Thursday, September 11, 2014

Can you pick the inconsistency?

Media concentration/diversity was big news in Australia last year. The ALP proposed a "media diversity test" (under the name public interest) be included in laws controlling mergers and acquisitions.

Its sternest critic was News Ltd (as it still was) headed by CEO Kim Williams.

The good gentleman was on QandA this week, He said two things about media that are worth noting.

On print media he said

And one of the things that I personally have difficulty with is that as media, particularly print journalism, which is still the major generator of news and news coverage in our media - all of the electronic media tend to be clients on the print media, in terms of story sources and investigations, with some notable exceptions, but I don't think even Tony would disagree with that...

On media diversity he said

I don't agree with Sam at all about there being fewer voices because there has never been such a proliferation of voices in relation to the vast array and empowered array of bloggers, of social discourse that occurs in all manner of things.

So the world according to Kim Williams has a proliferation of voices, but it is still print which is the major generator of news coverage in our media.

And he is absolutely correct. What he is saying is that the proliferation of outlets doesn't create diversity - it does the reverse. It generates even more voices to amplify the messages of the print media - despite their declining circulation.

I still stand by my analysis that the Murdoch media is not as influential as it claims.

However, out of his own mouth we have the admission that the Murdoch media is as dominant, if not more so, than it has ever been.

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Crisis in NBN land

The ACCC's decision not to take action against TPG's plans for fibre to the basement creates more of a crisis for NBN Co than might first appear.

The decision not to take action is based on the ACCC's interpretation of the law, in particular that TPG could avail itself of the level playing field exemption. This conclusion is that the existing assets were capable of providing superfast broadband and that the investments are only a less than one kilometre extension.

It is always somewhat unsatisfying to have to rely upon a regulator's interpretation of the law, rather than a court's. As a non lawyer I thought an argument could be made that none of these assets had ever been used before to provide VDSL to residential buildings so they weren't technically capable. TPG is doing something new - it is not just an extension of the capability.

Unfortunately the ACCC is also bound by the Model Litigant rules in Appendix B of the Legal Services Directions 2005.

I suspect this is the source of my long running concern that the ACCC is far more inclined to seek new powers than to test the powers it has in an actual court. It would seem to be far preferable to move to alternative solutions on the basis of a court determination rather than an ACCC interpretation that will have been necessarily conservative because of the model litigant rules.

That said, and since neither the Minister nor the ACMA who could also initiate action seems prepared to do so, we are back to the telco regulation merry-go-round. The simplest and most obvious remedy would be to amend the legislation to remove the per se exemption. To deal with genuine cases of simple network extensions it could be replaced by an authorisation regime for network extensions.

Instead there will be a two part process. Firstly, the VDSL service inside buildings will be subject to a declaration inquiry as outlined in the ACCC release. Such a process could take up to a year. Secondly, the Minister will commence consultation on a carrier licence condition that "would require owners of high-speed networks affected by the ACCC's declaration process to functionally separate their wholesale operations, and to provide access to competing service providers on the same terms as it is provided to their own retail operations."

This is much weaker than the obligation that would have applied to TPG if it was not exempt from the level playing field rules; they require structural separation. These rules also - in common with the level playing field rules - ignore the important questions about where an access seeker is required to interconnect with the  TPG network. If it is at somewhere other than the NBN Co Points of Interconnect this creates a potentially higher cost for access seekers than TPG.

The impact on NBN Co if this is proceeds is immense. If NBN Co chooses not to compete (by building FTTH) with TPG then it has a significant financial impact. TPG will see merit in pricing its services at the same price points as NBN Co's - that is the "market price." TPG will have a monopoly on the buildings for FTTB because two providers can't both use the copper for vectored VDSL. But TPG will only build where its costs are sufficiently low to make a profit.

So NBN Co will lose low cost premises but average revenues.

If NBN Co chooses to compete with TPG by building FTTH then NBN Co also loses relative to the MTM base case because it incurs higher costs (but it may get slightly higher revenues).

But the damage does not end there. While some like Stephen Bartholomeusz think that the functional separation requirement will deter Telstra and Optus, a lot will depend on the actual drafting of that instrument. It is hard to imagine that the functional separation requirement will extend beyond the operating business that provides the actual VDSL service.

Indeed, Telstra and or Optus could go one better to provide a structurally separated by wholly owned vehicle that invests in the VDSL boxes and the fibre to connect to pre-existing fibre assets. This wasn't an attractive business proposition when NBN Co was going to build FTTP.

To be clear - this is a problem entirely created by the decision to deploy FTTB rather than FTTH.

Worse, the instrument being proposed by the Minister could give Telstra the opportunity to rethink what role it plans to take on FTTN. Would functional separation of only the FTTN business satisfy the Minister. The costs of functional separation that Bartholomeusz quotes were the cost of a separation of the existing business, not a prospective separation of a new business.

We see yet again the wonderful intricacies of telco regulatory policy. How the establishment of independent regulators that aren't actually empowered to decide law creates a chimera of oversight, and how once you change one thing how repercussions are felt through the rest of policy.

(A good case study for my CommsDay presentation on 9 October)

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Funding of Terrorism

Excellent report on ABC News 24 just now on how ISIL has achieved its estimated funding of $2bill

Start was donations from Kuwait and Saudi Arabia, from private citizens, to causes in Syria. While some given for humanitarian uses diverted to military causes.

When it broke from Syria it gained other sources. $425 mill in good from bank in Mosul. Then theft from citizens. Next is extortion - otherwise called taxes - from areas colonised. Then black market trade in oil from wells captured. Lastly proceeds of ransoms from kidnapping. Claims the ransom demanded for US journalist was $75 million. US never pays but some Europeans do.

While security analysts spread fear of a caliph are stretching from Spain to Indonesia, the issue comes down to how sustainable that is. All such empires based only on force eventually fail, but it could be messy.

The core strategy has to be to get the Sunni States to identify IS as a threat rather than an ally. The vision of the caliphate needs to be converted as a threat to Saudi Arabia, Kuwait and the other Arab States. 

Tuesday, September 09, 2014

How not to do Corporate Affairs

The results of a trial of a new approach by NBN Co to deploying fibre to the premises show that the NBN Co Strategic Review has over-stated the cost of this option. NBN Co now faces a new set of data in determining the most cost-effective way to build the NBN.

The Age on Saturday reported on the trial in a Fibre Serving Access Module in Melton included the use of small diameter cable and small footprint multiports. They were among a number of initiatives that the Senate Select Committee on the National Broadband Network noted had been ignored in the preparation of the Strategic Review even though the management of NBN Co has used them for the development of the Corporate Plan 2013-16.

More on the implications of this later, but the initial response from NBN Co's Corporate Affairs head honcho Karine Keisler was to jump onto twitter to deny the existence of the trial.

@NickRossTech @theage Nic it's an inaccurate report. Note the absence of NBN commentary. No such pilot. MTM NBN is cheaper and sooner.

In a statement released on Monday NBN Co claimed that it was untrue that the technology in Melton would make a fibre roll-out cheaper than previously estimated. NBN Co said the efficiencies applied in Melton - such as smaller diameter cables and smaller multiports (or splitters) - are already being employed in the NBN build across Australia. 

This resulted in an hilarious article from Richard Chirgwin in The Register that began

NBN Co has issued a press statement assuring media that in spite of what looked like a favourable assessment of its fibre-to-the-premises rollout procedures, things really were dreadful until the new government commissioned the Strategic Review.

Or perhaps things weren't dreadful, but they're really, truly, definitely better now, trust us. Or something.

Fairfax Media then ran an online story in which NBN Co admitted the paper existed but that it was "written by a well-meaning member of staff and was misguided." The article quoted the NBN spokeswoman as saying the report hadn't been endorsed due to "shortfalls in the methodology and metrics." 

But it went on to note that the spokesperson "acknowledged some of its findings had merit and had already been adopted in parts of the network rollout where applicable.  This included the use of thinner cables and smaller footprint multiport equipment."

This is where life becomes really messy for NBN Co. On the one hand they are trying to defend their roll-out as being efficient and adapting changes that can reduce costs and time. However, they also need to defend their own Strategic Review.

The report of the Melton trial compared the deployment to the average of 20 FASAMs completed in the Ballarat area. Telstra remediation works for the trial commenced in January 2014, though many of the initiatives being trialled had been identified prior to September.

The FSAM was completed 70% faster than the comparable FSAMs and at a cost per premise of 50% less than for comparable completed FSAMs.

However the technology choices being trialled were only included by NBN Co in version 13 of its 2013-16 Corporate Plan. This version was presented to he September 2013 Board meeting at which the bulk of the directors retired.

In preparing the "Revised Outlook" for the Strategic Review NBN Co elected to use only the architecture and technology as used in the 2012-15 Corporate Plan. As the Senate Standing Committee on the National Broadband Network noted this substantially increased the costs over the expected costs under the previous management team. 

The Senate Committee recommended that the Strategic Review be redone comparing only a fibre to the premises roll-out using the revised architecture and the Multi-Technology Mix once real costs of copper and HFC were known.

The Government's official response rejected the recommendation, stating that the Strategic Review was prepared to "evaluate the position of NBN Co and to inform decisions on a revised Statement of Expectations." The response also advised that "more detailed view on the issues arising in respect of this recommendation" in the Government commentary posted to the Minister’s blog.

That commentary only questions whether the previous management could have achieved the lower costs, not whether lower costs could be achieved. It is a circular argument that says "my proof of the assertion that the previous management was incompotent is the strategic review, and the strategic review did not include improvements because the previous management were incompetent." 

The only other justification is that the improvements were not consistent with the Corporate Plan. 

NBN Co's best response to the story was to simply ignore the concerns raised about the Strategic Review - to defend it was to defend a document that has been tainted with politics. The only reason why the question of what the impact of the technology changes would be is that the Minister has used his $73 billion price tag claim ceaselessly. 

The Melton study simply shows that this is an artificial over statement of the cost of building FTTP.

NBN Co management needs to be as disciplined as the previous team was - that their task is to implement the objectives of the Government as communicated in the Statement of Expectations.

The next instrument that will come from NBN Co of relevance is the Corporate Plan 2014-17. At the annual results briefing NBN Co CEO Bill Morrow said the Corporate Plan had been submitted to the Government but indicated the company is still revising the outer years. Some of the recommendations from the still unreleased Volume 1 of the Vertigan expert panel apparently have implications for the plan. 

Morrow also advised that the targets to June 2014 are still based on an almost exclusively FTTP roll-out.

In finalising its Corporate Plan NBN Co must acknowledge two simple facts. 

Firstly, an FTTP network can be built faster and cheaper than assumed in the Strategic Review. 

Secondly, concluding the agreements necessary to implement the Multi Technology Mix is taking longer than planned.

Ultimately, the Plan needs to deal with the fact that replacing one technology (FTTP) with four (FTTP, FTTB, FTTN and HFC) is only making an already complex project more complex. That complexity will ultimately be resolved at the level of the business rules for technology choice. The Government’s Statement of Expectations issued in April states:

NBN Co will ensure the business rules it establishes to determine which technology is utilised in each locality are transparent to the community, and periodically updated to reflect technological and commercial developments
The Minister, NBN Co Board members and NBN Co management have all claimed the benefit of the current Government’s approach is that NBN “should be built in a cost effective way using the technology best matched to each area of Australia.”

The Melton trial is another valuable component in making these decisions. In his letter to Australians published on the day after last year’s election, the Prime Minister said:

We will deliver a new business plan for the NBN so that we can deliver faster broadband sooner and at less cost. I want our NBN rolled out within three years and Malcolm Turnbull is the right person to make this happen.

The Minister broke the promise to provide all Australians with 25 Mbps by 2016 when he released the Strategic Review. He claimed that NBN Co was in worse shape than he expected; even though his Strategic Review’s worst case was still $20 billion less than had been claimed by Mr Turnbull in April 2013.

NBN Co in its response to the report of the Melton trial, once it got beyond trying to deny its existence and conclusions, rightly noted that the Multi-Technology Mix allows the company the ability to make its own technology choices based on which is cost effective.

As the Minister said in April last year “We know that fibre to the premises is the best technological solution and if you can build it cost-effectively you should do so. If we're able to build more of it cost-effectively then we would do so." 

This is the promise the Minister  must not break; the promise to let NBN Co make its own technology choice to meet the Government’s objectives. 

And the NBN Co Corporate Affairs team needs to be focussed on promoting the company, not defending the politics. It doesn't need to trumpet that "MTM is cheaper and sooner" as appeared in the tweet - just that the Government has provided NBN Co with goals and flexibility of technology choice and NBN Co will do whatever it can to do that in the most efficient manner possible. 

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Wednesday, September 03, 2014

More on Kim Williams

I was somewhat scathing of Kim Williams' comments on the NBN that had been covered in an extract of his book. Today's Communications Day has alerted me to the fact that Williams has been at it again - that is again demonstrating a bias for prejudice over facts. But this time his attention is over an issue he should know more about - Pay TV in Australia.

Unfortunately Grahame Lynch's comment is only a report of what Williams says - not an analysis. Having already dealt with the detail of his claims about the NBN, let me now explain what he gets wrong about Pay TV. (Though I must thank Grahame for alerting me to the book's availability - my bookseller had advised 4 Sept as release date - but I bought it for Kindle just now).

Williams principal argument is that the excessive regulation of Pay TV resulted in the accumulation of significant losses. His conclusion is:

Some $10 billion was written off as a result of flawed policy and regulation. Bad policy is always hugely expensive in so many ways— not the least of which is, of course, investment confidence.

This is entirely a delusion. The bulk of that write off was a result of a failure to regulate, not the reverse.

At his book launch, according to Crikey, Williams noted that anyone who knew him also knew of his affection for the aphorisms of Mark Twain, in particular that "if you tell the truth, you don't have to remember anything."  Someone should have suggested to Williams that if he couldn't remember things he should look them up, not make them up. 

Williams starts his tale in the early 1990s saying:

Keating and I engaged in policy debate over the reform of the Broadcasting Services Act when he became prime minister (sic). At that stage I was at the ABC to set up its participation in the new subscription delivery regime, which was contemplated under the new 'renovated' Broadcasting Services Act...The reform of the act was a very messy affair with the worst example of the Bismark dictum on the making of laws. (Note: According to Wikiquote "dictum" is misattributed - its earliest known variant was "Laws, like sausages, cease to inspire respect in proportion as we know how they are made.")

It is a pity that Williams didn't start a little earlier with his policy analysis to reveal why in the re-write of the BSA there was any consideration regarding Pay (or subscription to use the industry's preferred descriptor) TV in the Act. For that the best source is Mark Westfield's The Gatekeepers (having been very close to much of this I can say the book is mostly accurate - except when it refers to Telstra's strategic partnership agreements as SPARs (p.237) - having been a co-designer of them I can promise you they were SPAs).

In 1980 then Minister Tony Staley commissioned the Australian Broadcasting Tribunal to report on Pay TV. It reported in 1982 with a recommendation that it be introduced quickly. Neither Staley, nor his successor Neil Brown (of ABC/SBS Board appointment fame) managed to act on the report. The incoming Labor Government was subject to intense lobbying, especially by the lobbyists for Packer, with (according to Westfield) particular effect on Victorian Ministers with the line"How would Victorians take it if they had to pay to see their football on television?"

The little movement that occurred was the advent of restricted distribution services to pubs and clubs - mostly distributing live sport, but especially racing.

This all changed on 2 October 1991 when Kim Beazley met with Richard Li (son of Li Ka-Shing controlling shareholder of Hutchison Whampoa) and and the MD of group Sion Murray. Beazley was on a mission to find potential bidders for the second telecommunications licence in Australia, which included the obligation to buy the Government owned satellite operator AUSSAT. Murray told Beazley "Unless you allow the satellite to be the exclusive carrier for pay television in Australia, we will not bid."

The rival bidder - Optus - had no interest in using the satellites for pay television - but without Hutchison (see note).  (the above is from Westfield Pp 23-25 & 57-60)

Economist Ross Jones provided a useful summary of the policy issues in the Summer 1991 issue of the CIS magazine Policy. Jones was concerned about the granting of a Pay TV monopoly of eight (to be expanded to ten) channels on the AUSSAT satellite platform. He did, however, observe:

The observation about the logic of the deployment of more than one cable system should be noted. The experience Jones talks about in the UK was eventually resolved by the merger of the satellite operators.

But to return to the point, the decision to open up the pay TV market at all was a consequence of another pro-competition decision, in telecommunications. And the monopoly proposed was only in the platform, not the providers.

The idea of satellite only Pay TV was already being challenged by the development of narrow-cast distribution systems using MDS (the 2.3 GHz spectrum now being used in regional areas by NBN Co and in metro by Optus for TD-LTE).

Williams refers in passing in his book to the ongoing policy discussions, the lobbying by television networks concerned that they would be closed out of pay and the lobbying by the ABC to have the two channel allocation made to them. Westfield covers this in detail - but suffice to say on Nine's Sunday program on 31 May 1992 PM Keating announced that there would be no platform restriction on subscription broadcasting licences.

This was the model that was legislated in the Broadcasting Services Act. Williams asserts that there was some "law of unintended consequences" and that once passed the Government was somehow surprised by the use of other technologies. It was not, it had realised the error of accepting Richard Li's proposal.

Williams asserts that the satellite services were used in "very light-touch, low levels of initial rollout." He attributes this to the decision to mandate a digital service. That wasn't the key driver - the key factor was marketing and the intersection of delivery platforms with the race for content.

However, the plans to auction the remaining MDS licences prior to the satellite services being launched was eventually de-railed - by the Prime Minister intervening again. In January 1993 the MDS auction was deferred. (Westfield Pp 131-137. This includes subsequent Australia Chairman Rod Price's infamous spray a Alan Fels about the latter's fate post the supposedly unwinnable - for Labor - election. This seems to be an unjustified assertion that subsequent ACCC decisions were payback).

When the digital satellite licences were allocated it was by auction - not the beauty parade that Jones complained of. It was, however, a very flawed auction process. The highest bidder was informed they had won and then given thirty days to decide whether they wanted it or not. A few players realised this and used the opportunity to place multiple bids.

One of the unsuccessful bidders was a consortium of Packer, Murdoch and Telstra (called PMT). The Telstra strategy in this venture was to utilise satellite as a market-finder; areas that had the highest take-up would be the first to get an HFC cable. Telstra had already deployed a test system in Paddington - a facility to which every media participant toured at some stage.

The (eventual) successful bidder for both was an entity called UCOM headed by Albert Hadid. Hadid on-sold the B licence to Australis and the A licence to a consortium headed by US pay operator Continental Century. The ABC licence - the C licence - was never taken up (I think - Williams directs us to Pamela Williams' Killing Fairfax for this story...see Note 2).

When the MDS licence auction got underway in 1994 Australis knew it needed to win the metropolitan licences, but wanted partners who would be franchises of the actual service (marketed as Galaxy) in regional areas. A UIH subsidiary the called CETV won most of the rest of the country and the Continental Century partnership bought trading as East Coast Television (whose MD Patrick Delaney now heads Fox Sports) held a pocket on the coast of NSW and Tasmania. CETV later changed its name to Austar (when I was working with them), and much later absorbed East Coast Television.

Ultimately the four channels that made up the A licence were provided by a group - XYZ - part owned by Austar. The other four channels that made up the B licence included Australis' biggest coup - a movie channel "Showtime" (of which more in a moment).

Apart from the delays that occurred in settling on the digital standard, the operators preference was to utilise their MDS licences first. The main reason was that the best sales channel was door-knocking, and it was easiest and most profitable to door-knock the areas where there was MDS reception.

It was at this point that the cable plays began. Optus' interest in HFC was entirely motivated by its telephony business - after all it was the firm that was going to make money from actual selling the satellite TV service. The telephony interest was a way to by-pass the very high rates Telstra was charging for what was then called "PSTN Ingress and Egress" (from which the PIE model used in regulatory proceedings got its name - this is now PSTNOA and PSTNTA). Telstra was charging an average of about 4.5 cents per minute.

Telstra ignored the threats. To make the threats real Optus partnered with Continental Cablevision to build Optus Vision. Despite the fact that Packer had been part of PMT and that Telstra and News each owned 15% of Seven, both Nine and Seven joined the Optus Vision consortium.

At this point Telstra's Frank Blount approached Optus offering to dramatically reduce the access prices - but Continental was here for cable TV and told Optus they couldn't negotiate. The launch of telephony didn't go smoothly for Optus, but once it was stable OptusVision still charged Optus the Telstra rate for access, claiming it was the market rate).

Telstra was now confronted with a scenario that was going to seriously erode value; but their own analysis determined that the loss was actually less if they also built an HFC network. Having done so they were confronted with the second issue of content. While some in Telstra favoured the pursuit of a deal with another US Pay TV operator, a small group in Telstra (including me) favoured a deal with News.

News was, however, also considering participating in OptusVision. The PMT venture was formally dissolved on 9 September 1994. At a meeting in LA over the weekend of 8-9 October 1994 Kerry Packer's CFO Nick Falloon (later Chair of TEN) met with Rupert Murdoch, Sam Chisholm and Bruce McWilliam (now at Seven). After the latter two left Falloon convinced Murdoch to join OptusVision - according to Westfield (P.277)  "he pressed the point that it was essential if the business was to be profitable that Australia have one dominant provider."

Murdoch's decision was relayed to Ken Cowley who relayed it to Telstra's Frank Blount. However a chance encounter that night and a bottle of red wine saw News and Telstra resurrect the deal. Once again according to Westfield (P.278) the two selling points for Murdoch was that in the JV with Telstra News would not need to provide any cash to build the cable network, and that PM Keating favoured the deal.

While News had prevaricated OptusVision and Australis between them had secured the rights to all the Hollywood movie content after frenetic and crazy competition. The Hollywood studios were confronted with two players each of whom claimed to be servicing the whole country. They had a very simple strategy for ensuring they weren't risking choosing a loser rather than a winner. The contracts stipulated a price per subscriber, but they also specified a minimum number of subscribers each year that translated into the forecast for the entire pay TV market in Australia.

Ultimately Foxtel acquired its movie content from Australis, but paying much more than Australis was paying. This movie content agreement was Australis biggest asset. On the flip side though, the franchise agreements Australis struck with CETV and East Coast Television in the end did not even cover the content cost Australis bore.

So now the stage was set. Australia and its franchisees settled into a partnership with Foxtel, and the OptusVision venture only had cable distribution (though it actually earned revenue from the Australis use of its satellites).

So a policy decision to introduce Pay TV to Australia, triggered by the opening up of the telecommunications market to competition, resulted in all three platforms of MDS, satellite and cable being used with essentially two competing content plays and two competing cables.

Despite latterly being a passionate advocate for competition, Williams in his book describes this as:

The law of unintended consequences, however, asserted itself with ferocious force, because the new approach separated the broadcast licences from delivery technologies and because those in the cosseted world of Canberra had not contemplated that other technologies and frequencies might be used for delivering subscription services. These, as an example, included cable -the intense fights conducted by Telstra and Optus have been written about extensively-and MDS...

Meanwhile the law of unintended consequences asserted itself with a vengeance (sic - this is only a few pages after the preceding text) after the new services were promoted across Australia....The result saw consumers being utterly confused and churn rates (the rate of subscriber rollover) between the various players in excess of 100 per cent per annum - again an attractive world first! It was real wild-west territory and horribly wasteful.

Williams tries to sheet the blame here entirely to the decision to mandate that the satellite service be digital. But the more rapid deployment of satellite would have had negligible effect on the cable competition. Satellite was inherently limited - especially if an analogue service was chosen - in the number of channels available.

But Williams is right - the real bloodbath was yet to come. This was the battle for sports rights. The "anti-siphoning" regime introduced with Pay TV was always an essential political element - the people who pay their taxes and vote had no interest in seeing the quantity of quality sport broadcast reduced. But it did not create the competition for sports rights.

Williams asserts:

Bad regulation demands creative responses so part of the solution was found in the financially destructive, in many ways, forced launch of the Super League. The Super Rugby also followed. Both were invented contests and therefore were able to be shown in their entirety because they were not on the anti-siphoning list. It was outrageous or predictable, depending on your perspective.

This is simple delusion. Seven and Nine as the free to air rights holders of the AFL and NRL respectively partnered with OptusVision to provide both sports on Pay TV. The AFL product was a particularly strong driver of subscriptions because it had a wider national appeal than its free to air coverage. It wasn't the anti-siphoning regime that was the issue, it was the relationship between the free to air stations and one cable operator.

Wile Super League was an invented competition, News did all it could to replicate Packer's 70s cricket coup of so bowdlerising the League that the alternative product was worthless. In this they failed. They had however sufficiently downgraded the product to the point where the NRL and Packer needed to achieve a reconciliation.

Williams concludes:

I was to clean up the leftover commercial consequences for Optus, Telstra and FOXTEL with a deal in 2002 that saw FOXTEL contracted to provideits services to Optus and FOXTEL become the main brand name synonymous with the subscription TV category in Australia. At that stage the accumulated cost between Foxte's and Optus TV's establishment costs and the separate overlapping cable networks that supported delivery of their services exceeded another $7 billion in write-downs.

Actually, at the point Williams was brought in Optus had simply been defeated. Westfield's book ends at the point where Autralis died - its assets were carved up between Foxtel, Optus and Austar. But more had happened by 2002. OptusVision had been blown apart by first an increase in Nine's stake which contravened the shareholders agreement, and then litigation by Seven over this. Optus cable business was primarily focussed on broadband and telephony.

When Foxtel (and Telstra) made the decision to digitise their service and greatly expand channel numbers Optus was confronted with the choice to do the same. History had shown that such destructive behaviour was possible again...and the trade-off was the content sharing deal.

Yes the Pay TV era was incredibly destructive - but was it caused by a layer of prescriptive regulation or the reverse, an excessive belief in the viability of infrastructure based competition? Were the firms investing irrational or is the tendency of all firms to over invest in times of change systemic? (The latter case is also supported by the free TV story as the three national networks created by Skase, Bond and Lowy failed).

I will not even gratify with a refutation Williams absurd proposition that Senator Conroy as Minister "never had any intention of delivering on his word" in relation to anti-siphoning. I can only assume that one of the reasons for Williams eventual dismissal by News was his inability to negotiate any outcomes in the regulatory space at all.

In Pay TV, as it does in telephony, Williams' book should not be relied upon by anyone seeking to understand Australian communications policy.

Note: Hutchison was part of the Kaloori consortium. When I worked at Hutchison in 1998/99 there was a copy of the Kaloori bid document in the photocopy room. Unfortunately I never looked at it. My recollection (and I couldn't find a source) was that in the end Kaloori did not bid.

Note 2: The ABC joint ventured with Fairfax and US based Cox Communications to utilise the two satellite channels. The company Australian Information Media was formed and headed by Kim Williams. AIM needed to get access to a subscriber system, and for the satellite that meant Galaxy. AIM also negotiated with Foxtel and OptusVision. After Williams suddenly left the ABC/AIM to head Rupert Murdoch's Fox Studio business (note this is the sequence as reported in the Pamela Williams book that Kim Williams refers us to - Kim W's Wikipedia entry has it that he joined Fox Studios only after the deal failed, Foxtel and the AIM partners reached an agreement for the news channel that was agreed by then Foxtel CEO Mark Booth and Sam Chisholm. News of the deal reached the AFRs Mark Furness who wrote the story...which was how Rupert Murdoch heard of it and he instructed it be killed. It was Richard Freudenstein, Foxtel's legal adviser and now CEO, who had to advise the other parties the deal was off. Mark Furness was appointed Director of Corporate Affairs at Foxtel in 1997.  Kim Williams joined him there as DEO in 2001.
{Williams dates his move to Fox Studios as April 1995, the Furness article was 28 July 1995}
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