Telecom New Zealand and Sky sign agreement

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#476490 1-Jun-2011 00:02

tdgeek: You cannot regulate Sky, on what basis? Monopoly? Sky has a technical monopoly, but it is not in a position of control of the market. Others are free to join and compete with Sky. Others being similarly large operators globally.

As there is no infrastructure to build, there is freedom and ease to compete here.

If Sky had a true monopoly, that made it impossible for others to join and compete, you may then have a case for regulation. Unless Sky have bought all satellite rights and bandwidth to stop others entering, there is no case.

If say, FTA took the F1, RWC, etc from Sky, then who will pay for that? Will we get a subscription for TVNZ? Or 4 minutes of RWC then 4 minutes of ads as happens in some high interest content?

There is infrastructure to build depending on what technology was chosen. You either have to get access to a satellite, or you have to build UHF broadcast towers. The current ones don't currently cover the entire country. You also have to have either a lot of capital to set it up and advertise, until you get a large enough customer base. You also have to pay for content, and get the exclusive deals for the premium content. It is a huge undertaking with huge costs and I can't see anyone starting one up. The cost is the barrier to entry, as is our relativity small population. Look what happened to the mobile market once it became regulated, we got 2 degrees come in.

tdgeek

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#476495 1-Jun-2011 00:13

---There is infrastructure to build depending on what technology was chosen. You either have to get access to a satellite, or you have to build UHF broadcast towers. The current ones don't currently cover the entire country. You also have to have either a lot of capital to set it up and advertise, until you get a large enough customer base. You also have to pay for content, and get the exclusive deals for the premium content. It is a huge undertaking with huge costs and I can't see anyone starting one up. The cost is the barrier to entry, as is our relativity small population. Look what happened to the mobile market once it became regulated, we got 2 degrees come in.---

Clearly they would get access to satellite. It worked for Sky, so in the 15 years plus they have succeeded. There is no barrier now, apart from that caused by Skys success. Off course they have to pay for content, as Sky does, so that is no barrier, unless you propose regulating the content providers?

I do see your point, but there has been ample time for another provider to add to the market, and by infrastructure I was comparing to say a land based national network that has been regulated, that obviously cannot be duplicated, both in time and in money. A satellite TV network is different.

ockel

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#476496 1-Jun-2011 00:18

compost:
martyyn: They tried to break Sky's monoply in England over the football and there was only one loser.

It ended up costing you more to watch your team because you were paying three different companies to view the share of the games they each had.

I only have Sky for one reason and one reason only and thats the football. Now the Champions League final is over Ill be cancelling as soon as I can find the time to make the phone call !

Being a Telecom customer though, Im all ears to see what they can provide as some sort of package :)

The Sky UK example is often thrown out there as a reason for not regulating monopolies, but their approach was poorly thought out. I bet these rules were drawn up hastily as a populist response to public outcry. I guess at least they didn't end up using taxes to put live free to air football on multiple channels at the same time...

OfCom (and the EU) spent considerable time and research in determining the best way to create competition in EPL given its "importance" to consumers and the belief that the monopoly on that content was not in the consumers best interest. To say that it was poorly thought out is flippant.

What it did highlight was that the theoretical notions of the cost-benefit analysis were simplistic and that regulation led to unintended consequences and higher costs that were not considered by the analysis. And that is the folly of regulation.

The next step for OfCom, after years of interest group lobbying, is the regulation of premier content packages of sport and movies. The latter was dropped as the economics didnt stack up despite the flawed analysis. Sport (essentially the EPL if you read each of the 3 studies and their appendices) to be regluated but the analysis itself is a manufactured outcome to allow regulation. If the previous effort to split the EPL rights package up didnt work then lets do it another way. There will be further unintended consequences - and the winners in the UK will not be the consumers but the new broadcast entrants (ie a transfer of wealth from BSkyB to the interest groups that didnt choose to develop and invest paytv but now want a slice of the profits).

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robbyp

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#476500 1-Jun-2011 00:50

tdgeek:

Clearly they would get access to satellite. It worked for Sky, so in the 15 years plus they have succeeded. There is no barrier now, apart from that caused by Skys success. Off course they have to pay for content, as Sky does, so that is no barrier, unless you propose regulating the content providers?

I do see your point, but there has been ample time for another provider to add to the market, and by infrastructure I was comparing to say a land based national network that has been regulated, that obviously cannot be duplicated, both in time and in money. A satellite TV network is different.

It would depend on the capacity of the existing satellites and whether the current users have exclusive use of it for a particular market etc. But even it they did get capacity, broadcasting is just one small part of it. Content is the key. If they don't have sport such as rugby , they are really going to struggle. Saturn used to have their own content, but it appears they just subcontracted it out to sky in the end, as sky has all the decent content.

I think the future is over the internet, but we are probably a decade away from that replacing satellite.

I am really only wanting regualtion to make it easier for a new entrant to come in, like what happened with the mobile market. Not to regulate pricing, as that is handled through real competition.

tdgeek

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#476560 1-Jun-2011 09:23

robbyp

I agree

martyyn

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#476575 1-Jun-2011 09:38

compost:
The Sky UK example is often thrown out there as a reason for not regulating monopolies, but their approach was poorly thought out. I bet these rules were drawn up hastily as a populist response to public outcry. I guess at least they didn't end up using taxes to put live free to air football on multiple channels at the same time...

Im confused.

On one hand you say the UK example was 'poorly thought out' and 'drawn up hastily as a populist response to public outcry' and then say 'at least they didn't end up using taxes to put live free to air football on multiple channels at the same time'

Given we have a 'live free to air "event" on multiple channels at the same time' to look forward to what makes you think we would end up with a fair system of regulation which wouldnt end up costing the consumer more in the long run ?

At least were not currently rushing all manner of ill-thought out legislation through Parliament at the moment is it ?........oh hold on.

As has been mentioned in a later post, I firmly believe content will eventually be delivered via the internet (a lot already is in the UK both through the BBC and Sky) and so Sky will have to think of another way to deliver their content.

I wonder how long it will take for the likes of TVNZ, TV3, Telecom, Vodafone etc to come to the realisation and make it happen.

andrew027

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#476979 2-Jun-2011 11:06

I would like to see it regulated in some form, especially as they control/are the paywall to most of the decent sports, which are considered part of NZs identity. Interest in sports such as rugby has dropped since it was placed behind the tv paywall.

Probably off topic, but I'm not sure the decline in interest in rugby has anything to do with pay TV. New Zealand viewer numbers plummeted after the All Blacks went out of the last World Cup, and haven't returned to teh same levels since. Over exposure to televised rugby has resuilted in boredom and indifference, rather than rebuilding the passion. This year we can tune in to high school rugby, local ("grassroots") and provincial games, Super 15 and tri-nations (how much AU v NZ v SA do we need - can't we play anyone else?) and of course RWC. Familiarity breeds contempt.

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StarBlazer

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#477009 2-Jun-2011 12:00

If we were to compare Sky and Telecom in methods of delivery and monopoly there is a possible way forward. Telecom is bit by bit separating into smaller companies. Those who maintain the networks are separate to those who sell the product.

In a regulated sence the network provider sells the use of the network to retailers, but cannot offer special prices. Everyone pays the same and has the same opportunity to create packages for end users.

Why can't pay TV be the same? If one company looked after the satellites and content (yes okay this is still a monopoly) then retailers could on-sell the content and build the packages as required - Why should I pay for channels that I don't want? It may even make it easier to get niche channels.

Procrastination eventually pays off.

Beccara

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#477018 2-Jun-2011 12:11

Nobody has answered the question Why? yet, Why do we need to split/regulate a market where the monopoly has been built up fairly, Why dont we just give more money to state broadcasters so they can bid on content more?

Most problems are the result of previous solutions...

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old3eyes

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#477031 2-Jun-2011 12:35

Beccara: Nobody has answered the question Why? yet, Why do we need to split/regulate a market where the monopoly has been built up fairly, Why dont we just give more money to state broadcasters so they can bid on content more?

One could say that the Bell Telephone Company in the US was built fairly without tax payer funding but the US gov in the early 1980s considered them a monopoly even though there were regional telcos operating and broke them up so there is a precedence here. Sky = bell system, Freeview = regional telcos..

Regards,

Old3eyes

martyyn

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#477035 2-Jun-2011 12:40

Beccara: Nobody has answered the question Why? yet, Why do we need to split/regulate a market where the monopoly has been built up fairly, Why dont we just give more money to state broadcasters so they can bid on content more?

I would imagine the $100 a month you pay to Sky and not the Government would have a lot to do with it.

Is there a state broadcaster in the world who can compete financially with pay-tv ? After all thats what it comes down to.....money.

mm1352000

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#477042 2-Jun-2011 12:54

Beccara: Nobody has answered the question Why? yet, Why do we need to split/regulate a market where the monopoly has been built up fairly, Why dont we just give more money to state broadcasters so they can bid on content more?

Traditionally state broadcasters are not meant to compete with pay TV. Their role has been to provide public service content, not premium content. They get money from the government for delivering that specific content, not to enable them to compete for general sports rights or buy any old US content. Things seem to be changing with the government saying they are unwilling to provide the money to subsidize the public service content and looking to repeal the TVNZ charter. That may free up TVNZ to spend money on other things, but perhaps at the cost of content on TVNZ 7 (it has been speculated that TVNZ 7 in its current form will disappear, but I can't remember if that has been confirmed). At the end of the day, they (TVNZ) still may not have deep enough pockets to compete with Sky. What happens next? You're in a position where the government would have no reason to give TVNZ money (little or no general public service) and Sky is still a monopoly. Does TVNZ start a pay service of their own? Heartland and Kidzone anyone???

tdgeek

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#477217 2-Jun-2011 21:29

---Why can't pay TV be the same? If one company looked after the satellites and content (yes okay this is still a monopoly) then retailers could on-sell the content and build the packages as required - Why should I pay for channels that I don't want? It may even make it easier to get niche channels.---

Sounds ok, but its not the same as a network in NZ owned by a central provider. Satelittes are not owned by Sky are they? Or are they? Even if they were, the content an ISP offers is Gb, but pay TV content has to be bought, its a lot more dynamic than boring ol' bandwidth and Gb.

I accept your theory as offered, but I feel regulation is going too far. Where do you stop? Regulate everything? When you regulate you either
A) remove the ability to be innovative as you are controlling the market, you make it artificial, supply and demand are removed.

B) you remove the initial innovation, letting entrepreneurs see that if you have a good idea and make it happen, you will get stripped of it.

Would you buy a business or build up a business and take the risk that it will be regulated as its too good, we want others to have it too?

My thoughts above are theoretical, but if you want to regulate something, regulate necessities such as Oil and Electrical generation

tdgeek

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#477219 2-Jun-2011 21:31

---Nobody has answered the question Why? yet, Why do we need to split/regulate a market where the monopoly has been built up fairly, Why dont we just give more money to state broadcasters so they can bid on content more?---

I agree. There is competition, as all TV is pay tv. All of it. Its just is some cases end users pay, in others, advertisers pay. But in both cases there is revenue generated, and content provided with that revenue. Sky has the best content so it runs the best business it appears.

tdgeek

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#477221 2-Jun-2011 21:33

---One could say that the Bell Telephone Company in the US was built fairly without tax payer funding but the US gov in the early 1980s considered them a monopoly---

Possibly more of a strategic issue?

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