Telstra Market Power Concerns Australia Competition Watchdog--Chairman
March 11 2012 - 1:09AM
Dow Jones News
The growing market power of Telstra Corp. (TLS.AU) has a lot to
do with the competition watchdog's concerns about pay-TV company
Foxtel's proposal to buy regional competitor Austar United
Communications Ltd. (AUN.AU) for 1.9 billion Australian dollars ($2
billion), Australian Competition and Consumer Commission Chairman
Rod Sims said Sunday.
Telstra, the nation's biggest telco, will be a major retailer of
broadband services on the new network. Because it also owns 50% of
Foxtel, the dominant pay-TV player in the cities, there are
concerns it could wield too much power if allowed to combine with
Austar.
Australia is undergoing massive structural changes in its
telecommunications sector with the rollout of a A$36 billion
national high-speed Internet network.
On Wednesday, Telstra said it had finalized its A$11 billion
agreement with the federal government over the rollout of the
network, which involves Telstra progressively shutting down its
fixed copper-line service.
If the pay-TV merger proceeds, Telstra would take its 50%
ownership of Foxtel to all of Australia, and as the
telecommunication world increasingly moves to a bundled product of
broadband, telephony and television, Telstra would hold a
significant advantage, he said.
"The dominant point with the merger is that they get access to
content," he said in an interview on Australian Broadcasting
Corp.'s Inside Business program.
Last week, Foxtel appeared to have moved closer to buying Austar
by proposing changes to address some ACCC competition concerns for
television content broadcast online.
The ACCC said last July it was "likely to result in a
substantial lessening of competition" in the pay-TV services
market, the market for TV content, and several markets for
telecommunications products in Australia. The ACCC has set a
tentative decision date of March 29 for the proposed merger.
The other half of Foxtel is owned by News Corp. (NWSA,
NWS.AU)--the owner of Dow Jones & Co., publisher of this
newswire--and Consolidated Media Holdings Ltd. (CMJ.AU), which each
have a 25% stake.
-By Ray Brindal, Dow Jones Newswires; 612 62080902;
ray.brindal@dowjones.com
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