Tuesday, 3 December 2013
Word’s going around that Australia’s only pay TV operator, Foxtel, intends to offer broadband internet services for the first time from late 2014. I found myself pondering what this could mean to consumers and whether that changes anything I’ve said about them in the past. You see, during my previous employment, part of my job was to predict market trends in the communications and technology sectors five years into the future – and it’s something I’d like to believe I became rather good at. So… indulge me while I look into my crystal ball.
So what will broadband internet with Foxtel be like?
Well, it probably means you’ll get an email once a year saying they’ve increased your bill by two bucks a month while fencing off more premium content behind paywalls.
Okay, I kid. Here are the five main things I see:
- Foxtel is about ten years behind on the whole ‘triple play’ thing where you get broadband, telephone and cable TV in one package. The market for entertainment consumption has already shown signs of moving away from cable TV towards IP and web-based delivery. This is only going to continue with the roll-out of the NBN, whatever form it takes. Foxtel needs to be in this space as it bleeds cable TV customers to the likes of iTunes, Netflix and internet service providers like Telstra and Optus. It’s a matter of long-term survival for them.
- Tech-savvy customers already using services like iTunes and Netflix will have no reason to sign up with Foxtel when they can already get all of the most popular entertainment Foxtel offers at a fraction of the cost.
- To get the best value for money, Foxtel customers who sign up for the triple play deal will probably opt for the cheapest, low data allowance broadband connection on the assumption that all IP-based entertainment viewing will be unmetered. Anything greater than the most basic broadband package isn’t likely to be competitive against other service providers.
- Foxtel will market the convenience of its broadband services as part of a one-stop shop for all your communications needs. In the short term, to establish a userbase, they’ll probably subsidise their broadband business or shave their margins or write off a lot of initial capital so that they can offer a range of cost-competitive packages. These will be wound back once the honeymoon is over.
- A 500GB monthly data cap on a mid-range broadband plan gets you around 250 hours of viewing in HD. That’s a little over eight hours a day of viewing. The question for consumers is whether they’d prefer to have their bandwidth monopolised by Foxtel, or to have the flexibility to use that bandwidth for gaming, music streaming, Skyping and so on.
As someone who doesn’t have a problem managing the components of his home entertainment set-up, it probably goes without saying that I won’t be interested in Foxtel Broadband.