Australia's Optus Reinvents Itself.

SYDNEY, AUSTRALIA -- After languishing for two years due to a series of technical problems, Australian telco Cable & Wireless Optus Ltd.'s (CWO) broadband-cable strategy is taking shape.

The company is set to launch a cable-modem service later this year through a partnership with @Home Network of the United States, according to local reports.

CWO wouldn't comment on the deals. Reports said CWO and its parent, Cable and Wireless Communications plc of the United Kingdom, signed off on the deal two weeks ago.

Sources added that CWO will have exclusive Australian rights to @Home's broadband-cable service, which @Home itself may manage.

CWO is also reinventing its Optus Vision cable-TV arm as part of its push into the home as a full-service provider. Earlier this month, the company began to offer consumers a bundled package of pay TV, Internet access and local-loop telephony services. It's a first for the company, which has struggled with pay TV penetration and technical problems on the telephony front.

Part of the new drive involves streamlining the pricing of its cable-TV product from a four-tier package to a two-tier offering, while providing free installation if a customer takes local telephony or Internet services in addition to pay TV.

The basic package includes 14 channels for $A14.95 ($U522.31) per month if the customer signs a 12-month contract and buys OV's local-phone or Internet service.

The "Deluxe" package, which sells for $A29.95 ($U544.69) per month, includes local phone service, as well as OV's Movie Network's three movie channels, Seven Network's three sports channels and ESPN International.

OV pay TV customers pay a $49.95 installation fee if they don't take Optus telephony.

As of the last quarter, about 66 percent of OV TV customers were buying an additional service. The company aims to boost that number to 75 percent, OV head of television Mike Lattin said.

OV has also agreed to supply its movie channels to regional operator Austar Entertainment Pty. Ltd., a unit of United International Holdings Inc.

Meanwhile, OV is renegotiating its supply contracts with Movie Vision's four Hollywood studio partners: The Walt Disney Co., Warner Bros., Metro Goldwyn Mayer Inc. and DreamWorks SKG.

Sources speculated that the studios are willing to sacrifice some of their minimum subscriber guarantees for a wider audience through nonexclusive deals. This could mean that those channels would also end up on the Foxtel cable platform.