Foxtel has requested the competition regulator to approve its deal that wants its pay-TV's operator services be made available only to Telstra broadband users.

Foxtel has asked the Australian Competition and Consumer Commission for permission to supply video content through the Internet using its iQ set-top boxes for customers who are only utilizting Telstra's BigPond broadband services.

The big telco will promote its T-Box set-top unit later this month, which will provide sports and entertainment content, including Telstra's linear channels.

The dialogue with ACCC coincides with the majority of the pay-TV industry competing for digital free-to-air channels and prospective internet broadcasters such as FetchTV, Hulu, and Telstra.

The deal with Telstra, which owns 50 per cent of Foxtel, also makes the relationship complicated since both use the same content to draw in customers to the digital world.

Rival telco Optus has argued that the deal will hamper competition within the industry as it attempts to lock the content while discussions with the Rudd government on the national broadband network are still not finalized.

We always thought Telstra would re-energise their monopoly powers, but we didn't think they would do that until a deal on the NBN had been finalised," said Optus government and corporate affairs director Maha Krishnapillai.

But if this goes ahead it will allow Telstra to lock away a big chunk of the customer base in broadband. In a very short period of time it will give them a great launch pad for NBN."

Foxtel, who submitted its proposal to ACCC last month, has stated it would provide a variety of content like movie and television programs which will be available in the iQ box.

Foxtel said the proposed services may enhance competition for entertainment and broadband services.

The proposal also stated that both parties agree only to waive certain charges to Foxtel if the deal was an exclusive one. Customers of BigPond will not be charged for an additional data download fees for trying the services.