Last year we reported on the 2014 TelSoc Charles Todd Oration from the former Chair of the ACCC, Graeme Samuel, when he warned against the looming content monopoly.
I thought about this when I read the news that Foxtel was offering access to its services without the need for a contract. Keen to legally watch the Game of Thrones (GoT) in a few binge sessions I thought ‘brilliant’ – only to find out that it would cost me $195, as I also would have to buy their set-top box.
So it is not just the exclusive content that creates this monopolistic situation; it is also the set-top box.
Going back in time a bit …. in 1996, yes 20 years ago, the then Minister for Communications, Michael Lee, indicated that he would use regulations to make sure that set-top boxes for pay TV would be compatible with each other, so that users only had to use one box to access the various services. However, after lobbying from News Corp, the decision that we ended up with two years later was totally the reverse and entrenched the possibilities for content and set-top box monopolies.
It is ridiculous that we now need a whole collection of set-top boxes in order to receive the various video entertainment services. Obviously people are not going to go along with this and it is easy to predict that those services that don’t require set-top boxes – or at least those that can combine as many as possible services over one box – will succeed. In the short term this will not happen in Australia, as at this stage Foxtel has the best content and will certainly not share it with other platforms such as Fetch (GoT is even not available on their own streaming service).
But all of these are rear-guard battles. Eventually open systems and videostreaming will win out. And the global content players will be the winners in the end, because of the rear-guard battles of the local players they are able to built up their own superior (open) business models and as they grow internationally they will be become more powerful and will be able to bid more for content rights than the significantly smaller national players such as Foxtel, Stan, Quickflix and Fetch. The big international boys will happily let the local ones fight between themselves as they are fully aware of the fact that none of them on their own will be able to compete with the Netflixes of this world. This is a pity for the local players but in the end their demise will be their own fault. Similar to the silly fights that Telstra engaged in when it tried to outmanoeuvre Google with its Sensis, BigPond and Foxtel services all competing internally with each other – and guess who won?
But all of this will take time and in the meantime we are stuck with these scattered content and set-top box monopolies.
This, of course, is also making it very difficult for new national players and innovative new services to enter the market as there is no common and open national platform.
With telco services now so commoditised through VoIP, Skype, WhatsApp and others, the one service customers are now most interested in over their fixed broadband connection is video entertainment, and for any player in this market without access to premium content (premium movies, TV services and local sport) it will be very hard to compete. The ACCC (as well as the FCC in the USA) has indicated it is watching this development and if the industry fails to address this issue internally external intervention will be unavoidable.