Sky TV stands by claims that big telcos can zero rate competitors

CEO John Fellet personally emails Vodafone CEO and Telecom Retail CEO, and is copied in on email to TelstraClear. Update at 4:30 pm Vodafone responds

Sky TV CEO John Fellet wrote to Vodafone and Telecom earlier this month to personally let them know the telcos can zero rate content to rival Quickflix.

This follows an email to a TelstraClear executive on March 29, in which Sky TV also says the telco can unmeter content to Quickflix and it will not be in breach of its contract.

It appears that Sky TV has no issue with the three largest telcos in New Zealand unmetering content to a rival video on demand services as long as the iSKY service is treated in the same way, and the telco isn’t paid a fee by the rival service to do so.

Quickflix entered the market on March 29 and Sky TV head of communications Kirsty Way told Computerworld at the time that the big telcos are able, as far as Sky TV is concerned, to zero rate traffic to the Quickflix site.

At the Telecommunications and ICT Summit on Tuesday Vodafone CEO Russell Stanners and TelstraClear CEO Allan Freeth said they would not be zero-rating Quickflix content. Freeth said he wasn’t sure his contract with Sky TV would allow him to do so.

Way showed copies of emails sent to each telco to Computerworld yesterday. Here are the relevant paragraphs from the three emails - each is slightly different as this reflects the individual arrangements each telco has with Sky TV.

Email to Vodafone CEO Russell Stanners from Sky TV CEO John Fellet

Monday April 2

“Under the terms of our reseller contract with you, there is no restriction on Vodafone or iHug simply (i.e, without anything further that might amount to “Special Assistance”) un-metering any third parties services including Quickflix, since this is a provision of a benefit to your own ISP customers and does not, by itself, amount to the provision of Pay Television Services or Special Assistance. As your Pay TV partner we would expect that if Vodafone does un-meter any video based services of a third party like Quickflix, then Vodafone would do the same for iSKY at least on an equivalent basis but hopefully better. We would also expect that you would always give greater prominence to the services provided by us, your content partner, in any marketing.”

Email to Telecom Retail CEO Alan Gourdie from Sky TV CEO John Fellet

Monday April 2

“Under the terms of our reseller contract with you, there is no restriction on Telecom simply (i.e. without anything further that might amount to “Special Assistance”) un-metering any third parties’ services including Quickflix, since this is a provision of a benefit to your own ISP customers and does not, by itself, amount to the provision of Pay Television Services or Special Assistance. As your Pay TV partner we have stipulated that if Telecom does un-meter any video based services of a third party like Quickflix, then Telecom must do the same for iSKY on an equivalent basis (e.g. in terms of how the un-metered access is promoted etc). Of course any bundling of a third party’s video content with any Sky services is not permitted.”

Email to TelstraClear executive Charlie Clementson from Angus Swainson (Sky TV CEO John Fellet among those copied in).

Thursday March 29

“Under the terms of our contracts with you, we had not contemplated the existence of, and you have not committed to un-meter, iSKY. Nevertheless we do not believe that the restrictions in the Retransmission contract restrict you from simply (ie without anything further that might amount to “Direct Assistance”) un-metering any third parties services since this, by itself, is the provision of a benefit to your own ISP customers and does not amount to the provision of Pay Television Services or Direct Assistance. As your Pay TV partner we would expect that if you were to un-meter Quickflix then you would do the same for iSKY and we would be understandably upset if this wasn’t the case. Of course any bundling of a third party’s video content with the SKY services is not permitted and in terms of promoting the un-metering of Video Content services you would need to be mindful of the provisions in the contract (including those around Direct Assistance) – we would also expect that you would give greater prominence to the service provided by us, your content partner in any marketing."

Computerworld has sought comment from Telecom, Vodafone and TelstraClear.

Update at 4:30 pm Computerworld has received the following email from Vodafone spokeswoman Sarah Newcombe:

"We have made a commercial decision about the way we are approaching QuickFlix right now; we have never said were unable to un-meter it. As you noted in your story on 17 April when Computerworld suggested that Quickflix was competition for Sky TV, Russell Stanners replied: 'Saying Quickflix competes with Sky is like saying the corner dairy competes with Countdown.' QuickFlix is an emerging player and this an area we will continue to watch with interest."

Update at 12:20 pm Computerworld has received the following statement from Alan Gourdie, CEO of Telecom Retail:

"Telecom is continually assessing what value to offer customers as well as offer the best value-added services.

Just as Sky does not give its airtime advertising away for free, we do not give our bandwidth away for free to other organisations for use with commercial services. We also review our data offerings regularly to ensure we are meeting our customers’ needs as new services like Quickflix arrive in New Zealand. We are always open to discussions with organisations like Sky and Quickflix to provide services that are beneficial to customers and all other parties concerned.

Customers with 100GB per month on our Total Home Broadband plan could stream over 100 movies and TV shows from Quickflix every month, so we are confident our current plans provide the right amount of data for anyone looking to use Quickflix or a similar service."

Update at 9:30 am Computerworld has received the following email from TelstraClear spokesman Gary Bowering:

"We're surprised and somewhat disappointed that our commercially sensitive discussions with Sky should be made so readily available to the media. However, we've spoken to Sky about this and they have offered their regret that they shared this part of the email dialogue we have had with them. Our aim is to have these discussions privately with Sky rather than through the media."

10 Comments

Anonymous

1

Hello? Anyone home in cloud cuckoo land???

Only you mate you're the sole occupant.

Anonymous

2

This simply shows the sad state of affairs and collusive behavior that is inherent, not because of bandwidth, but because of upstream licensing of content.

Un-meter is as far as I see it, simply a means to scrap the meat on the bones of the carcass that is centralized distribution.

The Yanks have this one right via their net-neutrality provisions. Telcos here have cocked it up royally by allowing the idea of un-metered content sites to become a service offering deal. It is anticompetitive. Period.

henareho

3

I've been giving Sky and hammering because I thought that their contracts were restricting the Telcos and ISP's from providing content from other providers. Seems this is not the case at all and that Telstra Clear boss Alan Freeth was crying wolf.

Apologies to John Fellett and his team at Sky, from the email above their actions seem fair and reasonable.

As for the telco's,hmm......

Anonymous

4

What this really shows is how clever Sky is. "Sure you can unmeter QuickFlix, but you have to do iSky to" - is asking the telcos to open a floodgate that only really benefits Sky. Quickflix doens't have as much content as Sky does (or could have if it wanted to) so on the law of averages, most people would end up seeing iSky content, not Quickflix content.

Result:
Sky wins; They look good for exncouraging competition. They get lots of their customers using iSky and all at zero cost to them. Sure some cusotmers view Quickflix, but they're so small Sky won't care. Lots of happy Sky customers and traffic to the site + zero cost = WIN!
Telco's lose; they carry the burden of that extra data traffic that has very low margin for them and isn't worth it for the cost of the traffic (see comments from all three companies at Telcon12) and they get criticised for not upping the data caps along the way, and probably for not providing the speeds people want to see the content. No profit + public crticism = FAIL.

Where's the telco incentive in the above? Would you open the floodgate?

Anonymous

5

It's a bit scummy that TelstraClear seems to believe it's OK to make Sky look bad by lying about the nature of their contract because they don't want to unmeter QuickFlix, but woe be unto Sky if it wants to set the record straight - that's a serious breach of commercial sensitivity!

I know one ISP I won't ever consider going with - I like having ethics in a provider thanks.

Anonymous

6

Why did they say no?

These three dinosaurs are the biggest roadblock to New Zealand joining the 21st century in telecommunications.

In most other (non-3rd world) places internet television in NORMAL. Broadcast TV is passe. Here the three biggest carrier won't un-meter TV content.

New Zealand used to be so proud of being early adopters of technology. I guess that was last millennium!

Anonymous if blank

7

Typical response from TelstraClear. Freeth appears to have told a porkie (albeit saying he "wasn't sure"). But instead of apologising, explaining or elaborating, TelstraClear bluster about the breach of confidentiality. All Sky was doing was put some facts on the table in response to Telstra's misleading comment.

I'm no apologist for Sky. However, this is a matter of public interest and if the public is being misinformed they have a right to table the evidence.

Anonymous

8

Don't care much about TelstraClear or Sky, bring NetFlix to NZ!

David

9

A year ago my datacap was 10gb and rubbish. In May it doubles to 160gb after being double a few months back. I think the cap issue is starting to resolve itself for more than just mainstream NZers. But unmetering is just a retention tool for telcos - trying to reduce churn. Unmetering Quickflix is a good look but would have little impact. Unmetering isky is serious data for free, but would also have a big impact on retention

Anonymous

10

Lets replace the word "sky" with Telecom and "Fellet" with Gattung..... Is it just me or is Sky trying it on because they're a) scare silly be possible regulation and b) scared even sillier by real competition?

This response by Sky is a pretty blatant sign of the monopolism at play here... ARE YOU READING THIS COMCOM?????

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