Foxtel-Optus: Disappearing up their own merger

by Marcus Browning

The proposed Foxtel-Optus merger will threaten cross-subsidisation of 
telecommunications to rural and remote areas and undermine local 
programming content. At the same time it will put Rupert Murdoch and Kerry 
Packer in an even more powerful position in media and telecommunications, 
where they already occupy a dominant position.

Telstra's broadband cable system is to be the conduit through which 
packaged deals of pay television, Internet, and mobile and fixed telephone 
services will be offered. From November 1 all Optus programs will be 
available on Foxtel and all Foxtel programs will be available on Optus.

Subscribers will get discounts on programs, Internet and telephone (both 
land line and mobile) if they take a bundle of these services together. 
This is not only the latest part of the push for pay-for-view customers. In 
practice it begins the process of eroding Telstra's universal service 
obligations by discriminating against those telephone users who do not take 
pay television packages from the merged entity.

Rural and remote areas will now be hit with higher prices for Internet and 
pay television than their city cousins. The way is now well and truly open 
for the next step in the deregulation of telecommunications i.e. dumping 
Telstra's cross-subsidisation program that ensures everyone pays the same 
price for their telephone calls.

Part of the drive to monopoly is related to the nature of pay television 
itself. From the beginning it was clear that most people were not going to 
pay for something they currently got for nothing, free-to-air broadcasting. 
High rating programs on free-to-air are now on pay-for-view — including 
the most popular sports.

The packaging of these programs with the other forms of communication 
technology by exploiting Telstra's unique, taxpayer-funded system, provides 
a further "incentive" to buy — in the guise of "choice" — what comes 
free. In the not-too-distant future all high rating programs, with their 
huge advertising dollars, will appear exclusively on pay television.

As far as local content is concerned, there will be no reason for Packer 
and Murdoch to keep up the quota of locally made programs, let alone 
increase it. This will have a big impact on local filmmakers and production 
companies which are already taking a battering from Murdoch's Hollywood-
based Fox conglomerate.

"We have a fundamental concern that, whoever the service providers are, 
they provide the appropriate levels of local content", said the Chief 
Executive of the Australian Film Commission, Kim Dalton. "It's not 
acceptable to go to the Australian people and say Australia cannot afford 
Australian content on pay-TV."

The Executive Director of the Screen Producers' Association, Joanne Yates, 
noted: "Even if Foxtel is committing money to drama, they'll do it through 
their own in-house production."

The "M" word is being avoided like the plague, but a marriage between 
Packer 's PBL, Murdoch's News Ltd, Singapore Telecommunications' Optus, and 
Telstra can be nothing other than a monopoly.

But if you listen to Telstra, Foxtel and Optus, there'll be no monopoly, no 
price hikes and no one disadvantaged, part of a "everything's apples, mate" 
PR exercise. Telstra Chief Executive, Ziggy Switkowski: "The bundling of 
telephone, internet and subscription TV services on a single customer-
convenient bill will allow Telstra to discount prices and reward customer 
loyalty."

Foxtel CEO Kim Williams: "These agreements will give more Australians more 
choices about "how to receive Foxtel" and will lead to greater competition 
in subscription television and telephony." (Control of Telstra's broadband 
technology will allow the merger to decide what other communication 
companies have access and at what price.)

Optus CEO Chris Anderson: "This cleans up a structurally flawed business 
"so we can compete more" at the local loop and telephony level rather than 
being content-disadvantaged."

The Financial Review's editorial on March 6, in the spirit of 
"everything' s apples, mate", stated, "Yesterday's announcement by Foxtel 
and Optus of an agreement to cut their losses on programming while still 
competing on delivery platforms is to be welcome."

There it is: they disappear up their own merger by monopolising "and" 
competing at the same time!

The Optus-Foxtel deal increases the concentration of ownership and control 
of every aspect of Australia's telecommunications system in the hands of 
two ruthless, profit-grubbing and anti-democratic media moguls. It is bad 
news for the economy, for workers and their jobs, and heralds the 
implementation of the Howard Government's plan to fully privatise Telstra.