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Spark using 'free' rugby offer to lock out competitors, says 2Degrees

Tuesday 18th June 2019

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Spark's offer of free access to streaming coverage of the Rugby World Cup in return for signing up for broadband or mobile phone services is undercutting competitors in exactly the way Spark warned would happen had Vodafone and Sky TV been allowed to merge, challenger mobile operator 2Degrees claims.

Describing Spark's latest offer as "a defining moment for monopoly content", 2Degrees chief executive Stewart Sherriff said Spark's use of a 'free' pass for new customers to access RWC coverage in return for signing either a 24 month mobile or 12 month broadband contract raised the question of whether it was "ever serious about wholesaling."

However, Spark hit back, saying it had "taken significant risks" to gain sports rights and that "far from being a monopoly, our entry into the market has lowered prices for access to sport and broadened access to some premium sporting content." 

A key barrier to competitors seeking to wholesale Spark's RWC service appears to be the fact that they cannot associate their products and services with the RWC brand, a restriction akin to the prohibition on non-sponsors of the Olympic Games to use the Olympics wording or logos.

Spark was also unapologetic about always intending to "use our investment in Rugby World Cup rights to deliver something extra special for our Spark customers" and "the unique ability to bundle Spark Sport with our broadband and mobile packages," Spark spokeswoman Ellie Cross told BusinessDesk.

Sherriff said other internet service providers, including 2Degrees, Vodafone and Vocus, had spent millions of dollars on upgrading equipment earlier than planned in order to be able to resell RWC coverage through wholesale arrangements with Spark.

Spark had made it  difficult to compete, offering its own customers low-priced packages before making any wholesale product available to competitors, and at higher prices, although Spark said it had deliberately made a 'super earlybird' offer that had seen many non-Spark customers sign up for the service before the company started making offers to its own customer base.

Sherriff said Spark’s actions were "very concerning for the longer term".

“What happens if Spark uses its market power to lock up premium sports rights to longer duration tournaments such as the SANZAR Rugby, then offers it free to anyone that signs a long-term contract with Spark?” he said.

“It’s important to consider these issues now, because the most important content for Kiwi viewers is about to shift from satellite TV to broadband. This will see the beginning of new viewing behaviour across the country.”

Despite the complaints, 2Degrees is not at this stage taking any formal complaint to the competition regulator, the Commerce Commission, 2Degrees spokesman Mat Bolland told BusinessDesk.

Sherriff said the benefits of equal access for telcos to the government-backed ultra-fast broadband network risked being substantially undone if rights to broadcast major sporting events were not made available on a competitive basis to competitors.

“Our concerns were shared by Spark when it opposed the merger of Sky and Vodafone," said Sherriff. "At the time, Spark described Sky’s offer to competing RSPs for content including premium sport as ‘entirely unreasonable’. From where we sit, that’s still the case.”

Spark's actions smacked of "the Telecom of old", he said.

Spark has made similar offers of free access to its streaming TV service Lightbox to gain and retain customers.


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