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TiVo’s walled garden

01 Dec 2009

>>> If you were offered premium Internet content for a special price, would you be willing to pay it? Depends on the content, you might say. So how about if a new form of entertainment was available, but only through one ISP? Would you be willing to switch? Your answer might well be the same.This is the gamble that Telecom, TVNZ and Hybrid Television Services are taking with the New Zealand launch of TiVo, the digital TV device that also offers Web-based content.TiVo is a digital television recorder (DTR) which does most of the things that MyFreeview or MySKY HDi can do. The difference is that TiVo also has CASPA On-Demand, an Internet platform with movies and TV shows (see page 14 for more about this).Telecom sells TiVo through its retail outlets – you can’t buy it anywhere else. TiVo will work just fine for anyone as a digital TV receiver/recorder; the catch is, you can’t get the CASPA content unless you have a Telecom broadband connection. And this has set off a debate.The TiVo-Telecom deal is special because of the price factor. Anyone who watches a lot of online video knows that it eats up data. Exceed your data cap and your monthly ISP bill is a big one. Telecom is providing TiVo content unmetered – that means it doesn’t affect your data cap. Web TV and interactive multimedia are the entertainment portals of the future, and deals like this will be commonplace before too long. The question being raised is whether this contravenes the spirit of the Internet.The USA is currently embroiled in a debate over Net Neutrality: the concept that the Internet should be free of restrictions on content, sites, or platforms. The US Federal Communications Commission (FCC) is moving to regulate so that the Internet remains completely available to anyone with a connection.The villains of the piece, according to supporters of neutrality, are telecommunications companies that want to be able to charge premium rates for certain content (particularly audio and video). They would do this by creating special pipelines, pouring more development money into premium services, eventually putting a price on just about everything you want to access online. Much of the Internet would become a ‘walled garden’, accessible only to those with the ability to pay.Telecom’s exclusive hold over TiVo’s online content, some say, is a move in this direction.Lobby group InternetNZ says the convergence between broadcasters, telcos and ISPs is a development that needs close watching.“It’s a case of just making sure that we retain open content markets, and if people are making deals available, that they’re not deliberately or otherwise locking out other players from the ISP market,” InternetNZ’s Deputy Executive Director Jordan Carter told NetGuide. “We’ve spent the last few years breaking Telecom’s monopoly over the access network through things like unbundling and operational separation, and on the Internet side of things we wouldn’t want to see the market evolve in a way that customers had to choose one particular ISP to get hold of content that they liked, or if they picked one ISP that had the commercial tie-ups, they got a much better service than was available to anyone else.”Scott Bartlett, CEO of rival ISP Orcon, calls it “a slippery slope”.“I can understand that Telecom wanted to do a deal and try to build some perceived competitive advantage,” he told NetGuide, “but the real issue is that if content owners are going to be successful, they need to get that content out there to as many people, remove the restrictions for access and find a business model that monetises it.“The best interest of Internet users in this country is that the Internet is open and that it has the absolute lowest amount of costs associated with it.”Bartlett is sceptical about TiVo’s commercial prospects with the exclusive Telecom deal. He says a lot of people won’t have access to that special TiVo content unless they change ISPs. What’s more, he doesn’t think TiVo’s ‘special’ content will be sufficient incentive.“Frankly I think SKY and Freeview will wipe the floor with them,” he said.Robbee Minicola, CEO of Hybrid Television Services, admits there is a risk in tying a new product to one ISP, but she believes it was the only way to get TiVo into New Zealand.“At the end of the day we needed the support of New Zealand’s largest telecomms provider to help us get this new product over the line into people’s households,” she told NetGuide. “It was critical for us.”  The New Zealand TiVo model is different from TiVo in Australia, where any ISP can be used, but only a few are letting TiVo content through unmetered. Others are, however, starting to reduce their rates and increase their data caps – so the market is working in the consumer’s favour. Why then, was the same not done here?“I know that probably really ticks off the other ISPs, but right now it is in the best interests of the majority of New Zealanders to be able to have a TiVo and have it unmetered,” Minicola said. Minicola also points out that New Zealand is the first country to get CASPA, and she thinks this will make a difference. She also believes that eventually, other ISPs will get on board with TiVo.“The whole idea of providing the exclusivity with Telecom was really about making sure that we could have this opportunity to exploit broadband in the biggest way in this country,” she said. “Will that always be the case? No, certainly not. We’ve got to perform and they’ve got to perform. If that doesn’t happen, we’re open to the rest of the market.”TiVo’s five-year plan envisages 160,000 devices sold. With other content-rich digital services vying for market share, consumers can afford to browse extensively before buying.