TiVo deal: it all depends on content

The TiVo deal is a biggie for Telecom and TVNZ/Hybrid. But are the two big boys bullying customers into buying boxes for their own boon? We put some questions to Richard Betts, technology expert and Tone magazine contributor; and to Michael Carney, media supremo at The Media Counsel.

Why did the parties do it?

Betts: It’s similar to other ones with TiVo overseas. It makes sense, because the size of the files mean that a consumer would bust their data cap very quickly. The way to get around that is by TiVo bringing on an Internet provider as a partner. That partner guarantees not to charge a customer for busting the data cap, which is quite a major concession, so in return Hybrid has apparently had to offer the partnership exclusively to Telecom, which presumably expects to get more people signed up as a result.

Carney: It provides TVNZ with a very powerful rival to MySky.

What’s the downside?

Carney: Well, it’s a bit of a blow to Vodafone, Orcon and TelstraClear and the like, because now Telecom has a strong reason to get people to consider shifting. The biggest barrier to winning more telco customers is justifying the cost/benefit to customers. Now Telecom has some additional benefits.

Betts: I think it’s a good solution for both parties, though a bit of a shame for customers of other ISPs who are locked into long-term contracts. But hey, isn’t that how markets work, and how brand loyalty is developed? My query is whether Telecom’s network is robust enough to transfer the data quickly; that depends on a whole bunch of things, including how far the customer lives from an exchange.

Is Telecom behaving like a monopoly?

Betts: It’s less of a monopoly than, for example, Vodafone with the iPhone, or indeed any phone network operator and the phones they carry exclusively. In fact, you could argue (and I suspect Hybrid will argue if you ask them) that TiVo is TVNZ’s attempt to avert a monopoly – buying in to TiVo means TVNZ has an in-house PVR rival to MySky.

Will it work?

Carney: I think it’ll come down to content. If you can receive a more valuable content offering than say MySky or Freeview, then yes it will work.

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