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Aussie Cablers Stung by Government Decision

Sydney, Australia-Australian television network Seven Network Ltd. is seeking "hundreds of millions of dollars" in damages from telco giant Telstra Ltd., a source at the broadcaster said.

Network executives made that clear after a federal court two weeks ago upheld a lower-court ruling that Telstra must open its broadband-cable network to content providers other than its 50 percent-owned Foxtel pay TV entity.

"The protracted delays, which Seven has experienced in obtaining access to the Telstra cable, have been damaging to Seven. The competition aspects of this, including issues such as possible misuse of market dominance, are under consideration by Seven," the broadcaster said in a prepared statement issued after the most recent ruling.

The full bench of the Federal Court dismissed Telstra's and Foxtel's appeal of a March decision to open access to Telstra's $3.5 billion broadband-cable network to Seven Network's C7 pay TV channels.

C7 operates two sports channels, and it will run two more dedicated to Olympic Games coverage next month. C7 is currently seen on Foxtel pay TV system rivals Optus Television and Austar Entertainment Pty. Ltd.

One particularly controversial element of the decision was the Federal Court's indication that Foxtel should be categorized as a "carriage service provider," bounded by the Telecommunications Act.

This means Telstra not only must allow access to its cable network, but must enable other programmers to use the conditional-access and other functions of its set-top boxes in 650,000 homes.

The decision clears the way for a shakeup of the country's pay TV industry, with independent content providers expected to scramble for access to Foxtel, as well as to rival cable carrier Optus and satellite operator Austar.

The decision, however, applies to analog cable, but not digital service. Telstra and Foxtel could also stall other channel providers it does not want by arguing that it does not have the capacity to carry the services.

On news of the court decision, Seven immediately demanded that Foxtel grant carriage of C7 in advance of next month's Australian Football League Grand Final.

"Our intention is to give access to as many Australians as possible to C7, which provides a wide range of sports programming, including AFL coverage, Rugby Union, National Soccer League, Australian Open tennis, Australian Open and Masters Golf championship and the forthcoming Ashes cricket series," Seven executive chairman Kerry Stokes said in a prepared statement.

However, Foxtel CEO Jim Blomfield quickly moved to dispel any notions that Foxtel would take on any new channels. He said the court decision will have no immediate impact on the company and disputed the proposed granting of access to Foxtel infrastructure.

"We aim to provide a wide range of programming, but we won't compromise the Foxtel service. And the court rulings do not give third parties direct access to our subscribers, sales avenues, the Foxtel brand or expertise," Blomfield said.

"The rulings do not mean Foxtel, as part of its channel lineup, will be offering any new channels supplied by TARBS or the Seven Network," he added, referring to ethnic-content provider Television and Radio Broadcasting Services, which has also staked its claim to a share of the Telstra bandwidth.

Stokes said he hoped Telstra and Foxtel would take a "co-operative approach" to opening their system to other channel providers.

"Although Telstra and Foxtel could appeal the ruling in the High Court, it would simply involve further unnecessary expenditure by Telstra and be contrary to the public interest," Stokes said in the statement.

"It is hoped that Telstra and Foxtel will now take appropriate steps to ensure that Seven is able to utilize the broadband cable, built at taxpayers' expense, to ensure a broad coverage of sporting and other events currently not available to Foxtel subscribers," he added.

TARBS managing director Mike Boulos said in a prepared statement that the company planned to begin transmitting its 19 English-language and ethnic pay TV channels on the Telstra cable "as soon as commercial negotiations can be completed."

Boulos said TARBS would also seek "substantial damages," as it was "the first to challenge the ridiculous situation in 1998, where the taxpayers' cable could only be used by Foxtel under a so-called exclusive arrangement."