Choice slams Australian pay TV pricing, Foxtel cries foul

Foxtel and Choice have launched a war of words over local content pricing, after the consumer advocacy group said Australian consumers could pay up to 430 percent more for major television programs through Foxtel when compared to overseas services.

The comments come as the two companies prepare to address a public Piracy Forum in Sydney, which brings together rights holders, ISPs, and industry stakeholders to discuss proposed changes to legislation that will attempt to curtail piracy in Australia.

In a media release issued today, Choice said Australians were continuing to face an "Australia Tax" on digital content thanks to "business models forced on consumers by local intermediaries," resulting in higher prices.

Calling out the example of the Netflix original series "Orange is the New Black", Choice said season two of the show cost Australians a minimum of AU$27.26 through Google Play, which is "219 percent more than what US Netflix customers pay". Choice added that Foxtel customers would pay "up to 431 percent more" than US Netflix customers to access the show through local pay TV.

Similarly, Choice CEO Alan Kirkland said Australian customers looking to watch the upcoming season of "The Walking Dead" would end up paying up to 376 percent more than UK viewers.

"Consumers are asking themselves why they have to pay a premium to Foxtel when they can access and pay a reasonable price for content through legitimate overseas services like Netflix," said Kirkland. "Despite what some local incumbents have said, accessing Netflix -- which will spend $3 billion this year paying for content from studios -- is legal."

However, Foxtel has contested Choice's claims, saying the consumer group had made "invalid comparisons between completely different products" and was being "disingenuous and hypocritical" in the digital content debate.

"To compare Foxtel's service with that of Netflix in the US is nonsensical," said Foxtel director of corporate affairs, Bruce Meagher. "Netflix is essentially a library service which, due to its success, has been able to commission a few high quality and popular dramas.

"So while it is true that consumers can get access to Orange is the New Black and House of Cards as part of their Netflix subscription that's basically where the new content offering ends," he added. "Given that Netflix doesn't sell Orange is the New Black to other US broadcasters, [US consumers] have to have Netflix on top of their cable account if they want to watch that show!"

Meagher also argued that if Foxtel didn't "aggregate the best international content" to attract subscription revenue, "we would not have the resources to invest in Australian content and...it would impact our ability to pay significant sports broadcasting licensing fees, seriously undermining Australia's sporting codes".

Foxtel's subscription revenue could soon change with the recent announcement that its entry-level package cost would be halved, which Meagher said would ensure Foxtel would "become even more affordable".

In response, Choice argued that it was "no coincidence that Foxtel has changed its prices when an estimated 200,000 Australians are directly accessing Netflix -- even though the US service does not even operate here officially.

"This is what competition looks like -- driving down prices, delivering products in the way consumers want to access them," said a Choice spokesperson.

"If we want to have a debate about the best ways to support Australian cultural life and sporting codes, let's talk about the most efficient and effective way of doing that. Let's not confuse it with the question of what's best for an incumbent monopoly subscription TV provider."