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Update Govt warns Foxtel on concessions - 21-May-2008, 12:20

Govt warns Foxtel on concessions


Australian digital-satellite platform Foxtel could find life more difficult soon, with the government indicating it would look at concessions Foxtel was given from local content and advertising rules many years ago.
Now Foxtel is profitable, the rationale behind the concessions allowing the platform to build up its business no longer applies, according to communications minister Stephen Conroy.

In an interview with the Australian Financial Review, Conroy said that there were a range of restrictions or concessions that were given to them that, given Foxtels profitability its hard to make the same case that was made originally. But Conroy added that it was an issue that must be discussed at length.

Conroy also put his weight behind the list of sports events that must be aired on free-to-air and not pay-TV, the so-called anti-siphoning list.

But there was some good news for Foxtel in Conroys words. He confirmed what has been rumoured in the market for months that the government is delaying the process to auction off a tranche of digital-terrestrial spectrum, which may have expanded the digital free-to-air sector and almost certainly would have led to the introduction of mobile TV.

Foxtel, while interested in mobile TV (it operates the Foxtel on Telstra 3G TV service through 50% shareholder Telstra), would almost certainly not have been eagerly awaiting the arrival of more competition.

Conroy said that the delay was due to lack of preparation by the previous government on the spectrum, both in terms of technology and the market. The government will undertake a detailed technical and policy review to consider whether services would work.

If I went [to auction] under the conditions that currently exist, I think there would be marginal business interest. So weve taken a step back and were having a good hard look at where to take this. Well reach a position on whether to proceed or not during the second half of the year.

Among the challenges cited by Conroy in using the spectrum is that currently, by law, those using the spctrum are required to reach 75% of the population, which would necessitate targteing regional as well as metropolitan areas an expensive operation.
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