Consumers will miss out if Vodafone/Sky Merger goes ahead

International experience shows a merger between Sky TV and Vodafone would be bad for consumers, creating a company with the ability - and incentive - to use premium live sports content to stifle competition.

2degrees’ submission to the Commerce Commission on the proposed merger is accompanied by expert reports from Plum Consulting in London and an economic analysis by Covec in New Zealand, which raise concerns about the impact of the proposed merger on the broadband and mobile markets.

They outline the struggles competitors overseas have faced when an operator has a monopoly on live sports content, the lack of safeguards against anti-competitive behavior in New Zealand and why the merger should be declined.

Without the merger, the experts conclude Sky has a bright future as an active wholesale provider serving multiple retailers who reach more customers over new fibre networks.

2degrees Director of Corporate Affairs & Wholesale Mat Bolland says some of the best arguments against such a merger are made by Vodafone itself in the UK, where it highlighted the perils of monopolising premium content to UK regulator Ofcom in 2015.

“Ignoring the effects of ‘key content’ across wider and traditionally unrelated markets such as mobile or broadband only customers, will have an enduring and irreversible effect, as the focus moves to TV bundled competition…” stated Vodafone.

“Vodafone ultimately remains concerned that if access to this content cannot be secured on Fair, Reasonable and Non Discriminatory terms, competition and consumer choice across a variety of telecommunications markets will be severely harmed.”

Mr Bolland says there is no legal requirement for Sky and Vodafone to provide competitors with content on fair, reasonable or non-discriminatory terms.

“2degrees believes the innovation it brought to mobile can be extended via content over mobile and broadband. There is an exciting future for consumers if companies like 2degrees can work with Sky to develop new ways of watching and experiencing premium sport” he says.

“The alternative is that a new monopoly gets to decide what New Zealanders get to see and do with premium sport via satellite, broadband and mobile.”

Given the wide range of issues raised, the company supports the Commerce Commission holding a conference to explore the issues.

The 2degrees submission and expert reports can be accessed via the Commerce Commission website: http://www.comcom.govt.nz/business-competition/mergers-and-acquisitions/clearances/clearances-register/vodafone-europe-b.v.-and-sky-network-television-limited/