iSky likely to tempt three ISPs

Sky Television chief executive John Fellet says he hopes Sky can persuade at least three or four internet providers not to charge customers to download programmes and movies from its soon-to-be-launched internet television service, iSky.

Mr Fellet revealed a few more details of the service, which he said would launch in mid-November and would be free to Sky customers who had signed up to the equivalent pay-TV channels.

Sky will stream three sports channels and a selection of news channels. Subscribers will also be able to download 200 movies to watch at any time from a catalogue that will change each month, and catch up on movies and many programmes they may have missed on Prime and other "basic" Sky channels.

One industry source said iSky put internet providers in a quandary. Sky was being "hard-nosed" and there was little in it collectively for internet providers to offer iSky unmetered, though some ISPs might steal a march on rivals by doing so, given Sky's hold over key broadcast content.

Vodafone and Orcon are among those believed to be considering letting customers access iSky without that contributing to their monthly broadband data caps. Orcon spokesman Duncan Blair confirmed it was in discussions.

Mr Fellet said Sky would offer iSky on the same terms to all internet providers, including Telecom, which has its own relationship with free-to-air digital and internet platform provider TiVo.

Telecom spokeswoman Emma-Kate Greer was non-committal, saying it was "always assessing the market and looking at innovative product and service opportunities". The industry source suggested Telecom would probably regard iSky as an offer it could afford to refuse, especially if it judged there was a prospect the Government might reopen a review of broadcasting regulation.

Sky's original internet service, Sky Online, which was pulled last year, had been a "disaster" because of clunky technology, the wrong content and a "bad business model", Mr Fellet said. Mistakes included hosting programming on servers overseas and charging Sky subscribers a $5 monthly "administration fee" to access the service.

Sky has this time spent about $4m so it can host the content on its own computers in New Zealand. That means internet providers will not need to pay for capacity on the Southern Cross cable to serve up programmes to customers, making the option of unmetered downloads more viable.

Mr Fellet said that, initially, Sky would only directly profit from iSky by also serving up pay-per-view movies for viewing on computers. It would not sell its "adult" pay-per-view programmes online, at least at first, he said. That business was "slowly dying anyway" as a result of the preponderance of free pornography on the internet.

Sky later plans to sell access to iSky to the one half of households that do not subscribe to its pay-TV service, a move it hopes will attract new customers, and use it to deliver downloadable content to its MySky set-top boxes.

- © Fairfax NZ News