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COMMENT: Why Fetch TV Deal Faces Problems

The purchase of 51% of Fetch TV, for $50M raises serious questions, as to why Telstra has gone down a content path when they already own 35% of Foxtel.

Fetch TV is an aggregator of other people’s content, with the business made up of subscribers from Telstra’s archrival Optus, iiNet, Aussie Broadband, Dodo and Primus.

So does this mean that Telstra now has access 650,000 plus iiNet, Aussie Broadband, Dodo and Primus customers which would gives them a carrier monopoly when it comes to streamed content across carriers.

These are the same carriers that deliver the bulk of NBN broadband customers in Australia and that is a monopoly.

Or have they simply paid $76 a head to get access to 650,000 of their competitors’ customers.

Optus told ChannelNews that it wasn’t a surprise, that the deal was done.

It also appears that at this stage they have no option but to stay with Fetch TV until they have an alternative solution which ChannelNews understands is currently being developed.

Optus management who are tipped to lodge a complaint to the ACCC claim that they were already moving in a different direction prior to the deal being announced with what they are describing as a world-first SubHub offering.

SubHub, provides Optus customers with the option to manage their content subscriptions all in the one place, and currently includes partners such as Netflix and Amazon Prime.

They said that the Optus SubHub enables a digital everywhere approach, offering customers the content they want without the need for a traditional set-top boxes.

The man behind this questionable move to buy Fetch TV s Danish telecommunications executive Kim Krogh Andersen.

He came to Australia a year ago to develop Telstra’s technology and product blueprint.

The last Nordic executive Telstra hired, Stephen Elop, the former CEO of Nokia failed to deliver for Telstra despite selling the carrier on his skill set and capability and quickly left the Country.

Andersen claims he can see many ways consumers are accessing streaming video services and free-to-air TV he singled out Telstra TV’s Roku box, Foxtel’s iQ boxes Apple TV, Google Chromecast, Microsoft’s Xbox, Sony’s PlayStation and smart TVs from Samsung, LG and Hisense.

Hello! Most of these are competitors that are already cranking out aggregated content delivery while taking a click of the ticket when new subscribers sign up.

You only have to look at what LG and Samsung two Companies that own over 60% of the global TV market have done during the past 18 months.

Both South Korean TV brands have restructured their Smart TV offering with LG creating an open source offering with their webOS software so that they can take a bigger click of the ticket.

This upgrade has resulted in their webOS content software now appearing on TV brands such as Bauhn which is sold at Aldi, Polaroid TV’s that are sold at Big W as well as over 20 other TV brands.

They have done this because they are now taking a click of the ticket every time a new consumer signs up for a paid content streaming service such as Netflix, Disney+, Paramount +.

This amounts to tens of millions for these TV brands.

In the USA small TV brand Visio netted over $A$220 million from clicking the ticket on content streaming services because they have their own smart TV operating system.

Back in 2015 I sat in the Telstra presentation theatre along with the CEO of Roku when Telstra management bleated, that they were going to change the world, with their “All new” Telstra TV Roku box which in 7 years appears to only have managed to attract 800,000 users.

I got a Telstra TV Roku box for free when I switched to Telstra broadband, it sits in a cupboard gathering dust because like thousands of other Telstra customers I never use the box.
I use a Foxtel iQ5 and a Fetch TV box.

Currently Telstra is on the third iteration of the Roku set-top box with their licence set to expire next year.

It would be interesting to see how many users are active participants of the Telstra TV box which was never a good box.

There is one plus out of the deal, the Fetch TV Mini and Mighty set top boxes are superior in every way.

Anderson is already claiming that there should be no concern for the Australian Competition and Consumer Commission because Fetch TV is an aggregator and not a controller of access.

How about the model where Fetch TV is already in bed with several carriers of broadband and when coupled with Telstra creates a questionable monopoly position for the ACCC to consider?

Scott Lorson the CEO of Fetch TV told the AFR, that Fetch is like a Westfield shopping centre, which is agnostic to retailers (streaming services) leasing space.

He said that their model is based on Fetch clicking the ticket on the way through.

Another alternative is that Telstra is playing a long game by trying to jack up News Corp who own 65% of Foxtel which allows them to control the business.

Fetch TV could well be a carrot that Telstra is waving under the noses of News Corp management, when their real aim is to buy out News Corps share of Foxtel on the cheap.

Foxtel is currently facing a battle to retain sports codes and entertainment content supply and if News Corp does decide to say stuff you, bid high for NRL and AFL content and they retain HBO, Telstra will then have to decide whether they want to sell their 35% or put up with brutal competition from Foxtel who are set to roll out their Glass TV offering next year.



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