Australia's second-fastest growing internet service provider M2 Telecommunications is poised for an aggressively-priced launch into internet television that will pit it against Telstra and Foxtel, which is preparing to launch into broadband next year.
M2's consumer brand Dodo will offer a basic version of Fetch TV's service for free with its $39.90 Unlimited ADSL 2+ broadband service for metropolitan areas. Line rental starts at $29.90 per month.
Consumers will also have to pay $69 plus postage and packaging for the Fetch-TV set top box, which offers a personal video recorder, 36 channels, access to a movie library of 3000 titles with 30 pre-selected movies each month and catch up TV among other features.
"Whilst a number of companies have an IPTV offering... we have launched what we believe to be some of the most disruptive plans on the market," said Boris Rozenvasser, M2's consumer director.
Melbourne-based M2 owns internet service providers Dodo and iPrimus as well as business services veteran Commander. It added more subscribers than any other ISP bar Telstra in the first six months of the year.
Facing increasing competition in the pay-television sector, Foxtel, controlled by News Corp and Telstra last month slashed the value of its basic cable and satellite service from $49 to $25.
"Foxtel has made an aggressive move on pricing but the key for customers is now a single price point including phone line and broadband and we are seeing Dodo launch a very aggressive salvo in the bundle battle," said Scott Lorson, chief executive of Fetch.
Foxtel boasts 2.6 million customers to Fetch's 140,000, and now makes huge profits after initial years of losses, whereas Fetch has just turned profitable after its own heavy investments.
However, Foxtel is facing increasing competitive threats to its historic monopoly, the impact of which is as-yet-unknown.
The addition of M2 gives Fetch TV three of the top five ISPs, or 40 per cent of the country's five biggest ISPs.
It means that the top five have now all chosen their television dance partners for internet television:Telstra and TPG have aligned with Foxtel while iiNet, Singtel-Optus and now, fifth-placed M2, have selected Fetch TV as their pay-TV partner.
All are betting that "triple play bundles" of phone, broadband and internet-delivered television are key to retaining customers and maintaining growth as the national broadband network is rolled out offering higher downlaod speeds.
Foxtel has also launched a subscription movies on demand service Presto, and cut the price to just $9.99 a month. It is preparing its own "triple play" offer from next year including broadband and phone line with its cable and satellite service.
It's move to drop prices was one of the most heavily researched decisions in its history and analysts have been impressed by the amount of work undertaken by the Foxtel strategy team.
Of the circa 9.million occupied homes in Australia, analysts estimate that the number that already have a set-top-box based service is approaching 3 million, divided between Foxtel, Telstra's T-Box and Fetch. By comparison, the combined number of users using a subscription service that relies on a virtual private network - such as Presto, Quickflix and Netflix - is estimated at around 250,000.
Those proportions may change if Foxtel signs up Seven West Media to its service and adds television content. Nine Entertainment Co has also teamed up with Fairfax Media, owner of The Australian Financial Review, to launch its on subscription video-on-demand service next year.
