* Lara Sinclair * From: The Australian * March 29, 2010 12:00AM
TELSTRA'S decade-long plan to become a major media player is in disarray following the resignation of the architect of its media strategy and moves to restrict internet-TV companies from showing popular sports online.
The future of Telstra's media division is in question after the resignation of its chief, Justin Milne, last week to pursue other interests, and speculation the division would be downgraded in a company restructure today.
Sources said Mr Milne's role, which formerly reported to Telstra chief executive David Thodey, would report to another executive following a wide-ranging restructure of the products area and the appointment of a new consumer chief.
Close observers of Telstra's media activities -- which include the launch last year of an internet protocol TV trial delivering video content to TV sets through an internet-connected set-top box and personal video recorder, dubbed the Tbox -- said Mr Milne's departure was a blow.
"Their ideals of being a media business are fundamentally over with his exit," a well-placed media executive said.
"He was the only one pushing to be a media mogul and take Telstra into that space.
"Now it looks like the business focus is primarily legislative -- stopping the split (of Telstra's wholesale and retail businesses) and getting on with the business of serving consumers."
Mr Milne's resignation comes as the nascent IPTV industry -- made up of companies including search giant Google, Fetch TV (backed by Malaysian billionaire T. Ananda Krishnan), TiVo owner Hybrid TV and internet service providers Internode and iiNet -- is struggling to develop a business model and the regulatory landscape remains unclear.
Even as digital technology appears to be opening the way for new entrants, the government appears determined to provide legislative protection for existing media businesses such as free-to-air TV.
IPTV players expressed surprise at the news last week that the government would legislate to prevent them from bidding to show popular sports online first, rather than on free-to-air TV.
Communications Minister Stephen Conroy said IPTV players, along with pay-TV companies such as Foxtel, would be restricted in bidding for popular sports "to ensure that Australians get to see free-to-air sport".
A Telstra source said the company was surprised by the announcement and cautioned the government against preventing investment in IPTV.
"We didn't know what he was going to say the other day," the source said.
"You've got to be careful with an industry that is so nascent, that you don't over-regulate it, because you'll just kill it."
A spokeswoman for Google, which recently won the global rights to broadcast live Indian Premier League matches on the internet, also spoke out against the plan, saying it was "in users' interests to be able to freely access a full range of content online, including what's on the anti-siphoning list".
"It would be a real shame to cloud Australia's bright broadband future with the imposition of old rules," the spokeswoman said.
"What's the point of delivering universal broadband infrastructure if people won't be able to use it fully?"
A Telstra source said there would be "no winding back" of Telstra's media ambitions following Mr Milne's departure.
Mr Milne has been closely associated with Telstra's bidding for exclusive sports and entertainment content, as well as the Tbox launch -- even more so following the departure last year of fellow Telstra executive Holly Kramer.
The Tbox trial was seen as a way for Telstra to safeguard its media ambitions and protect its broadband customer base if the telco is forced by the government to sell its half-share of pay-TV company Foxtel.
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