The Australian Competition and Consumer Commission today announced it requires modifications to the regime proposed by Telstra and Foxtel for access to their analogue and digital pay TV networks before it approves the arrangements.
The decision relates to four applications lodged by Telstra and Foxtel resulting from the ACCC’s approval of the Foxtel/Optus/Telstra content supply arrangements in November 2002.
The first two applications are for approval of access undertakings containing the price and non-price terms and conditions under which third parties can access Telstra’s existing analogue pay TV cable network and Foxtel’s analogue set-top units (STUs).
The third and fourth applications seek an order from the ACCC for an exemption from any future access obligations relating to Telstra and Foxtel’s proposed digital pay TV network, which is expected to be in operation next year. Telstra and Foxtel have already provided undertakings for third party access to the digital pay TV network and set-top units, once digital services are provided.
ACCC Chairman, Mr Graeme Samuel, said the ACCC's draft view on the analogue undertakings is that the proposals cannot be supported in their current form.
"However, the ACCC believes the proposed arrangements would be acceptable if certain changes to the undertakings are made by the parties", he said. "Subject to the ACCC's final view, if these changes are made, the analogue undertaking arrangements can be approved relatively quickly".
The ACCC's draft view on the digital exemptions is that these should be granted, but with important limitations and conditions. These limitations and conditions will require alterations to the digital undertakings already provided.
The ACCC's concerns relate principally to:
- that the cost of access to Foxtel’s analogue and digital STUs appears to overstate the relevant business risks, and should provide for a lower return on capital;
- that the cost of access to Telstra’s digital cable may not adequately reflect the contribution to costs from other uses of the cable network (particularly broadband internet) in the future, and therefore should be reduced over time, if Telstra receives greater revenues from alternative uses; and
- that some of the non-price elements of the access undertakings should be further strengthened to promote effective and timely terms and conditions of access – including dispute resolution processes.
"The ACCC has discussed many of its concerns with Telstra and Foxtel. The ACCC hopes they will agree to amend their undertakings to address these concerns".
The reports detailing the ACCC's preliminary views on the analogue and digital arrangements proposed by Telstra and Foxtel have been issued for public comment.
The ACCC will make a final decision following the consideration of comments by interested parties.
This is the ACCC's first application assessment under the new anticipatory exemption provisions, which have been specifically designed to facilitate efficient investment in new telecommunications services and infrastructure by addressing regulatory uncertainty in advance of the investment being made.