The Australian Competition and Consumer Commission today announced a draft decision to reject the special access undertaking submitted by Foxtel in relation to its Digital Set Top Unit Service.

Digital set top units are used to receive, decrypt and display pay-TV content (including interactive television content) at the customer's premises.

The service consists of a number of components:

  • access to Foxtel's digital set top units
  • conditional access services that control which channels a subscriber can view (through encryption of the pay TV signal)
  • Foxtel's electronic program guide, and
  • the modem within the unit which supports interactive TV.

Foxtel's undertaking would allow content providers to use its digital pay TV platform to sell their own channels direct to Foxtel subscribers.

"The ACCC commends Foxtel on its use of the special access undertaking provisions to voluntarily offer access to its digital pay TV platform", ACCC Commissioner, Mr Ed Willett, said today.

"The ACCC considers Foxtel's undertaking provides access for content providers on reasonable terms.

"Had the undertaking been limited to that, the ACCC's draft view would be to accept it. 

"However, the key difficulty is that the undertaking also prevents competing pay TV firms from using the Trade Practices Act 1974 to access the individual component services that make up the Digital Set Top Unit Service from Foxtel on a stand-alone basis".

The ACCC's examination of the market suggested that other pay TV firms can buy these individual services commercially. The ACCC would not be inclined to place great weight on the value of regulated access to these individual services on a stand alone basis.  Overall, the ACCC considers that other factors, such as access to premium content, are more critical impediments to effective competition between pay TV firms.

"However, a special access undertaking is a mechanism under the Act to offer access to services on agreed terms and conditions. In the ACCC's view, an undertaking cannot legally be used as a backdoor way to obtain an exemption from possible access regulation.

"Unfortunately, therefore, the ACCC's draft view is that it is not able in law to accept the undertaking".

Copies of the ACCC's draft report and other documentation relevant to the special access undertaking (including the undertaking, Foxtel's supporting submissions and other material) will be available on the ACCC website.

The ACCC seeks submissions from interested parties on its draft view by no later than 25 September 2006.