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Telco law review reignites content debate

Friday 18th October 2013

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Communications Minister Amy Adams' review of law governing the telecommunications sector has reignited the debate as to whether content will be a major driver for consumers to jump on to fibre services.

Access and availability of premium content is seen as becoming increasingly important in fuelling migration of customers to faster broadband services, and Ministry of Business, Innovation and Employment officials expect to look into convergence and content regulation in future phases of the review of the Telecommunications Act 2001, according to their discussion document reviewing the law.

In a submission on the review, pay-TV monopolist Sky Network Television, which this month was warned for breaching competition law in its contracts with retail service providers, refutes the claim, saying benefits derived from web-based education and health services will drive demand and that uptake on the government-subsidised ultrafast broadband network shouldn't be an objective in and of itself.

"The mechanisms for delivery of content are already many and varied," Sky TV said in its submission. "While UFB is one of the mechanisms, and the availability of content over UFB may be appealing to consumers, it is not clear that the availability of content is substantially linked to the uptake of UFB."

In a different vein, on-demand and streaming video provider Quickflix urged officials to look at content delivery more quickly, with the convergence between broadcasting and telecommunications already here.

"MBIE, like the Commerce Commission, rightly identifies access to content as a critical consideration in relation to the uptake of UFB, but it does not follow from that conclusion that issues relating to access to content should not be considered until the UFB roll-out is complete," Quickflix said. "In fact, given the significance of content, the opposite is true."

A 2012 Commerce Commission study into demand-side issues for high-speed internet services found video services were likely to be the primary driver for consumers at first, and that uptake would accelerate if more options were available.

In her first major outing as Communications Minister last year, Adams said she was reluctant to intervene in the sector, saying it needed to settle down before the government would consider cutting across market forces. She was also sceptical of a joint broadcasting and telecommunications regulator.

The convergence between telecommunications and broadcasting has seen Telecom Corp, the country's biggest telecommunications company, dabble with content, entering into a distribution deal with web-based broadcaster Coliseum Sports Media to play the English Premier League football.

Telecom chief executive Simon Moutter has been dragging the company away from an infrastructure-based player and into a data-driven and mobile-focused telecommunications operator.

Today, he told a Commerce Commission-led competition conference in Wellington that retail network operators are facing increasing pressure on their revenue streams, and that any shift towards content would have to be valuable enough in its own right to cover the cost of investment.

"We don't own the centre piece of infrastructure that earns most of the margin," Moutter said. "If we move upstream, it has to pay."

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