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  1. troskolo

    1,644 Posts.

    From what i am hearing is that Optus is close to securing a deal with Media World comm.

    Michael Sainsbury
    JANUARY 08, 2003

    OPTUS will kill its $200 million interactive television project, turning instead to high-speed internet services as it rebuilds its consumer division.

    As part of the plan, the No.2 telco is understood to be nearing a deal with Telstra for wholesale high-speed internet services using digital subscriber line technology via Telstra's copper wires.
    Optus cranked up iTV in early 2001 with a test network of 300 mainly internal users in Sydney. It extended the network to about 3000 users with services such as television-based email, online video games and video on demand.

    According to sources, Optus spent about $200 million preparing its network for iTV, equipping a purpose-built centre in Sydney, and on extensive information technology systems.

    While many of the iTV offerings proved popular, the business model failed to work.


    Optus has had success with its cable-based high-speed internet service, particularly when bundled with telephony services and pay-TV. To extend this model beyond its cable network, which passes only two million homes, Optus needs to offer copper wire-based high-speed internet.

    The company has the choice of buying or building a residential DSL network.

    Optus has already spent more than $100 million on a business-grade DSL network through its XYZed subsidiary, but it's not economic to offer lower priced consumer services in this way.

    In Optus's favour is the fact that Telstra is keen to lock its main competitor into a wholesale contract, because such a potentially big customer would improve Telstra economics on a DSL network that loses money at present.

    Optus is also probably the key for Telstra to hit its target of one million broadband customers by 2005.

    The entry of Optus into the DSL market would have flow-on effects for Telstra's direct sales as well.

    New Zealand has shown that more than one company in the market can stimulate demand.

    "Telstra has indicated that, in New Zealand, broadband penetration is three times the average in zones where both Telstra Clear and Telecom New Zealand compete," said UBS Warburg analyst Tim Smeallie.

    Optus and Telstra will want to avoid a repetition of their costly rivalry in the mid-1990s when they built pay-TV cable networks side by side. It cost the industry more than $5 billion, and almost destroyed Optus.

    The other side of the interactive TV project is Optus's upcoming C1 satellite.

    According to sources, the original plan was to use the satellite to provide interactive pay-TV for Optus customers.

    But the deal to offload Optus's pay-TV programming to rival Foxtel came with a commitment by the pay-TV giant to buy space on the satellite for its own pay TV-service - in effect, pre-selling all space on the satellite before its launch later this year.

    Optus's consumer division - known as CMM (consumer and multimedia) - has been losing money for years, but payments to Hollywood movie studios ended with the Foxtel content-sharing deal.

    According to insiders, Optus hopes the division's cashflow will break even in about 18 months, under the new strategy.

    The company wants to have a residential DSL service available around the middle of the year.

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