Westman applies for VOD licence, other small cablecos expected to follow suit

Westman Communications Group is the first small cable operator in Canada to apply for a video-on-demand (VOD) licence in hopes of eventually offering its digital subscribers various types of programming on-demand (CCR Update, April 16/03). Like larger cablecos already offering VOD, the Brandon MB-based cable co-operative is banking on VOD to boost digital penetration, reduce customer churn, and retain a competitive advantage over its satellite competitors. Satellite TV distributors do not have the two-way broadband capability needed to deliver VOD, but Bell ExpressVu LP is instead looking at using its personal video recorder (PVR) set-top box to offer a limited VOD service (CCR, March 13/03, March 1/02). Westman president and CEO David Baxter tells Canadian Communications Reports that the cableco plans to offer VOD in only its largest systems, as its smallest communities probably wouldn’t be able to economically sustain the service. Westman plans to offer VOD in Brandon and the surrounding communities of Minnedosa, Neepawa and Carberry, which receive digital service via a Headend-in-the-Sky (HITS) system. At the time of the filing of its VOD application with the CRTC in September 2002, Westman had 14,886 basic cable customers in those areas. The communities to which Westman provides digital cable through HITS-QT will not be getting VOD for the foreseeable future (CCR, Aug. 15/01). "You have to be able to justify the cost of the servers (to host the VOD titles) on a stand-alone basis, or you have to have high-speed communications links between the communities to achieve economies of scale. So that’s why we’re not planning to do (VOD) in the HITS-QT communities, at least not at this time," Baxter says. "The economies challenge is significant for smaller cable operators, there’s no doubt about that. It’s something that we’re fine tuning ourselves to ensure that we can minimize the costs of the servers required and the encoding costs and so on." In its VOD application, which was gazetted by the CRTC on April 10 (Broadcasting Notice of Public Hearing 2003-4), Westman indicates that it plans to charge between $3.99 to $7.99 per title. The cableco projects that there will be 2,520 digital customers it could offer VOD to in year one of its licence, with that number climbing to 5,320 by year seven. It predicts bringing in $90,000 in revenue, exclusively from movies, in year one. Revenue is projected to rise to $462,000 in year seven, with $382,000 of the total being derived from movies. It anticipates spending about $422,000 on new assets, such as studio broadcast control equipment. Baxter says the VOD service will offer other genres of programming and perhaps expand into subscription VOD (SVOD) over time. Westman tells the CRTC that it plans to offer between 100 and 300 feature film titles a week, with 89% of them coming from the United States. Baxter, however, admits that no agreements have been inked to date for VOD content. He notes that the Canadian Cable Systems Alliance (CCSA) is working on negotiating VOD content for its members, which includes Westman. Utica ON-based Compton Communications, which has about 4,800 basic cable customers and just over 200 digital cable subscribers, told CCR recently that it was applying to the CRTC for a VOD licence in hopes of deploying the service in 2004. Baxter believes that yet more small cablecos will soon be hopping on the VOD bandwagon. "I think a lot of CCSA members plan to offer VOD, it’s just a matter of timing," he says. "Certainly our approach was to get the application in because it will certainly be close to a year from the time we put in the application (that we get approval). We wanted to make sure that we were in the position that once we were ready to launch VOD that we had the licence to do it." The CRTC will consider the application at a public hearing in Edmonton scheduled to begin on June 16.

Westman applies for VOD licence, other small cablecos expected to follow suit

Broadcast | April 25, 2003

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