Fairfax NZ eyes vertical integration with ISP venture

Tuesday 9th August 2016

Fairfax New Zealand, which is looking to stitch up a merger with rival NZME, is looking to extend its business beyond content provision with a new venture to launch a fibre-only internet service provider.

Dubbed Stuff Fibre, the ISP plans to launch in the next three months, offering uncapped ultrafast broadband with a 100 megabit download speed. The holding company, NZ Fibre Communications, is 51 percent owned by Fairfax New Zealand, and 49 percent owned by Giant Management, a vehicle housing stakes owned by the ISP's management including former Vodafone executives Sam Morse, David Chapman-Smith, Geoff D'Augney and Robert Tihanyi and former Sky Network Television manager John Simmons.

Morse will lead the venture, and is joined on the Stuff Fibre board by Simmons, Fairfax NZ boss Simon Tong and marketing director Campbell Mitchell.

Internet New Zealand welcomed the addition of a new entrant to the market, though deputy chief executive Andrew Cushen was wary about the ISP using bundled content as its way to stand out from rivals.

"Much like Vodafone and Sky, that raises some concerns about network neutrality," Cushen said in an emailed statement. "We hope, and we would like assurances from Stuff Fibre, that they won't force their customers only to see content from Stuff."

The move comes with Fairfax seeking antitrust approval to merge with its biggest print rival NZME, while the blurring line between telecommunications and broadcasting has seen a proposed tie-up between Vodafone New Zealand and Sky TV, while Spark New Zealand has launched an online video streaming service. At the same time, the telecommunications sector is going through a period of consolidation with mobile phone carrier Two Degrees Mobile buying ISP provider Snap in the past year and, Australia's M2 Group acquiring CallPlus and later merging with Vocus Communications among recent deals.

Fairfax and NZME are pushing the idea that they can't compete in digital advertising against the likes of online competitors Google and Facebook without combining their resources and that audiences and advertisers are agnostic as to the platform they use to get information. Both companies have adopted a 'digital first' strategy prioritising online editorial and advertising over their traditional print businesses.

Among issues the commission has said it will look at include whether there are separate digital and print media markets, and whether there's much overlap in online advertising and the supply of news and entertainment via Fairfax's stuff.co.nz and NZME's nzherald.co.nz websites.

Giant Management is 47 percent owned by Morse, with D'Audney, Chapman- Smith and Simmons each holding 14 percent and Tihanyi 10 percent.

BusinessDesk.co.nz

Comments from our readers

No comments yet