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Telstra reforms signal Foxtel changes

The government tells Telstra to sell off its 50 per cent stake in Foxtel or else.

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Foxtel digCommunications Minister Stephen Conroy has announced dramatic reforms to the stucture of Telstra as the government prepares to roll out its $43 billion broadband network.

Telstra has been warned voluntarily to separate its wholesale and retail arms or be prevented from acquiring new wireless broadband spectrum.

It will be prevented from gaining new spectrum while it remains vertically integrated, owns a hybrid fibre coaxial cable network and holds onto its interest in pay TV operator Foxtel.

But as an incentive to Telstra to co-operate, the legislation gives the minister the right to ditch the last two requirements if the structural separation wins the approval of the Australian Consumer and Competition Commission.

If the company does not agree to structural separation, the Government will use new laws to break up Telstra and force it to sell off its cable network and 50 per cent stake in Foxtel.

Telstra must make up its mind on what it will do in the next few months, with the legislation to be introduced into Parliament today and due to be debated in the Upper House in November.

The move also comes at a time when Channel Seven Chairman Kerry Stokes has been seeking a bigger stake in the Pay TV market.

Source: The Australian, ABC

18 Responses

  1. As others have stated Telstra seems to be uping costs to each client even when it is getting top dollar for some times average service and questionable accounting practices

  2. Hooray! Separate wholesale from retail. I don’t see why I have to pay Telstra to reconnect my copper phone line, am forced to be with them for 3months (otherwise $100 penalty on top) when I want a phone service from another company!

  3. Telsra should be broken up, sold off stamped on, kicked around, management sacked its pay phones crushed, its mobile shops bulldozed, foxtels name changed to fox anything else, its cable ripped down, any thing slightly resembling telsra or their stupid t, banned ………….. Blah blah blah blah ………………………………..and burned and shot repeatedly

  5. I’m with Bigpond and every month I curse the day I signed a contract. It is OK but so overpriced. Their plans are outdated and in no way competitive. I’m glad something is finally happening.

  6. Telstra being forced to sell their Foxtel stake should’ve happened a long time ago. Kerry Stokes would gladly buy it despite the huge debt, but probably wouldn’t be allowed to and Nine and Ten can’t afford to buy it. My guess is, News Corp – Rupert Murdoch will very gladly buy Telstra out of their Foxtel stake. If for some reason, the ACCC won’t allow them to, then there’s plenty of foreign cable players who can, if they’re allowed to.

  9. @Paull: AT&T, or “Ma Bell” as they called it, was broken up by the US Government in 1984, because it had a virtual monopoly (similar to what Telstra used to have in Australia), on telephones in the USA. “Ma Bell” as a result, was broken up into “Baby Bells” which operated on a regional scale, rather than a national scale, which eventually saw one of the regional “Bell” companies, buy the now heavily weakened AT&T in 2005.

    “Bell” is a reference to the “Bell System”, and it’s inventor, Alexander Bell.
    AT&T means American Telephone and Telegraph, and has no connection to AAPT (which is owned by Telecom New Zealand).

    Thus any breakup of Telstra, will easily go down as something major in telecommunications history like the AT&T forced breakup in 1984.

  11. @ johnjet: Neighbourhood Cable and TransACT are much smaller than Telstra and Optus and serves a small number of regions. Shouldn’t they be allowed to grow?

  12. If the government is serious, it should end the Foxtel monopoly on the majority of Pay TV content (i.e allow SelectTV and others, access to the Foxtel channel library), with the Telstra split. I’d rather see Foxtel and Austar broken up the same way as AT&T was years ago.

    Allowing more competition in the conventional Pay TV sector, would help lower prices, drive takeup, and give more choice to viewers.

    Imagine if Austar and Foxtel were competing in the capital cities (initally, with regional expansion if the competition strategy works) , with the content pool system, shared with a “must carry” option, where all local FTA channels, must be carried by the local (e.g Foxtel QLD and Austar QLD) pay operators.

    No FTA network should own any of the local pay operators, ever, and the “baby” Foxtels/Austars, would be under the same national reach restrictions as FTA, i.e. cannot cover more than 75% of the Australian population, if they intended to buyout the other local operators, if this strategy is a success.

  13. Earthquake, the real problem with Pay TV competition is that Foxtel & Austar own most of the channels (or have exclusive rights), so independent providers get slim pickings in what channels they can have.

  14. If Telstra is forces to sell its stake in Foxtel then Optus should be forced to sell its stake in the satellites, Neighbourhood Cable and TransAct should also be forced to sell its cable access.
    You can not say Telstra cant have pay tv access or pay tv infrastructure yet the others can.

  15. In regards to pay TV, I don’t think that there will be enough competition for a while yet until the national broadband network is built and IPTV operators open up taking advantage of the new Internet TV sets.

    Seven attempting to take partial ownership of Foxtel doesn’t assist pay tv competition in Australia either. It’s just replacing one FTA operator with another.

    I’d hope that the Federal government could also look at limiting cross-ownership for FTA networks owning Foxtel, not just Telstra owning it.

  17. In general, Telstra is such a rip off now days. Their internet, phone, and cable are all grossly overpriced, that’s why I’d never go back with them.
    On the plus side, their broadband ad was pretty funny.

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