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«COMMERCIAL RADIO INQUIRY Report of the Australian Broadcasting Authority Hearing into Radio 2UE Sydney Pty Limited February 2000 Sydney ISBN 0 642 ...»

-- [ Page 40 ] --

Now, of course, telephony and local telephony in particular are the two issues that Optus can be expected to gear itself towards. In the six months to December last they connected 139,000 new local call service subscribers.

Chris Anderson says they’re connecting new subscribers at double that rate today. This is going to eat significantly into the Telstra share which is one of the reasons they’re wanting to privatise Telstra. If this keeps going you won’t get the price for Telstra in two years time that you might have got for it now.

But on that basis Optus would have half a million local call subscribers in about two years.

The most important part of this is that most new local call subscribers are taking one or two other Optus services like, for example, pay TV or long distance, the long distance service.

In other words, they’re not just hooking customers up to local phones. There are two or three revenue streams coming from the one customer.

Chris Anderson has had to endure a fairly sceptical market for a long time. He’s now more than dragged Cable and Wireless Optus around the corner. They are a viable entity and customers are increasingly going to be looking at shifting their business from Telstra to Cable and Wireless Optus.813 2UE’s Submission to the Hearing In addition to the general submissions made by 2UE, 2UE also made the following

submission in relation to this broadcast:

Jones had been very publicly associated with Optus (through public appearances and advertising) for some years. This must condition his listeners’ expectations of the way in which he will deal with Optus and related topics whilst on-air.814 The Panel’s Findings The Panel finds that the broadcast of these interviews are current affairs programs. They purport to concern matters focussing on political and economic issues of relevance to the community.

The Panel finds the available fact of Mr Jones commercial agreement with Optus was withheld during both broadcasts. The existence of Mr Jones’ commercial agreement with Optus was not disclosed in the broadcast.

The Panel finds that this available fact was relevant because:

♦ the issue was of concern to Optus. The perception in the financial marketplace that Optus may be a viable company in which to invest is a significant issue for any public company, including Optus; and ♦ the broadcast was favourable to Optus. Mr Jones says ‘Chris Anderson has had to endure a fairly sceptical market for a long time. He’s now more than dragged Cable and Wireless Optus around the corner. They are a viable entity and customers are increasingly going to be looking at shifting their business from Telstra to Cable and Wireless Optus’.815 The Panel notes 2UE’s submission that Mr Jones had been ‘very publicly associated with Optus (through public appearances and advertising) over some years’, and that this must condition listeners’ expectations regarding his disinterestedness or otherwise. However, clause 3.1(a) provides that advertisements must not be presented as news programs or other programs. To the extent that the presentation of any live read advertisement is capable of causing confusion in listeners’ minds with the editorial comment of Mr Jones, the Panel would be concerned that those live read advertisements may have breached clause 3.1(a).

Exhibit 86, p. 172.

Submission made by 2UE – Alan Jones Broadcasts – Breach of Clause 2.2(d) of Code of Practice 2, D21 Exhibit 86, p. 172.

Further, listeners should not be required to be aware of the public appearances of Mr Jones for Optus, which are external to the matter broadcast. Mr Jones’ public appearances for Optus are not, in the Panel’s view, sufficient disclosure of a commercial relationship between him and Optus, which encompasses on-air editorial conduct.

The Panel therefore does not accept the submission of 2UE in this regard.

The Panel finds that, in the presentation of a current affairs program, Mr Jones presented material in a misleading manner by withholding a relevant available fact, namely the existence of a commercial relationship between himself and Optus.

The Panel finds 2UE to be in breach of clause 2.2(d) of the Codes.

CABLE & WIRELESS OPTUS – AAPT TAKEOVER,

1 JUNE 1999 AT 5:30 AM Material Broadcast by Mr Jones

On 23 June 1999, Mr Jones broadcast the following:

Just on telecommunications, Cable and Wireless have walked away from their $1.49 billion bid for AAPT. The Australian Competition and Consumer Commission has vetoed what would have been the largest telecommunication take-over in Australia, saying the deal would have removed a vigorous and effective competitor from the market. I don’t agree with that, but the umpire has spoken.

What is needed is a vigorous competitor to Telstra in the market, and most of these, even Cable and Wireless Optus, are too small. Cable and Wireless Optus plus AAPT would have given the consumer fairly significant clout.816 2UE’s Submission to the Hearing In addition to the general submissions made by 2UE, 2UE also made the following

submission in relation to this broadcast:

Jones had been very publicly associated with Optus (through public appearances and advertising) for some years. This must condition his listeners’ expectations of the way in which he will deal with Optus and related topics whilst on-air.817 The Panel’s Findings The Panel finds that the broadcast of these interviews are current affairs programs. They purport to concern matters focussing on political and economic issues of relevance to the community.





Exhibit 86, p. 177.

Submission made by 2UE – Alan Jones Broadcasts – Breach of Clause 2.2(d) of Code of Practice 2, D25 The Panel finds the available fact of Mr Jones commercial agreement with Optus was withheld during both broadcasts. The existence of Mr Jones’ commercial agreement with Optus was not disclosed in the broadcast.

The Panel finds that this available fact was relevant because:

♦ Mr Jones defended Optus’ desire to acquire AAPT. Mr Jones says ‘what is needed is a vigorous competitor to Telstra in the market, and most of these, even Cable and Wireless Optus, are too small. Cable and Wireless Optus plus AAPT would have given the consumer fairly significant clout’;818 and ♦ the broadcast was favourable to Optus.

The Panel notes 2UE’s submission that Mr Jones had been ‘very publicly associated with Optus (through public appearances and advertising) over some years’, and that this must condition listeners’ expectations regarding his disinterestedness or otherwise. However, clause 3.1(a) provides that advertisements must not be presented as news programs or other programs. To the extent that the presentation of any live read advertisement is capable of causing confusion in listeners’ minds with the editorial comment of Mr Jones, the Panel would be concerned that those live read advertisements may have breached clause 3.1(a).

Further, listeners should not be required to be aware of the public appearances of Mr Jones for Optus, which are external to the matter broadcast. Mr Jones’ public appearances for Optus are not, in the Panel’s view, sufficient disclosure of a commercial relationship between him and Optus, which encompasses on-air editorial conduct.

The Panel therefore does not accept the submission of 2UE in this regard.

The Panel finds that, in the presentation of a current affairs program, Mr Jones presented material in a misleading manner by withholding a relevant available fact, namely the existence of a commercial relationship between himself and Optus.

The Panel finds 2UE to be in breach of clause 2.2(d) of the Codes.

CABLE & WIRELESS OPTUS – AAPT TAKEOVER,

1 JUNE 1999 AT 6:30 AM Material Broadcast by Mr Jones

On 1 June 1999, Mr Jones broadcast the following:

In what must surely be an amazing decision the Australian Competition and Consumer Commission has skuttled the takeover bid of Cable and Wireless Optus for the AAPT, which is the other telecommunications chain. The Chairman, Professor Fels, found that the purchase by Optus of Australia’s third carrier, if it went ahead, would remove ‘a vigorous and effective competitor’.

Well, there would be many who would disagree with that. Indeed what is desperately needed in the world of telecommunications now is a vigorous and effective competitor big enough to take on Telstra, and I’ll have more to say about that in the days ahead.

–  –  –

But the letters I get from customers of Telstra complaining about terrible service surely suggests that the kind of competition we seek in the market isn’t there. Cable and Wireless together with AAPT, as I’ve said many times, would have provided that kind of competition.

As one financial writer said today: ‘Chris Anderson, the very able boss of Cable and Wireless Optus, has received the referee’s red card’, the writer said, ‘and the player receiving the free kick is Telecom New Zealand boss Rod Deane.’ Well, that’s partly true. Telecom New Zealand may now be able to have a shot at doing what Chris Anderson has been unsuccessful in achieving. In other words they may make a takeover bid that AAPT accept. But Telecom Australia have got a free kick as well. Along they go in a world which is anything but competitive.819 2UE’s Submission to the Hearing In addition to the general submissions made by 2UE, 2UE also made the following

submission in relation to this broadcast:

Jones had been very publicly associated with Optus (through public appearances and advertising) for some years. This must condition his listeners’ expectations of the way in which he will deal with Optus and related topics whilst on-air.820 The Panel’s Findings The Panel finds that the broadcast of these interviews are current affairs programs. They purport to concern matters focussing on political and economic issues of relevance to the community.

The Panel finds the available fact of Mr Jones commercial agreement with Optus was withheld during both broadcasts. The existence of Mr Jones’ commercial agreement with Optus was not disclosed in the broadcast.

The Panel finds that this available fact was relevant because:

♦ Mr Jones defended Optus’ desire to acquire AAPT. Mr Jones says ‘the kind of competition we seek in the market isn’t there. Cable and Wireless together with AAPT, as I’ve said many times, would have provided that kind of competition’;821 and ♦ the broadcast was favourable to Optus.

The Panel notes 2UE’s submission that Mr Jones had been ‘very publicly associated with Optus (through public appearances and advertising) over some years’, and that this must condition listeners’ expectations regarding his disinterestedness or otherwise. However, clause 3.1(a) provides that advertisements must not be presented as news programs or other programs. To the extent that the presentation of any live read advertisement is capable of causing confusion in listeners’ minds with the editorial comment of Mr Jones, the Panel would be concerned that those live read advertisements may have breached clause 3.1(a).

Further, listeners should not be required to be aware of the public appearances of Mr Jones for Optus, which are external to the matter broadcast. Mr Jones’ public appearances for Exhibit 86, p. 177.

Submission made by 2UE – Alan Jones Broadcasts – Breach of Clause 2.2(d) of Code of Practice 2, D26 Exhibit 86, p. 177.

Optus are not, in the Panel’s view, sufficient disclosure of a commercial relationship between him and Optus, which encompasses on-air editorial conduct.

The Panel therefore does not accept the submission of 2UE in this regard.

The Panel finds that, in the presentation of a current affairs program, Mr Jones presented material in a misleading manner by withholding a relevant available fact, namely the existence of a commercial relationship between himself and Optus.

The Panel finds 2UE to be in breach of clause 2.2(d) of the Codes.

LOCAL CALLS Material Provided to Mr Jones

On 22 June 1999, Mr Woodhill, Optus, sent a fax to Mr Jones. The fax provided:

We put this release out today; it is a significant step in communication. While we have many more local call customers through reselling Telstra’s services, this 170,000 are on our cable.

It is proof that we are providing competition to Telstra – we are the only company competing in local telephony.

This announcement is significant in terms of what is going on in the world at present. Optus was the first company in the world to deploy this cable technology for local telephony. It has proven so successful other companies in the world are buying cable TV companies in the United States so they too can provide local telephony the way Optus does. One example of this is AT&T who bought Media One, a company we worked with to put our cable network in place.

It ties in nicely with the announcement we made about our joint venture with Excite@Home as all the technologies (telephony, Internet via cable modem, long distance, pay TV) can only converge using cable.822 Attached to the fax was a media release, entitled ‘Cable & Wireless Optus delivers on local

telephony promise’, dated 22 June 1999. It provided:

Cable & Wireless Optus today delivered on its commitment to shareholders and institutional investors to install 170,000 directly connected local telephony customers prior to the end of the financial year (30 June 1999).

The commitment was made prior to the company’s listing on the Australian Stock Exchange in November of last year and has been reaffirmed on several occasions since.

‘This is another example of Cable & Wireless Optus delivering on promises – doing what we said we would do,’ a company spokesman said.

‘By meeting our forecasts for directly connected local telephony customers, we are building real value in the broadband HFC network.

–  –  –

‘The recent announcement of a joint venture with the world’s leading aggregator of broadband content and service provision Excite@Home, as well as the launch of cable modems this year, will continue to build the value of this asset,’ the spokesman said.



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