Network Insight Institute

Kim Williams

Kim Williams, Chief Executive, FOXTEL

The territory of subscription television is all about consumers and about delivering choice. We are now in over one-in-five homes with a penetration rate of over 23 per cent of Australian households. We offer over the various platforms - whether that's TransACT, Neighbourhood Cable, Austar, Optus or FOXTEL - over 50 channels to choose from.

Subscription television's share of overall Australian television viewing is constantly growing as new subscribers join the system, and is strong and sustained in those homes that have the service.

We are about empowering consumers, empowering them in terms of a huge range of different product styles, whether that's movie channels, sports channels, news channels, documentary channels, children's channels, music channels, lifestyle channels, general entertainment channels and of course non-English language channels.

It is, put simply, an extremely honest form of television with a uniquely intimate relationship and direct contact with that audience, both in terms of daily service delivery to the home and in terms of speaking directly with the subscribers who make up our audience. FOXTEL and Austar process between us about 750,000 phone calls every month through our Customer Service Centres.

What FOXTEL is engaged with at the moment is developing a digital interactive product that is very different from the digital product we have today.

I would remind you all that subscription television in its satellite domain has been delivering digital images and digital sound to Australian television households since 1995.
FOXTEL's new digital cable and satellite services will drive that choice further. It will be launched in the first half of 2004, subject to regulatory approvals that we are currently working to resolve with the ACCC in relation to third party access to our platform.

For consumers, FOXTEL digital will mean a whole new world. They will not need a new television set, but it will expand the range of choices and the quality of services that are offered to consumers.

There will be over 100 channels at launch. There will be new services with an Electronic Program Guide that makes navigation extremely simple. There will be interactivity that provides service enhancements that are genuinely useful and attractive to consumers, particularly with Sport and News. There is an offer to the open broadcasters for retransmission so that they can be integrated into the product offering and integrated into the Electronic Program Guide in order that consumers can watch subscription channels and open broadcast channels seamlessly using one remote control.

For consumers, it means more choice, better value, new ways to engage with channels, and much greater control over what they want to watch, when they want to watch it.

For channels and producers, it means the benefits of more competition, and new ways to build brands and grow audiences. It means more sophisticated viewers with much higher expectations to fulfil.

For the open broadcasters it provides an opportunity to be incorporated into that universe at no charge to them from FOXTEL. It offers them access to an expanded audience, because the audience is growing.

In fact, subscription television has grown the overall level of television viewing in Australia over the last seven years. Over that period, open broadcasting viewing in metropolitan Australia has fallen by more than two hours per week, or by 10%, while overall television viewing has risen with the growth driven by subscription television.

For advertisers, FOXTEL digital will offer new ways to engage with consumers through interactive content sponsorship and opportunities to deliver sophisticated advertising messages to targeted audiences. None of that is new news internationally because, of course, those things have been happening in a wide variety of other markets already. It's just that it is happening much later in Australia.

In the course of launching those digital interactive services, FOXTEL is promoting investment in jobs, in content and in infrastructure with an investment at a company level that exceeds $600 million. That provides abundant opportunities to a wide variety of participants across the whole broadcast landscape: creative industries and content providers will be given opportunity through new channels and programs; technology providers will be given opportunity through new software development with, as one example, interactive games; employment will be provided directly by FOXTEL and indirectly in terms of all of the services and channels that will be liberated through the new system; new retail opportunities will be provided through the roll-out of subscription television through the vast landscape of retail outlets in Australia and through all of the partner sellers of FOXTEL through companies such as Telstra, Optus, AAPT, Neighbourhood Cable, and TransACT.

In a regulatory sense the subscription television industry has brought about the circumstances and the possibility for that massive digital transformation through an extensive process of industry reform. That was seen last year through the FOXTEL-Optus Content Supply Agreement and the agreements for Telstra to resell FOXTEL. The related undertakings given to the Australian Consumer and Competition Commission by FOXTEL, Optus, Austar and Telstra were unprecedented in their scope and dimension. We have seen many interesting competitive outcomes, including the commitment to a full open access regime by the FOXTEL platform which is the subject of the current inquiry in both the analogue and digital domains by the ACCC. We hope for resolution in the next month or two. Clearly there are many other issues inside subscription television and open broadcast television that digital migration touches upon. My colleague John Porter will be dealing with those issues as the chair of our industry association, ASTRA.

In FOXTEL's digital future there are two significant phases. The first phase will be seen in the first six months of 2004, subject to those regulatory clearances I have mentioned, with the initiation of an extremely simple, very attractive, extraordinarily fast Electronic Program Guide that I described earlier. You will see the addition of a huge range of channels that offer near-video-on-demand movies through a service called FOXTEL Box Office. You will see interactive News applications of the kind that I think will genuinely surprise even many of the more cynical people in this room. With interactive Sports applications, you will see sports in a way that will transform forever the way in which consumers expect sport to be transmitted by broadcasters, whether they are subscription broadcasters or open broadcasters. You will see a full range of additional channels with many new channels joining the system and a number of channels being time-shifted for maximum consumer convenience. You will see the addition of subscription games. You will see closed captioning on a very wide number of channels. You will see the addition of audio channels including foreign language audio channels. And of course there will be digital pictures and digital sounds as there have been in the satellite universe since 1995. It's a very significant service expansion that will be encompassed from that first day of launch.

Phase 2 will commence around 6 months after initial launch. It will see additions through much more active use of the return path. And every home that has FOXTEL digital will have an installed return path. It will deliver additional voting, messaging, games on a pay-per-play or pay-per-session basis, channel overlay enhancements, and the not-for-profit Community and Knowledge channels that FOXTEL committed to last year. It will also see the advent of the Personal Digital Recorder, a device which is much discussed and in my experience much misunderstood.

Above all, subscription television is about entertainment choice, it is about the power of choice in the hands of consumers. Digital technology, which I think most of today's session has been about, should enhance the entertainment and the options for viewers. Technology itself will never be a driver of product take-up. Only the services that are offered that will be the driver.

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