‘Skyfone’ view of competitive market contentious

SkyTV shareholders have voted to merge with Vodafone NZ in a complex deal in which Vodafone NZ’s global parent will hold the controlling 51% stake. In effect SkyTV will pay $344 billion for Vodafone, of which $1.25 billion will be in cash and the rest in shares.

The deal only requires Commerce Commission approval and documents the companies have supplied paint a vibrant, competitive view of the telco, sports broadcasting and PayTV market New Zealand. This is a contentious view. Why? Here are three points to consider:

  • Competition in broadband – the documents claim there are 80 broadband providers in NZ, but if you look at the list of liable companies for the telco development levy, there are only 7 providers offering retail services (not counting wholesale providers although if you include Kordia then its 8), not 80. In order to be liable for the levy, you have to be a telco earning over $10m a year from the NZ market. Where did they find the other 70+ providers – they may exist but they are tiny and barely competitive with Vodafone’s market presence.
  • Competition in sports broadcasting – SkyTV asserts that sports bodies themselves are producing their own content, but that too is overstated. The documents name sports organisations such as Auckland Cricket, Hockey New Zealand and New Zealand Football. But it’s rugby that really matters, and while the documents note that a rival has acquired some rights to major rugby games – these rights do not include NZ.
  • Sky TV claims its content will continue to be offered to other players – but at what cost? The price isn’t regulated, so it isn’t public how much SkyTV charges, or the terms and conditions. If it’s priced out of the market then it’s effectively not being made available to other players.

For more on this merger and other topics such as teaching Digital Technology in New Zealand Schools and the Facebook privacy hoax, listen to the RadioNZ interview on 7 July 2016 here.

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