ACCC green lights Foxtel-Optus deal

"The undertakings provide access to programs for pay TV operators, broader choice for consumers and access to Telstra's cable network and Foxtel's set-top boxes," the ACCC said in a statement.

"The majority of submissions considered rationalisation was necessary in the industry, which was suffering from high content costs and difficulty accessing quality content", said ACCC Chairman, Professor Allan Fels.

"Most of the concerns raised about the arrangements related to the ability of Foxtel to prevent meaningful competition in the pay TV industry by blocking competitors from using either its programming or its cable network".

Foxtel and regional player Austar have agreed to allow rival operators to purchase programming at "fair and commercial terms". "This also will facilitate new investment in broadband networks," Fels said.

Foxtel and Telstra have given undertakings to the ACCC to allow rival pay TV operators to use existing and proposed digital networks to provide competitive services, but the conditions of that access will still be subject to the Trade Practices Act.

Telstra and Foxtel have also committed to make the pay TV network digital, conditional on the passing of the Federal Telecommunications Competition Bill.

Fels said the ACCC is still worried about the extent of vertical integration in the pay TV market, but said its role in this case was to determine the impact of the content sharing undertakings. "There was evidence that the competitive position of Optus in the market was being adversely affected by its inability to access and supply key content to its customers," Fels said.

Optus chief executive Chris Anderson has repeatedly cast doubts over the future of Optus' cable network if the ACCC did not approve the undertakings.

The ACCC is also set to report to communications Minister Senator Richard Alston on how the structure of the pay TV and telecommunications markets are likely to affect competition, with particular attention being paid to Telstra's part-ownership of Foxtel.