Regional Cablesystems gets digital lessons from revamped Kirkland Lake system

Regional Cablesystems Inc is preparing to revamp its digital TV offering following a market trial that found some customers unhappy with the price and size of channel packages. All 2,600 subscribers at Regional’s Kirkland Lake ON system were converted to digital earlier this year as part of the trial. "What we have determined after eight or nine months of trial is that we’re going to have to reinvent the product of the game based on the response of our customers," says John Reid, VP of marketing and communications at Regional. "Our plan is to offer more, cheaper packages by breaking up the packages into smaller ones to offer more choice and more price points." The test results are revealing. The company reports that about 20 per cent of its customers cancelled their cable service after receiving their free digital box. Revenues, however, remained stable because of higher take rates among the other customers. Andrea Zizman, director of marketing at Regional’s Northern Division, has several theories as to what led to the decline, including one involving piracy. "We went from (an analog) system that is easily pirated to a system that’s not," she explains. "So there were people that probably paid for a basic cable package but had an analog scrambler box so they could take the signals illegally." Having to now pay for the signals turned out to be something those customers weren’t keen to do, she speculates. "Generally, people who steal television tend to always steal television. So there’s that and that’s really hard to confirm quantitatively, we have confirmed it qualitatively though by talking to people in the community," she says. Another factor could be that analog customers received a large basic package of 30 channels for a relatively low price. With digital, subscribers were offered large theme packages. Regional also offered an all-inclusive package priced at $59.99 per month. In comparison, Bell ExpressVu LP charged $52.99 for a similar offering. "We thought we could explain the $7 difference in free after-sales service and things like that," says Zizman. "But the truth is that until a customer has their television set go off, they don’t really value that. The $7 was enough of a difference that they went, ‘oh, this is not good’," she says. Other things that Regional should have done differently, according to Zizman, was offer a free trial period. As well, Regional should not have tried to get its customers to install the digital set-top boxes themselves. "We needed to have all the boxes deployed prior to the switch being deployed one day. We gave out the boxes but it turns out that everyone just had them at home and hadn’t installed them," she notes. "Self install really isn’t the way to go right now until it’s a technology that’s resident in television sets, you have to spend the time with the customer." Another consideration, says Zizman, is that people in Kirkland Lake were "VCR mad" and losing the analog channels turned out to be a big issue because they couldn’t watch one program and tape another on digital. Both Reid and Zizman say that more time has to be spent on educating customers about digital technology. The cableco negotiated short-term, one-year contracts with programmers to make Kirkland Lake all digital. Those contracts come up for renegotiation soon, but Reid doesn’t anticipate any problems. "Negotiating the initial contracts with programmers was the most difficult part of the process. But we didn’t violate any of the terms and this is a test model, so we don’t believe there will be any problems in resigning," he says. Regional spent over $2.1 million in the Kirkland Lake area to launch Canada’s first 100 per cent digital cable TV service in February. The transition boosted the number of channels from 47 channels to over 140, including 16 pay per view movie and live events channels, six new movie channels and the addition of popular specialty services such as the Food Network and Prime.

Regional Cablesystems gets digital lessons from revamped Kirkland Lake system

Broadcast | September 13, 2001

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