Telstra wants to make IPTV its 'go to' service, relies on Foxtel for flexible content

Australian telco Telstra (ASX: TLS.AX) plans to use a T-Box personal video recorder (PVR) unit as the linchpin and a strengthened relationship with content provider Foxtel to make its IPTV service the lever that pries more revenue from a legacy mobile and fixed line subscriber base.

The plans to open up IPTV start with the T-Box, which has been offered by the telco since 2010.

"Up until now we have basically bundled a T-Box just as a personal video recorder device that gives you access to IP content and acts as a digital terrestrial PVR for free-to-air TV and basic account access to transaction video-on-demand," Rick Ellis, director of Telstra's media portfolio told The Australian.

Now the carrier plans to bundle "subscriber linear (scheduled programming) channels and further down the track we will be bundling subscription video-on-demand as well as movies and TV services. That's a first in the Australian market."

The company has already sold 500,000 of the T-Box units and is looking to double that number as it increases the product's attractiveness, the article continued.

At the same time, Telstra is working to develop more compelling programming to fill its IPTV offering that now attracts 1.5 million customers who are bundled into voice and Internet services. That's where Foxtel comes into the picture.

"As far as content goes, we are looking to Foxtel to effectively secure the rights to the content that we want to bundle up and take to market, first with the T-Box and second into the multi-screen environment--as opposed to going there and doing it ourselves," Ellis said. "That's Foxtel's strength and we own half of them so it makes sense for us to look to Foxtel to do that. It's an alliance, if you like."

What Telstra also likes is the ability of an enhanced IPTV offering to juice up its other legacy businesses that have been somewhat lagging, even by targeting what the Australian article called the "pay-light" market of subscribers who don't want to be locked into long term contracts for traditional TV lineups.

"Generally it's about having more choice than is currently offered in the market," said Eric Kearley, the carrier's head of IPTV. "It's not about having 300 channels; it's about having more choice or just subscribing to sport. That pay-light segment is where we, with our partners--Foxtel being our prime partner--see huge growth," he concluded.

For more:
- The Australian has this story (sub. req.)

Related articles:
Foxtel moves ahead in IPTV space
IPTV destroying video store business in Australia