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Sky TV gets reprieve from telecommunications levy

Thursday 19th April 2012

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Sky Network Television, New Zealand’s dominant pay-TV operator, won’t have to contribute to an annual levy that is to fund non-commercial telecommunications, based on the Commerce Commission’s provisional view on which companies will be liable.

The antitrust regulator excluded Sky from potential liability to pay the Telecommunications Development Levy in its 2012 draft notification, released today. That means Sky, which is 44 percent owned by News Corp, won’t contribute to the fund which replaced the Telecommunications Service Obligation (TSO).

Sky was originally named as a potentially liable party due to its dominance in providing content in the Commerce Commission’s original discussion document. The pay-TV operator was excluded because its equipment that plugs into the public telecommunications network (PTN) is private, and not covered by the legislation.

“Providers of content as services over the internet do not, merely by allowing end-users to access their content and information (whether via on-premises services or in a third-party hosting facility or cache), operate a component of a PTN,” the commission said. “Only if they operate a component of the PTN over which the content is conveyed are they liable.”

Sky TV has been battling to avoid regulation after the antitrust regulator included content arrangements in its on-going probe into potential barriers to broadband uptake.

The pay-TV operator feared the study might become a quasi-regulatory inquiry as rivals push for a merging of the telecommunications and broadcasting regimes.  Its shares gained 0.4 percent to $5.35 in trading today, and are up 0.6 percent this year.

The TSO, formerly known as the Kiwi Share, was used to pay for telecommunications infrastructure where it isn’t immediately profitable to do so, such as in rural areas. Its replacement is a contestable fund that officially starts this year, and will initially meet the government’s $300 million rural broadband initiative.

The commission decided to include telecommunications infrastructure owner Chorus, turning down arguments from the former network company of Telecom that it should be excluded as it wasn’t a separately incorporated entity last year.

The levy will also capture local fibre companies and Crown Fibre Holdings as a related party.

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