"[Our target] is the entire rest of the market that doesn't currently get pay TV," Telstra group managing director for media and marketing Joe Pollard said. "It's a big play for us and we see ourselves as an aggregator of great content experiences in the home and out of the home. "Having Telstra TV as part of that strategy is incredibly important to us [and] we see the launch of Telstra TV as filling out the proposition for pay TV and subscription television all the way through." Potential to cannibalise customers Deloitte technology and media partner Damien Tampling said there was potential the move would cannibalise Foxtel customers but that would depend on detail, especially the quality of content and timing of shows.

"Foxtel has still secured Game of Thrones [and other premium content]. Aside from sport, they do secure a number of pieces of content in a privileged way," he said.



"Its intention is not to disrupt Foxtel, but more to sweep up the long tail of consumer that would probably like more depth and breadth of content but can't afford the price point that Foxtel put out there. But having said that, Foxtel have launched a low-cost offering". The Roku 2 device is popular in the United States and Britain, where it competes against Apple TV and Google's Chromecast devices and sells for $US69.99 ($95.88). It comes with a remote control and users can also switch apps and channels using an app on their smartphones. Roku also hosts thousands of streaming apps that provide everything from HBO Go, to niche media services, to live sports such as Major League Baseball. It's one of the most popular options for the growing cohort of "cord cutters" who have dropped their expensive cable TV subscriptions and opted for internet streams instead. Details in September Ms Pollard said local pricing and terms would be released on September 10 with details on the various apps that will be available to use it. It will play Netflix and Presto, which is Foxtel's streaming video on demand service, on launch with Fairfax Media and Nine Entertainment's Stan service compatible soon after, and it will only be available to Telstra broadband customers. Users will still need to pay subscription fees to these SVOD services.

"Roku has hundreds of international apps and we're working with them on the Australian rights so a lot of them ... will be available here as well," she said. But Ms Pollard insisted Telstra TV would not harm Foxtel, which has never been able to reach more than 30 per cent of the market despite its near-monopoly status. Foxtel is very popular and jointly-owned by Telstra and News Corporation. "We really see this as the entry-level product to enable people to see streaming video on demand," she said. "These types of devices tend to be additive to the full-meal deal that is a pay TV service. "We will not be positioning this as a substitution for Foxtel at all. This is very much for non-pay TV customers." The Roku 2 does not have a TV tuner or the ability to record live TV, which are functions that FetchTV, Foxtel's iQ3, Telstra's T-Box can all perform.

Ms Pollard also said live sports were major reasons customers would stick with Foxtel and free-to-air TV. Live sports restricted "At the moment our sports rights are restricted to live mobile [and] our interest in live sports is for mobility. Mobiles and small screens – tiny, tiny screens," she said. Mr Tampling said he thinks there is a smarter path regarding sports rights and not just keeping them to mobile devices for Telstra, especially when it is possible to push content from these devices to a television. He said it might be controversial and it might cause some tension between the big players in the market that have traditionally been able to play together being pay TV, telco and free-to-air.

"The uptake and usage of the sports content on mobile devices, which Telstra has essentially secured, is pretty poor." The consumer wants every single game, anytime, anywhere, Mr Tampling said. "If they don't [take digital rights outside mobile devices], it becomes clear that they're going to let Foxtel maintain its position of strength in terms of bidding for the ancillary rights that aren't on free-to-air." Ms Pollard also ruled out matching moves by Optus, Dodo and iiNet to slash data limits for services such as Netflix, which has become a major percentage of Australia's total internet traffic. "[Asking us to offer it unmetered] is like asking 'why aren't you giving away free electricity?'," she said. "Data is the differentiator and you've seen with the launch of a lot of these services that data isn't free."