In the final part of his two part feature about IPTV in Australia, Paul Budde looks at Telstra’s broadband TV competitors. The focus in the region today is on VOD, with Anytime/RIA among those deploying

Monopoly fears

The Australian Competition and Consumer Commission (ACCC) has been cool to Telstra’s content moves (see June issue) and has clearly indicated it will not tolerate Telstra establishing a broadband content monopoly. Telstra is hampered by its Foxtel business and is therefore missing a valuable opportunity to move into the brave new converged world. Regulatory changes will likely lead to Telstra’s divestiture of Foxtel. However, to be a viable competitor, Foxtel needs access to the Telstra network. While this would be disruptive for Foxtel, it could try to forge an alliance with Optus and take on Telstra in a joint action.

In early 2006, Foxtel announced its plans to launch BigPond Movie Downloads, a broadband download-to-PC service, bringing it into direct competition with its 50% owner, Telstra. The move is part of a number of initiatives planned to broaden Foxtel’s distribution platform. The company is already in the process of acquiring the rights for such a service. Foxtel also intends to launch a VOD service, via Foxtel iQ, which enables viewers to record and store shows. It is planned to extend this service to mobile, via a handheld device called iQ2Go.

Commercial VOD

Now, on to other broadband players. VOD Pty Ltd was the first commercial VOD provider in Australia, offering Hollywood movies, independent studio works and archival footage digitally via telephone wire or other varieties of cable networks to a set-top box. VOD Pty Ltd is owned by Movie Source, which is majority-owned by the shareholders of the Australian Video Chain, Civic Video.

Another early VOD provider, TransACT, announced significant improvements to its VOD offerings in 2005. Domination by Telstra/Foxtel and limited content had been stumbling blocks for the company. TransACT’s VOD partner, Anytime, has survived difficult times and is now able to realise its VOD vision. Anytime is backed by Macquarie Bank, LA-based production company Coote Hayes, and Singapore property conglomerate YTC, which have made supply deals with four major Hollywood studios that will provide a library of 20,000 titles, making it the largest single regional offering for VOD. The service began in Canberra with 100 titles, which will be refreshed every few weeks. Anytime is also active in Singapore and Taiwan and conservatively forecasts being in 3 million homes in the region in five years. In March 2006 Anytime indicated it was partnering with Regional Internet Australia (RIA) of Townsville in a deal to bring VOD movies to regional Queensland. The companies plan to use ADSL2+ broadband to deliver on-demand movies from Fox, Sony, Warner and Universal.

The service was expected to go live in Townsville by June 2006, on RIA’s MyNexus service, then rolling out to Cairns, Rockhampton, Gladstone, Mackay, Roma, Mt Isa and Dalby, in conjunction with in-fill to smaller regional centres. Entry level monthly pricing will start at AU$24.95 for a first service (ADSL2+, phone or Anytime), AU$14.95 for a second service, and AU$9.95 for a third service. New release movies can be rented for $5.95 for a 24 hour period. Library (i.e. older) movies will rent for AU$3.50.

Movies Online Ltd’s Reeltime service has secured agreements with leading studios and production houses to supply movies and other content and is a very interesting case. Because Telstra was facing challenges relating to its contractual relationship with Foxtel, regulatory issues relating to market dominance, and the power of Hollywood regarding content contracts and distribution windows, Movies Online was able to sign a wholesale contract with Telstra under extremely favourable conditions; receiving access to the bandwidth it needed for video. This let Telstra off the regulatory hook while allowing it to indirectly ‘compete’ with Foxtel. While Telstra is contractually limited to delivering movies to TV sets, its competitors are not. Reeltime was launched in mid-2005 and, unlike the Telstra IPTV service, by offering the service to ISPs and BSPs Reeltime is not limited to PC delivery. Adam Internet was the first BSP to start offering the service, which delivers MPEG-4 video over its ADSL2+ network. Around the same time iiNet also announced its intention to use Movies Online for its own triple-play model. Optus and around 20 other companies are currently looking at the service. Consumer pricing is competitive with DVD rentals.

Video Ezy

Video rental company Video Ezy has announced it will make an initial VOD debut in 2006, ramping to a full mass market launch in 2007. It is believed the company is well advanced and is undertaking a large-scale consumer research project over the coming months to perfect its business model. With 35% of Australia’s home video rental market, Video Ezy is one of the country’s largest entertainment providers. The plan is that the company will use franchise operators, using an infrastructure developed by Video Ezy to deliver to a set-top box. While the main focus is on Australia, Video Ezy is also planning a 2007 IPTV launch across its international businesses in New Zealand, Thailand, Indonesia, Singapore, Malaysia, Fiji and the UAE. The coverage, and a 20-year rental relationship, makes Video Ezy an attractive proposition for Hollywood studios.

24Mbps broadband

In April 2006, the Soul Group signed a sourcing agreement with CommTel Network Solutions Australia, which will supply Nokia D500 IP Multi Service Access Node systems and related services for Soul, which will provide 24Mbps service for broadband access, IPTV and VoIP services. Deliveries commenced in January 2006 and services were to commence quickly.

In April 2005 California/Singapore-based M2B World announced its intention to open an Australian office and provide a range of broadband television programming. The company claims to provide over 100 channels and has already signed regional contracts with operators such as SingTel in Singapore and with United Power, a Japanese broadband ISP. SingTel offers 25 channels at prices beginning at $5.95 per month and also offers some content over its 3G network.

In addition to this array of providers targeting the TV, several Internet video companies operate in Australia. They include Crank TV, a partnership of Austereo and Sony BMG, which is launching with Sony BMG video clips and VJ links from the radio network. Another is ROO Media, an online broadcast video network with a catalogue of news, business, video game, movie, music, health, travel and entertainment video content, and a business model based on advertising, sponsorship, syndication and e-commerce. ROO’s streaming footprint is across 60 plus countries, 100 plus networks and 10,000 plus servers and can easily handle hundreds of thousands of simultaneous connections.