I'm not happy that Spark is blaming its overseas suppliers for the Rugby World Cup problems – it's their service to sort out in advance. All services like this, including Sky's, involve off-shore and outsourced components.
But it is important for New Zealanders, our economy, and NZ Rugby to give Spark a break in the early stages of this new Rugby World Cup online service, with its fixable teething problems.
There is so much to gain from changing away from Sky dominance, which had captured the sports bodies and the public, to their disadvantage. There's a lot more at stake than just Saturday night footie.
Internationally, sports bodies historically gave the broadcast rights to single providers, such as Sky in New Zealand. There's a big trend though to the sport controlling and producing the content and providing it to more content carriers. This is a change from content providers competing for the market (to be appointed as the single provider) to competing in the market (that is, competing against other providers).
That spreads the risk, but, more importantly, the competition between providers, vying for viewers, will improve quality and options for Kiwis, and lead to additional features such as multiple parallel channels showing different views of the game, interactive viewing, and so on. That's what competition in the market does.
Sky's long-standing position as the live test broadcaster meant that it didn't need to provide those additional features, and Kiwis lost out on quality-of-service and options. Sky had a captive audience and didn't need to strongly innovate. It had the sports bodies captive and it had the viewers captive.
I spent a few months acting for parties successfully opposing Vodafone and Sky merging. As is the position internationally, a telco (here, Vodafone) controlling live premium sport (here, live tests) can distort the telco market in its favour, away from competitors, thereby leading to market failure and poor outcomes for New Zealanders. That's the main reason the Commerce Commission did not allow the merger. Spark getting the sole longer-term rights over live premium sport such as All Blacks tests can have the same effect, for the reasons Spark itself argued when opposing that merger.
That is especially important in terms of encouraging uptake of new fast broadband services such as UFB. New Zealand had removed the monopoly problems in telecommunications by separating Chorus and what is now called Spark. Allow one Telco to have the live rugby rights and that is like re-monopolising telecommunications services. And New Zealanders and the economy loses out.
At first sight, the idea that live rugby tests could have such a dramatic effect on telecommunications and the broader New Zealand economy seems a stretch. But that is, strikingly, the international experience, reflected in our Commerce Commission's decision to stop the Vodafone and Sky merger. The UK equivalent of the Commission, for example, spends a lot of time reducing the anti-competitive effects of one provider controlling live Premier League football rights.
Spark boss fronts after streaming fail, service returns to streaming-only
Editorial: Spark misfire will affect big picture of streaming
Essentially, a monopoly input (live sports rights) added to a bundle of services in a competitive market (such as voice and broadband services) makes that bundle a unique and monopolistic service that can't be replicated by others. The telco with the sports rights can distort the market in its favour, and charge more and/or innovate less. While having a telco providing live sports content is very positive for broadband uptake and our economy, it is far better to have multiple providers competing over fibre, mobile, wireless and satellite.
The good news is the NZ Rugby can win out too if it is smart. It has the monopoly over the live AB tests. By being stuck with Sky, the NZ Rugby monopoly power was essentially given to Sky, reducing NZ Rugby revenues.
NZ Rugby has the monopoly, so use it, don't give it away!
With live premium sports rights up for renewal, this is a defining moment.
If the NZ Rugby doesn't go for multiple carriers and paths now, they'll be regulated within four years, as night follows day.
• Lawyer Michael Wigley specialises in competition, technology and IP issues. He has acted for Spark rival 2degrees