The Australian Competition and Consumer Commission today announced the court-enforceable undertakings proposed by Foxtel, Optus, Telstra and Austar address the ACCC's concern about the potential anti-competitive effects of the planned pay-TV arrangements between Foxtel and Optus.
The ACCC does not therefore intend to oppose the arrangements, which allow Optus and Foxtel to share pay TV programming.
The undertakings provide access to programs for pay TV operators, broader choice for consumers and access to Telstra's cable network and Foxtel's set-top boxes.
The decision follows extensive consultations between the ACCC and the industry since June, when the ACCC concluded the proposed arrangements were likely to have the effect of substantially lessening competition in a number of pay TV markets.
"The majority of submissions considered rationalisation was necessary in the industry, which was suffering from high content costs and difficulty accessing quality content", ACCC Chairman, Professor Allan Fels, said today.
"Pay TV operators will now have access to a more comprehensive range of programming, enabling them to offer pay TV consumers a broader range of programs, including popular movies and sports", he said.
"Most of the concerns raised about the arrangements related to the ability of Foxtel to prevent meaningful competition in the pay TV industry by blocking competitors from using either its programming or its cable network".
In order to address the concerns about access to programming, Foxtel and Austar have agreed to allow rival operators, such as TransACT and Neighbourhood Cable, to purchase their pay TV content at fair and commercial terms.
"This also will facilitate new investment in broadband networks", Professor Fels said.
The concerns about access to infrastructure, such as Telstra's cable network and Foxtel's set-top boxes, have been addressed by Foxtel and Telstra's undertakings to allow rival pay TV operators to use their analogue and proposed digital networks to provide competing pay TV services to consumers.
"The terms and conditions Telstra and Foxtel impose for access to these networks are still to be subject to further consideration by the ACCC to determine whether they comply with the telecommunications access requirements of the Trade Practices Act 1974".
Foxtel and Telstra have committed to 'digitise' the pay TV network, although this commitment is conditional on the passing of the Federal Telecommunications Competition Bill and further decision-making processes provided for in this proposed legislation. The proposed legislation allows potential investors to seek an exemption from the access regime which would otherwise apply if the services were regulated in the future.
The digitisation of the network would be a positive outcome for consumers as it would result in more channels for content suppliers to distribute their product, new services such as interactive television and ultimately more choice for consumers.
Professor Fels emphasised the undertakings are not intended to alter the pre-existing competitive landscape in the pay TV industry.
"The ACCC's role is to decide whether the undertakings address the potential anti-competitive conduct or effects arising directly from the content-sharing arrangements", he said.
"In this case there was evidence that the competitive position of Optus in the market was being adversely affected by its inability to access and supply key content to its customers.
"The content-sharing arrangements should enable Optus to improve its programming and ensure consumers are offered a better quality pay TV service".
Professor Fels said the undertakings also protect the availability of independent programming to consumers.
The ACCC continues to be concerned about the level of vertical integration in the pay TV industry, particularly given the position of Telstra as a major shareholder in Foxtel. This leaves the ACCC with concerns about the appropriate regulatory regime in both pay TV and telephony markets.
These will be considered in a report to Senator Richard Alston, Minister for Communications, Information Technology and the Arts, who has requested advice on how emerging market structures are likely to affect competition across pay TV and telecommunications.
"This report will also include some of the concerns raised during the consultation process which the ACCC did not consider relevant to the transaction being considered", Professor Fels said.
The ACCC will continue to monitor the pay TV and related industries closely and will take immediate action if any of the parties fail to comply with the spirit of the undertakings.