Investigation unlikely to affect TV service

PEOPLE agitating for greater regulation of the broadcasting industry might be heartened the Commerce Commission is investigating Sky Television’s Igloo joint venture with Television New Zealand, to see whether the tie-up might breach competition rules.

But sharemarket investors rightly brushed it off as a sideshow.

Sky spokesman Tony O’brien yesterday made it perfectly clear that even if the joint venture was unwound, that wouldn’t derail the launch of the discount paytelevision service.

The big question remains whether a future government will break Sky’s grip on the distri- bution of paid television content, for example by ‘‘unbundling’’ its set-top boxes, which are now in more than half of homes.

Unbundling would let other providers such as telecommunications companies, sports organisations and programme-makers themselves sell content direct to consumers through Sky’s network on terms set by regulators.

The commission does not have the power to authorise such a drastic intervention and all it can do is to police transactions such as the Igloo deal.

The commission said it began investigating the joint venture this month after receiving ‘‘complaints from third parties’’ that are rumoured to include TV3 owner Mediaworks.

Igloo, which is due to launch its service in May or June, is 49 per cent-owned by TVNZ but controlled by Sky. Igloo set-top boxes will cost under $200 and will let customers who can receive Freeview HD (86 per cent of the

As far as Sky is concerned, TVNZ’S participation in Igloo and the $12.3 million it agreed to contribute as its share of Igloo’s setup costs, was only a ‘‘nice to have’’.

population) watch 11 pay-tv channels provided by Sky, as well as Freeview HD, for $25 a month. Subscribers will also be able to buy additional programmes and films ‘‘on-demand’’ that will be streamed to the set-top boxes over the internet.

Some of that on-demand content was expected to be provided by TVNZ and it could still be, even if the joint venture ibly scrapped.

The chief argument in favour of disallowing the joint venture is that TVNZ might be more willing and able to sell new and archived programming to other paytelevision market entrants, such as any New Zealand version of Netflix, if it wasn’t tied up in an equity venture with Sky.

But as far as Sky is concerned, TVNZ’S participation in Igloo and the $12.3 million it agreed to contribute as its share of Igloo’s setup costs, was only a ‘‘nice to have’’. The commission is powerless to stop TVNZ selling programming to Igloo on commercial terms, as a supplier, if it is not allowed to be a shareholder. TVNZ spokeswoman Megan Richards would not comment yesterday on whether it might entertain such an alternative.

Some industry insiders concede it is possible the Government may be playing a clever long term game with regard to

is

forc- more meaningful the industry.

The dream outcome for consumers would be for them to be able to pick and choose their viewing from a smorgasbord of free-to-air television and paytelevision channels, as well as content that they could purchase on-demand over the internet on a casual basis, from a range of providers, using an industrystandard set-top box.

The problem is that Sky has not yet hooked its set-top boxes up to broadband. So trying to bring about that vision now would involve attempting to regulate infrastructure that does not exist, in the hope that it would still be in someone’s interest to provide it.

Sky might be slower to connect its set-top boxes to ultra-fast broadband if it thought they would then be unbundled. Until then, there is a case for regulators keeping their long term intentions close to their chest.

regulation

of