Aliant pulls plug on VibeVision digital TV service; opts for Bell ExpressVu instead

Atlantic Canada telephone company Aliant Telecom is winding down its digital TV service VibeVision and will instead offer Bell ExpressVu LP’s satellite TV service to its customers, the company announced this week. While some industry observers predict that other Canadian telcos planning digital TV deployments using high-speed phone lines will eventually abandon their plans, the telcos say Aliant’s move has no impact on their strategies. SaskTel is currently testing its digital TV service with 80 employees in Regina. A company spokesperson says the telco is planning to launch commercially in Regina and Saskatoon at the end of August, followed by launches in Prince Albert, Moose Jaw, Yorkton, Swift Current, North Battleford, Weyburn, and Estevan as early as this fall. "We think that there is a market for this service in Saskatchewan," says Michelle Englot, SaskTel’s director of corporate affairs. "We feel that proceeding with our digital interactive video service is a viable option for us." Similarly, Manitoba Telecom Services Inc. is forging ahead with a trial of its digital TV service, according to a company official (CCR, May 23/02). However, convincing TV subscribers to switch from existing providers won’t be easy for the telcos. Aliant had little success with VibeVision, managing to capture only 3,300 subscribers since its launch in January 2000. The service was available to an estimated 80,000 households in select neighbourhoods in Saint John and Moncton NB and Halifax NS. VibeVision generated only $1 million in revenue in 2001. When it launches its digital interactive video service, SaskTel will be operating in the most competitive market in Canada for broadcast distribution services – no easy challenge given Saskatchewan’s small population base. Incumbent cable operators (Shaw Communications Inc. or Access Communications), Canada’s two satellite TV operators, and wireless cableco Image Wireless Communications Inc, currently serve most, if not all, of the communities SaskTel plans to serve. Aliant Telecom’s move to pull the plug on its digital TV service has been rumoured for months and should not come as a surprise to industry watchers given the high cost to roll out VibeVision, its limited success in signing up customers, and the fact that BCE Inc. owns 53 per cent of parent Aliant Inc. BCE long ago chose satellite as its platform to distribute TV programming and has sunk hundreds of millions of dollars into Bell ExpressVu since its launch in 1997. The writing may have been on the wall just prior to Aliant Telecom’s announcement. In recent weeks, the telco quietly made a major change to its VibeVision service, making it available only to Aliant high-speed Internet customers. The move was likely meant to limit costly expansion of the service to only high-margin customers. Previously, non-Internet customers could get the service but had to pay a higher rate to subscribe to the VibeVision basic package. Then, on June 17, the parent company disclosed that it was undertaking a thorough review of its operations to streamline costs and to improve revenue performance wherever possible following its analysis of the CRTC’s price cap decision. The landmark ruling is expected to cost Aliant up to $25 million a year in operating income. (See the June 18/02 issue of CCR affiliate publication Network Letter for more details.) Late in 2001, Aliant Telecom and Bell Canada agreed to work more closely together to achieve shared goals of improving customer service, reducing costs, and increasing revenues. "We have identified that there are ways both companies can grow by working together by leveraging our respective strengths that when shared, will make both of our companies stronger. Together we are finding ways to reduce costs and also to bring new products and services to our customers, which will enhance our overall financial picture," Aliant stated. Ultimately, Aliant Telecom chose to take advantage of its close working relationship with Bell Canada to offer Bell ExpressVu as the digital TV option for its customers throughout Atlantic Canada. Technology, economic factors were key to decision Technology limitations and economics were also key factors in the decision to abandon VibeVision, according to Chris Keevill, president of Aliant Telecom Broadband Services. The downturn in the technology industry meant that equipment makers were not investing in new technology to bring down costs. "The challenge we had going forward was that the technology industry at large had not invested (in) some of the technologies that would have made (VibeVision) easier to scale up in large volumes," he tells CCR. "So it was important at this point in its life cycle where it was more expensive, less economic than we would have planned originally as a result of the technology downturn." Another technology limitation of TV over high-speed digital subscriber line (DSL) networks is that customers must be within a certain distance to the telco central office or switching station to be able to receive the service, Keevill explains. "The bandwidth requirement was high, and so we couldn’t reach all of our customers with the bandwidth required for VibeVision," he says. Keevill adds that better options are currently available from Bell ExpressVu and from video delivered to computers using Aliant’s high-speed Internet service. Bell ExpressVu offers more programming choices including more pay-per-view channels. "It was a tough decision but it came down to economics alongside an opportunity with our partnership with Bell ExpressVu to serve the needs of our customers and to serve more of our customers with an existing and well-established, solid service offering through Bell ExpressVu," Keevill says. Ironically, Aliant One customers already had the option of ordering Bell ExpressVu satellite TV systems and packages as well as the VibeVision service. Aliant One is a premium service of bundles of phone, cellular, Internet, and TV services designed to save customers time and money via one bill and faster, more convenient service. It is offered in Nova Scotia and Prince Edward Island and will soon be available in New Brunswick and Newfoundland. Keevill credits the learnings achieved in the development of VibeVision with laying the groundwork for other enhanced broadband services such as music, video-on-demand (VOD), and TV programming to computers over its existing DSL broadband network. He sees Aliant’s TV-to-the-PC service as more viable in the long-term to deliver video over its network. Keevill would not say how much Aliant has invested specifically in VibeVision, but it is certainly in the tens of millions of dollars. VibeVision customers will not incur any expenses to switch from the service to Bell ExpressVu. Aliant has no target date for when it would like to have customers migrated to the satellite TV service, although it would like to do so quickly. It is offering existing VibeVision customers special offers on Internet service and rebates on telecom services when they switch. Aliant’s announcement regarding VibeVision was made in conjunction with news that it was investing $85 million to expand its broadband network across Atlantic Canada. It also noted that in the coming months it would begin marketing new video applications including VOD and TV programming direct to computers over its broadband network. These applications will be built using Aliant-affiliate iMagicTV Inc.’s video middleware software platform. iMagicTV software was also used for VibeVision.

Aliant pulls plug on VibeVision digital TV service; opts for Bell ExpressVu instead

Broadcast | June 21, 2002

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