telephony services with additional services, including mobile and Internet, under its Rewards Options program. The Foxtel pay TV services will be added to this program. Discounts will remain at their present levels.
ACCC Chairman, Professor Allan Fels, said the ACCC had concluded the overall public benefits of allowing Telstra to proceed with the proposed bundling arrangements were likely to outweigh any public detriment.
"In reaching its decision, the ACCC analysed the likely effect of the proposed conduct on the markets for pay TV services and the markets for various telecommunications services", Professor Fels said.
"Consumers should benefit from increased choice in bundled offerings of pay TV and telephony services, with further benefits arising through Telstra's discounting strategy and the convenience of getting multiple services on a single bill.
"The public interest is also served as the increase in competition arising from Telstra bundling its services is likely to increase the penetration rates of pay TV. However, the ACCC recognises that any competitive benefits of Telstra entering the market are partly mitigated by Telstra's 50 per cent equity interest in Foxtel, its major competitor in pay TV".
Professor Fels said the majority of market participants consulted about the proposed bundling did not believe the public benefits arising from the proposed conduct outweighed the public detriment.
"While the ACCC gave these comments serious consideration, many of the concerns related to fears that Telstra would set wholesale prices at a level that would squeeze 'single service' providers that rely on the Telstra network out of the market.
"However, the ACCC's analysis of Telstra's proposed pricing does not indicate a price squeeze based upon information provided to the ACCC".
Professor Fels noted the market inquiries had revealed concerns about bundling generally, in terms of its impact on both consumers and industry. The ACCC's decision in this matter is confined solely to the bundling conduct in this proposal.