Saturn snipes at Telecom-Sky tie

By RICHARD BRADDELL

WELLINGTON - A new attempt by Telecom to link up with Sky Television would reopen litigation previously brought by Clear Communications, says the chief executive of Saturn Communications, Jack Matthews.

The possibility of a Sky link was raised last week by Telecom's chief executive, Theresa Gattung.

Such a link would bolster Telecom's internet service provider Xtra, which could expand its content range in a looming competition with Saturn, which from February will host a new souped up information and content internet service to be launched in Wellington by a European sister company.

Mr Matthews said Saturn had been far too small to contemplate litigation four years ago when Clear went to court, but that was no longer the case.

"Our view now is that they should be prepared for another round of litigation if they proceed with a Sky relationship," he said.

Lengthy litigation between Clear and Telecom ended two years ago with a High Court ruling that while it was not intrinsically anticompetitive for Telecom to be in the pay television market, it was open for competitors to launch a fresh challenge if Telecom made a move with Sky.

However, Mr Matthews said that if Sky had a number of non-exclusive relationships, "that might work fine for us."

Such developments would become part of a looming battle of the bandwidths in which Saturn's cable network from next February will be host to high-speed internet information, entertainment and video content offered by sister company Cello.

Mr Matthews likened Cello to an Xtra providing entertainment over Jetstream, Telecom's brand name for its ADSL high-speed delivery mechanism.

Cello is the European equivalent of America's @Home and as leading internet content portal relies on UPC's extensive European cable network, which allows delivery of almost unlimited bandwidth.

Owned by Saturn parent UnitedGlobalCom's European subsidiary, UPC, Cello will operate in New Zealand as a separate company from Saturn, using eight or nine servers currently being installed and with six staff hired locally.

While Cello will be available only on Saturn's Wellington network, the fact UnitedGlobalCom is prepared to invest in its establishment might be a hint that a December board meeting will be sympathetically disposed to approving Saturn's expansion outside Wellington.

UGC has already earmarked $100 million in equity for expansion, which with debt could be leveraged to as much as $400 million.

Mr Matthews said an outright rejection by the board was unlikely, but a deferment was possible.

"I would be surprised if our board does not elect to go forward with an expansion plan. But having said that, it is their decision," he said.

Meanwhile, he saw no conflict in Saturn hosting a high-speed internet content portal and yet being opposed to Telecom's furthering its Xtra ambitions in an exclusive link with Sky.

The difference was that Telecom had 97 per cent of the market against Saturn's 3 per cent and that anti-trust legislation was designed to deal with such imbalances.