AAPT aims to have pay-TV up and running next year

1:00pm - By PETER GRIFFIN

Telecom's Australian operation AAPT is determined not to be left out in the cold by the Foxtel-Optus pay-TV content sharing deal and hopes to have its own pay-TV offering in the market by the middle of next year.

The Australian Competition and Consumer Commission (ACCC) last week cleared an A$1.3 billion deal between pay-TV operator Foxtel and second-ranked Australian carrier Optus, allowing the two to share programming and networks.

While the deal was watered down at the behest of regulators to require Foxtel to open its network to rivals, smaller carriers remain nervous at Telstra's 50 per cent stake in Foxtel and fear a cosy duopoly is being formed with Telstra and Optus looking to mop up the pay-TV market between them, bundling phone, internet and pay-TV access.

Telecom's chief operating officer for Australia, David Bedford, said he had misgivings about the deal being rubber-stamped by the ACCC when the body has raised its own concerns about Telstra's role in the pay-TV market.

He had flagged his concerns to the ACCC and written to communications minister Richard Alston.

"The [ACCC] felt it was beyond their power to rule on anything about that. They've flagged it as an issue but let the deal go through without it being dealt with," said Bedford.

"If you want competion in the telecoms industry and other players apart from Telstra and Optus are going to be denied one of the key components, you're not going to get competition," he added.AAPT's consumer business had revenue of $187 million in the three months to September 30, largely derived from local and long distance calling and cellular traffic, and made a surlpus of $6 million. Overall the Australian business is just now breaking even.

While struggling to match Telstra on deals in the consumer Telstra market, Bedford said it was imperative AAPT was able to offer pay-TV and negotiations would take place later this month to try and secure a content deal with Foxtel.

"It's more than volumes, it's the perception. You have to be able to provide that full range of services if a customer wants it. If you don't have that there's a risk of you being seen as not one of the top rank," said Bedford.

Foxtel had shown a willingness to negotiate with AAPT some time ago, said Bedford, but had "been dragging their heels" more recently.

"When you're one of the smaller players, you have to make a bit of fuss from time to time to get listened to," he said.

"I'm not sure what the timing will be but we're keen to be able to package into our offering pay-TV certainly in the first six months of next year."

Telstra plans to begin offering customers Foxtel subscriptions from December 1.