Rivals and New Zealand Public Slam Sky TV's Digital Monopoly

23 May 2008

AUCKLAND: In its first review of digital TV broadcasting regulations, New Zealand's Ministry for Culture and Heritage appears to have stirred-up a hornet's nest both among rivals and members of the public.

Topping the list of complaints is the pay-TV monopoly Sky TV,  a satellite service controlled by News Corporation which holds over forty percent of its stock.

In submissions made public earlier this week, free-to-air broadcasters including TVNZ, TVWorks (which owns TV3 and C4) and Freeview were vocal in their criticism of what they allege to be Sky's dominance in the digital market.

Sky does not deny the allegation, conceding it has  prospered under the extant "light-handed" broadcasting regulations. But it defends the status quo, claiming that consumers had greatly benefited from the viewing choices it offers. 

Unsurprisingly it declares itself opposed to any new "heavy-handed" regulatory regime, on the classic grounds that this would stifle "investment in new platforms, services and content."

Competitors disagree.

"Sky has been able to develop a vertically integrated business with the potential to exert considerable market power," alleges state-owned TVNZ.

"That lack of marketplace rules and dominance by one player could lead to a lack of media diversity in New Zealand."

While TVWorks posits that the current choice for viewers is "Sky or no pay TV". The government, it said, should create competition by providing "seed funding" for additional Freeview channels, with no direct cost to the consumer.

"New Zealand's delicate broadcasting ecology" is under threat, claims Freeview, the country's first free-to-air digital television platform,. It cites the unimpeded growth of Sky and new digital media.

The latter's subscription revenues are rising at a much faster rate than TV ad revenues, a situation that could ultimately result in Sky outbidding all other broadcasters for premium programme rights.

"The rise of Sky as a natural and dominant monopoly and the growth of digital media mean that this laissez-faire approach is no longer possible if the government is to achieve its stated objectives for the broadcasting sector," argues the Freeview submission.

No surprise, of course, that less thriving broadcasters are going for the jugular of a highly successful and profitable rival. But private individuals have no such incentive. A number of submissions from ordinary viewers were equally scathing about Sky's all but unrestricted monopoly. 

"Sky should not have all the sports channels," wrote one. "They should be FTA [free to air], or at least some sport should be."

Another objector complained that Sky treats its customers with contempt, forcing them to pay for forty to fifty channels with "garbage" content" in order to briefly see a live sport broadcast".

The Minister of Broadcasting and the Minister for Communications and Information Technology will report back to the government by 31 July 2008 on the outcome of the consultation and their recommendations.

Data sourced from nzherald.co.nz; additional content by WARC staff