Foxtel special access undertaking for the Digital Set Top Unit Service
Special access undertaking lodged pursuant to s 152CBA, Division 5, Part XIC (December 2006)
Facts
The Special Access Undertaking specifies the terms and conditions upon which Foxtel undertakes to supply what it terms the 'Digital Set Top Unit Service'. An initial 2005 undertaking was rejected by the ACCC. A revised application was accepted by the ACCC in 2007.
ACCC decision
Final decision
Reasonableness of terms and conditions in the Undertaking
The Commission is satisfied that the terms and conditions specified in the Undertaking are reasonable as required by s.152CBD(2)(b).
On balance, the Commission considers that the Undertaking provides a potentially effective form of access for content provider access seekers wanting to provide services to Foxtel’s existing subscribers in competition with Foxtel’s tier channels i.e. niche channel providers.
In particular, accepting the Undertaking provides access to the 'minimum bundle of assets' that a niche channel provider (who intends to provide tier channels to Foxtel’s subscriber base) requires in order to provide its subscription television services to end users. That is, the Undertaking provides access to Foxtel's subscribers (the key obstacle for content providers), as well as access to modem services and inclusion in the EPG.
The Commission considers that there is value in niche channel providers having a mechanism for gaining distribution on Foxtel’s digital platform, given Foxtel’s market power in the acquisition of subscription television content and the scale of its existing subscriber base. In this respect, the Commission notes that the Undertaking would provide improved terms and conditions of access compared with Foxtel’s current [10] operative s.87B undertaking, including provision of access to modem services and EPG services.
The Commission notes that Foxtel’s TSLRIC-based pricing methodology will result in access prices based on costs, and that Foxtel will be allowed to recover the costs (operating, capital, and some common costs) incurred in providing the service, plus a normal return on capital. Therefore, the Commission considers that the pricing methodology will lead to efficient access prices and encourage economically efficient investment in infrastructure. Further, the Commission considers that this methodology takes proper account of the direct costs Foxtel incurs in providing access to its Digital Set Top Unit Service.
In addition, the Commission is satisfied that the non-price terms and conditions in the Undertaking are in the LTIE and give due regard to the interests of Foxtel as the access provider and the interests of access seekers.
Consistency with the SAOs
In regards to the consistency of the Undertaking with the applicable SAOs, the Commission notes that the Undertaking is limited to the Digital Set Top Unit Service as a bundled service (unlike the October 2005 Undertaking), without any attempt to cover stand-alone access to its unbundled component elements.
Further, the tying clauses meet with the obligation to supply the active declared service whether or not the tying clauses are treated as limitations on the service. The Commission is satisfied that the Undertaking is consistent with the obligation to supply the active declared service.
1.4 Conclusion
Overall, the Commission is satisfied that the terms and conditions specified in the Undertaking are consistent with the applicable SAOs to the extent that those obligations would apply to Foxtel if the relevant service were treated as a declared service as is required by s.152CBD(2)(a).
The Commission is satisfied that the terms and conditions specified in the Undertaking are reasonable as required by s.152CBD(2)(b).
As a result, the Commission’s Final Decision is to accept the Undertaking."
(pages 9-10 ACCC Final Decision (March 2007)))
Submissions
Submissions are available on the ACCC site - the key opposing submission was by the Seven Network
