Sky TV stands by claims that big telcos can zero rate competitors

CEO John Fellet personally emails Vodafone CEO and Telecom Retail CEO, and is copied in on email to TelstraClear. Update at 4:30 pm Vodafone responds

Sky TV CEO John Fellet wrote to Vodafone and Telecom earlier this month to personally let them know the telcos can zero rate content to rival Quickflix.

This follows an email to a TelstraClear executive on March 29, in which Sky TV also says the telco can unmeter content to Quickflix and it will not be in breach of its contract.

It appears that Sky TV has no issue with the three largest telcos in New Zealand unmetering content to a rival video on demand services as long as the iSKY service is treated in the same way, and the telco isn’t paid a fee by the rival service to do so.

Quickflix entered the market on March 29 and Sky TV head of communications Kirsty Way told Computerworld at the time that the big telcos are able, as far as Sky TV is concerned, to zero rate traffic to the Quickflix site.

At the Telecommunications and ICT Summit on Tuesday Vodafone CEO Russell Stanners and TelstraClear CEO Allan Freeth said they would not be zero-rating Quickflix content. Freeth said he wasn’t sure his contract with Sky TV would allow him to do so.

Way showed copies of emails sent to each telco to Computerworld yesterday. Here are the relevant paragraphs from the three emails - each is slightly different as this reflects the individual arrangements each telco has with Sky TV.

Email to Vodafone CEO Russell Stanners from Sky TV CEO John Fellet
Monday April 2

“Under the terms of our reseller contract with you, there is no restriction on Vodafone or iHug simply (i.e, without anything further that might amount to “Special Assistance”) un-metering any third parties services including Quickflix, since this is a provision of a benefit to your own ISP customers and does not, by itself, amount to the provision of Pay Television Services or Special Assistance. As your Pay TV partner we would expect that if Vodafone does un-meter any video based services of a third party like Quickflix, then Vodafone would do the same for iSKY at least on an equivalent basis but hopefully better. We would also expect that you would always give greater prominence to the services provided by us, your content partner, in any marketing.”

Email to Telecom Retail CEO Alan Gourdie from Sky TV CEO John Fellet
Monday April 2

“Under the terms of our reseller contract with you, there is no restriction on Telecom simply (i.e. without anything further that might amount to “Special Assistance”) un-metering any third parties’ services including Quickflix, since this is a provision of a benefit to your own ISP customers and does not, by itself, amount to the provision of Pay Television Services or Special Assistance. As your Pay TV partner we have stipulated that if Telecom does un-meter any video based services of a third party like Quickflix, then Telecom must do the same for iSKY on an equivalent basis (e.g. in terms of how the un-metered access is promoted etc). Of course any bundling of a third party’s video content with any Sky services is not permitted.”

Email to TelstraClear executive Charlie Clementson from Angus Swainson (Sky TV CEO John Fellet among those copied in).
Thursday March 29

“Under the terms of our contracts with you, we had not contemplated the existence of, and you have not committed to un-meter, iSKY. Nevertheless we do not believe that the restrictions in the Retransmission contract restrict you from simply (ie without anything further that might amount to “Direct Assistance”) un-metering any third parties services since this, by itself, is the provision of a benefit to your own ISP customers and does not amount to the provision of Pay Television Services or Direct Assistance. As your Pay TV partner we would expect that if you were to un-meter Quickflix then you would do the same for iSKY and we would be understandably upset if this wasn’t the case. Of course any bundling of a third party’s video content with the SKY services is not permitted and in terms of promoting the un-metering of Video Content services you would need to be mindful of the provisions in the contract (including those around Direct Assistance) – we would also expect that you would give greater prominence to the service provided by us, your content partner in any marketing."

Computerworld has sought comment from Telecom, Vodafone and TelstraClear.

Update at 4:30 pm Computerworld has received the following email from Vodafone spokeswoman Sarah Newcombe:

"We have made a commercial decision about the way we are approaching QuickFlix right now; we have never said were unable to un-meter it. As you noted in your story on 17 April when Computerworld suggested that Quickflix was competition for Sky TV, Russell Stanners replied: 'Saying Quickflix competes with Sky is like saying the corner dairy competes with Countdown.' QuickFlix is an emerging player and this an area we will continue to watch with interest."

Update at 12:20 pm Computerworld has received the following statement from Alan Gourdie, CEO of Telecom Retail:

"Telecom is continually assessing what value to offer customers as well as offer the best value-added services.

Just as Sky does not give its airtime advertising away for free, we do not give our bandwidth away for free to other organisations for use with commercial services. We also review our data offerings regularly to ensure we are meeting our customers’ needs as new services like Quickflix arrive in New Zealand. We are always open to discussions with organisations like Sky and Quickflix to provide services that are beneficial to customers and all other parties concerned.

Customers with 100GB per month on our Total Home Broadband plan could stream over 100 movies and TV shows from Quickflix every month, so we are confident our current plans provide the right amount of data for anyone looking to use Quickflix or a similar service."

Update at 9:30 am Computerworld has received the following email from TelstraClear spokesman Gary Bowering:

"We're surprised and somewhat disappointed that our commercially sensitive discussions with Sky should be made so readily available to the media. However, we've spoken to Sky about this and they have offered their regret that they shared this part of the email dialogue we have had with them. Our aim is to have these discussions privately with Sky rather than through the media."