The Sky’s the limit

Reg­u­la­tion sorely needed

Kapi-Mana News - - OPINION -

One para­dox of the free mar­ket is that it needs to be reg­u­lated to re­main free.

Left to its own de­vices, the mar­ket will quickly gen­er­ate one big fish that eats all the smaller fry in the pond, and that skews the mar­ket to suit it­self and its share­hold­ers. Noth­ing sur­pris­ing about that. Yet it ex­plains why even the United States has recog­nised the need for in­ter­ven­tion – and in­di­cates why, as long ago as 1910, the United States Supreme Court broke the stran­gle­hold that John D Rockefeller and his Stan­dard Oil Com­pany had achieved on the Amer­i­can en­ergy mar­ket.

In the 1970s, Amer­i­can reg­u­la­tors in­ter­vened again to force the coun­try’s main telecom­mu­ni­ca­tions com­pany to break it­self up into sev­eral small, com­pet­ing com­pa­nies.

New Zealand has been slow to fol­low suit.

In a small coun­try such as ours, the risk of one com­pany achiev­ing a dom­i­nant po­si­tion is high, es­pe­cially be­cause the big play­ers in key ar­eas of the econ­omy are for­mer state en­ti­ties – such as Tele­com – that be­gan life as state mo­nop­o­lies.

In the 1990s, for ex­am­ple, the pre­vail­ing cli­mate of ‘‘light-handed’’ reg­u­la­tion al­lowed Tele­com to vir­tu­ally run riot.

Tele­com used its dom­i­nance to de­lay the ad­vent of ef­fec­tive com­pe­ti­tion, sti­fled the en­try of new tech­nol­ogy and hiked costs to cus­tomers and firms alike.

As a re­sult, New Zealand – whose dis­tance from global mar­kets has al­ways made mod­ern telecom­mu­ni­ca­tions a strate­gic ne­ces­sity – still lags be­hind the rest of the de­vel­oped world.

Last week, sim­i­lar con­cerns were be­ing raised about the dom­i­nant po­si­tion en­joyed by Sky TV, and calls were be­ing made for the Com­merce Com­mis­sion to play a more ef­fec­tive watch­dog role with re­spect to the pay-tv op­er­a­tor.

The trig­ger for the lat­est round of con­cern? Sky is im­pos­ing ma­jor costs on sports bod­ies, in re­turn for cov­er­age of their events.

In re­cent years, Sky has be­gun to charge na­tional sports or­gan­i­sa­tions to broad­cast their events, and the fees have re­port­edly reached up to $200,000 per event in some cases.

Ul­ti­mately, it is ratepay­ers and tax­pay­ers who have to pick up the tab, via the money they pour into the sports and tourism bod­ies con­cerned.

In other coun­tries, the ex­is­tence of ef­fec­tive com­pe­ti­tion means that tele­vi­sion firms pay the sports bod­ies – and the win­ning tele­vi­sion com­pany can then lever­age ad­ver­tis­ing and pay-tv sub­scrip­tions from its sports con­tent.

Not here. When you’re tele­vi­sion’s main player – as Sky in­creas­ingly is – you can screw the scrum in any way you choose, es­pe­cially if the free mar­ket watch­dog is snooz­ing in its ken­nel.

True, the Com­merce Com­mis­sion has ( be­lat­edly) said it will be in­ves­ti­gat­ing Sky’s deals with in­ter­net ser­vice providers for any signs of mo­nop­oly be­hav­iour.

Yet al­most si­mul­ta­ne­ously, the com­mis­sion chose to give the ‘‘all clear’’ to Sky’s re­cent pay-tv joint ven­ture with Tele­vi­sion New Zealand, which will re­move a fur­ther tier of com­pe­ti­tion from the tele­vi­sion mar­ket.

For now, sports or­gan­i­sa­tions want­ing tele­vi­sion cov­er­age have to deal with Sky, on very much the terms that the pay-tv op­er­a­tor puts on the ta­ble.

Sky is in the happy po­si­tion of en­joy­ing three re­lated in­come streams: from the sports bod­ies, from ads, and from sub­scrip­tions.

Long will it con­tinue to pros­per, so long as ‘‘reg­u­la­tion’’ re­mains a dirty word in New Zealand’s po­lit­i­cal vo­cab­u­lary.

Newspapers in English

Newspapers from New Zealand

© PressReader. All rights reserved.