Content is the way of the future for phone companies

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Telecommunications Giants Signal Key Role of Content

Focus on content is at an all time high after American telco giant AT & T paid a $112 billion for Time Warner. Australian media and telecommunications executives have confirmed that ownership of prime viewing content is going to be a key concern for their companies in the next few years.

The AT&T acquisition makes them new owners of the U.S. media company that itself owns well known movie makers and distributors, HBO, TNT and Warner Brothers. In a separate development which in itself shows the move into content is of huge importance to the commercial success of telcos and media was the Optus decision to gain rights to broadcast U.K. premier League (soccer) matches in Australia. Optus is one of Australia’s major telecommunications companies and is heavily involved already in broadband and mobile phone service, but this hasn’t stopped them shifting their focus into becoming a multimedia company in their own right.

Competition Hots Up For Prime Spots Broadcasting Rights

Optus is owned by Singapore based telecommunications company Singtel. It out-bidded Foxtel for the Premier League broadcast rights with a huge $189 million over 3 years. The other company that lost the bid for the prime viewing English soccer championship matches was beIN Sports, which is owned by a Qatar based company.

A sign that popular sports content is up for grabs is Foxtel’s successful bid for broadcasting rights to six of the U.K.’s premier league clubs, even if it missed the main prize. Optus is not content just with soccer viewing rights as it is also keen to look at the a-league and rights to digital cricket within Australia, too.

Foxtel itself is in part ownership, fifty-fifty with Australia’s other major telecommunications giant, Telstra as well as media company News Corporation, owned by Rupert Murdoch. Foxtel already owns national broadcasting rights to the Australian Football League (AFL), netball and the National Rugby League.

Content Delivered Anytime Anywhere

One of the drivers behind the search for prime content by telcos is the fact that they can deliver that content to their customers practically everywhere because of their ability to provide mobile phone services. Owners of smartphones and other devices have shown their willingness to have the content they want everywhere they go. That means that a commuter on the bus into work might not just want to check their emails. They want to watch a cricket match in India, download a movie or listen to their favourite music.

It’s that combination of anytime, everywhere accessibility matched to the content that really drives people to want to watch it that makes telcos want to partner up to content providers, whether they are media companies or movie makers.

Tim Worner, Seven West Media CEO, said just that when interviewed about the significance of AT&T’s acquisition of Time Warner. He said that the size of the deal and its significance would “reverberate” around the Australian media and telco industry. Similar comments were echoed by the CEOs of other media companies Prime Media, Network Ten and Southern Cross Austereo.

Worner said that AT&T’s move vindicated Seven’s owns strategy on the key importance of owning the sort of content that its customers actually wanted to see. He said that there would soon be other similar partnerships being created. He pointed out the fact that the major telcos were locked in a struggle to acquire the rights to broadcast live sports fixtures and said that it made sense that the telcos were after just the sort of content that viewers really had a passion for.

Domestic Roaming in Australia Could Boost Competition For Content

The quest for content could really be ramped up if the current inquiry into domestic mobile roaming by the Australian Competition and Consumer Commission (ACCC) declares that such a service is in the interests of Australian consumers.

Although the two major telcos, Optus and Telstra, are not happy about the idea of domestic roaming, others are, especially Vodafone, which has argued for some time that duplicating infrastructure outside of the metropolitan areas of the country did not make sense. The concept of domestic roaming that the ACCC is investigating would basically mean that mobile phone infrastructure would be shared, as it is for global roaming. Of course, if domestic roaming was allowed, it would involve a fee if you were using another telco’s mobile phone infrastructure to access your own. However, the potential benefits all round of reduced setup costs have been clearly spelled out by Vodafone executives.

If domestic roaming does go ahead it removes with one stroke the central point of difference between different mobile phone providers and puts the pressure on them to compete for prime content instead.

Free to Air Gets the Best Content at the Moment

Ten’s CEO Paul Alexander said that getting access to high quality content, while desirable, was difficult. Anderson said that access to high quality video, for instance, was going to be a problem for the immediate future. He said that, at present, the best content available was provided by free-to-air and it would be difficult for any telco to provide similar high quality content to that provided by media companies like Time Warner.

Southern Cross’s CEO Grant Blackley agreed and has said that AT&T’s deal with Time Warner points the way forward for telcos that are struggling to create content all by themselves.

Blackley said that he thought similar moves could happen in Australia but there would be significant bureaucratic hurdles to overcome first. He said that it was a significant point of difference that Southern Cross could be bought up by Telstra much more easily than Southern Cross could merge with Fairfax, for instance.

Neil Aitken

Having worked in 3 countries for 4 telcos on both voice and data products, Neil is in a position to give you the inside track. Get beyond the marketing messages to the best plan for you.