2degrees has sharpened its criticism of Spark's move to make Rugby World Cup tournament passes free for new or renewing Spark customers - and it's raised the prospect that Spark could squeeze competitors more if the telco wins Super Rugby rights.

Spark denies the accusation, ironically in part by co-opting an argument previously deployed by its old foe John Fellet (keep reading).

Bad blood between the telcos began when 2degrees and Vocus (owner of Orcon and Slingshot) said Spark had promised retail ISPs the right to resell RWC Tournament passes if they upgraded their networks to support better World Cup streaming - only to offer wholesale terms that were unworkable.

Earlier this week, as Spark revealed its free offer, the pair pulled out of the wholesale talks.


So did Vodafone, with a spokeswoman telling the Herald, "We have advised Spark that we won't be proceeding with wholesaling the Spark Sport app due to both commercial and technical reasons."

Vocus consumer GM Taryn Hamilton said, "They had most ISPs keen to do a deal but they stuffed around and failed to cement any. Now they are cynically giving away a deal to their customers."

Sherriff doesn't like it

Now, 2degrees boss Stewart Sherriff is calling Spark's exclusive free RWC offer "a defining moment for monopoly content".

It may be the turning point New Zealand sports fans look back on with regret, he says.

Sherrif says Spark's offer of a "free" tournament pass for customers that sign a broadband or mobile contract raises concerns about whether it was ever serious about wholesaling. In good faith.

Competing ISPs invested millions in network upgrades based on assurances from Spark about wholesale offers, he says.

Spark's offer is only available to customers who sign a 12-month broadband or a 24-month mobile contract. Competitors aren't able to replicate this offer.

"Even though rugby watchers can technically access the tournament via any broadband network, some people may feel they have to move to Spark, which will lock them up for one or two years for an event that lasts a few weeks," Sherriff said.


"What happens if Spark uses its market power to lock up premium sports rights to longer duration tournaments such as the Sanzar Rugby, then offer it free to anyone that signs a long-term contract with Spark?

"It's important to consider these issues now, because the most important content for Kiwi viewers is about to shift from satellite TV to broadband. This will see the beginning of new viewing behaviour across the country.

"The Government funded UFB networks to create a level playing field for broadband competition. The ownership of must-have content such as the rugby has the potential to undo a lot of that benefit and ultimately reduce the choice available to consumers.

"Our concerns were shared by Spark when it opposed the merger of Sky and Vodafone. At the time, Spark described Sky's offer to competing retail ISPs for content including premium sport as 'entirely unreasonable'. From where we sit, that's still the case."

Sherriff says 2degrees fully appreciates that Spark made a sizeable investment to buy the RWC rights, but its behaviour towards wholesaling parallels the Telecom of old.

Spark responds

For Spark, a spokeswoman responds, "We believe that the wholesale deal we've proposed to potential wholesale partners is a fair one, within the constraints we're working within.

"We want as many New Zealanders to enjoy Spark Sport as possible and have always stressed that we want to increase access to sport for New Zealanders. This is why we launched Spark Sport with a direct to consumer offer that any New Zealander can purchase, irrespective of their broadband provider. This included a super early bird price to encourage customers onto the service.

"We held off launching the Spark customer offer for six weeks following initial launch, and in that time, a significant proportion of non-Spark customers have signed up to the service, without any need to change their mobile or broadband provider.

"That said, we've always been up front about our intention to use our investment in Rugby World Cup rights to deliver something extra special for our Spark customers.

"Spark has worked hard and taken significant risks to gain access to sports rights and develop an innovative new sports streaming product. We are a new entrant to this space; far from being a monopoly, our entry into the market has lowered prices for access to sport and broadened access to some premium sporting content."

And, ironically adopting an argument frequently used by former Sky TV boss John Fellet against Sky TV, she says, "There is nothing stopping other providers from purchasing their own content to differentiate their offers in the way that Spark has."

Despite 2degrees' sharpened criticism, the company has not laid a formal complaint with the Commerce Commission.