Telstra readies for IPTV battle with Foxtel

Telstra readies for IPTV battle with Foxtel

Natalie Apostolou  |   June 12, 2009

Whatever legacy Telstra's departing CEO Sol Trujillo leaves, a world-class 'media-comms' giant won't be one of them.

After four years, his effort to turn the business away from dumb pipes into smart content has fallen woefully short.

At the core of the transformation was the attempt to launch a national IPTV network. The carrier staged technology trials with virtually every high-profile vendor, consuming millions dollars and time over the past five years. On each occasion the carrier junked the previous effort and began all over again.

The latest IPTV RFI issued before Christmas held a different type of urgency, however.

This time the threat was not just the state-funded NBN from its familiar adversary, the Australian government, but the IPTV plans of its 50%-owned pay TV affiliate, Foxtel.

November 2008 saw the end of a ten-year non-compete deal between Foxtel and its owners Telstra, Rupert Murdoch's News Corp and Consolidated Media Holdings.

At the time Trujillo flagged that friendly war within the camps would erupt soon. 'There is a lot of growth ahead for us in terms of what we are going to do. It is an important part of our media-comms strategy. The question now about IPTV is how can we make it complementary with other services that we can deliver as we continue to add value for customers,' he said at Telstra's annual investor day in November.

The carrier has remained tight-lipped about its plans since, but a leak of the RFI for an IP set-top box for the latest trial set off an internal witch hunt at Telstra Media.

According to the RFI, Telstra's internet arm BigPond is planning to launch the service by year-end, taking on Foxtel, an increasingly-aggressive TiVo and second-tier ISPs and content retailers such as Quikflix that are also ramping up their IPTV plans.

Prohibited

The mooted BigPond service will include a combination of digital free-to-air, a full personal video recorder, a range of BigPond content services, customized websites like YouTube and Flickr and open access to high-speed web services and cloud computing. The services will also include an e-commerce facility that will cover the full range of Telstra's content from movies, music and gaming.

Foxtel, Australia's biggest pay TV provider, meanwhile has re-launched its web platform with transactional capabilities and streaming functionality that will be further developed in the next few months. Foxtel confirmed that it will launch full-length program downloads in October and provide subscribers with catch-up TV and exclusive screening options such as video streaming of the winter Olympics in February.

From a consumer angle, the use of internet-based technology for applications such as TiVo and Foxtel IQ is blurring the lines between the internet and cable TV.

Foxtel is prohibited by law from obtaining exclusive access to most kinds of content. However Telstra Media is under no such constraints.

Telco analyst Paul Budde claims that Trujillo's parting shot was to make Foxtel the trump card for Telstra in its current negotiations with the government over access to the $31 billion NBN.

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