Hamilton cablecos duplicate analog signals in digital to compete against satellite TV

Two small Hamilton ON-based cablecos have become the first in Canada to duplicate all the analog signals they distribute in digital to better compete with their all-digital direct-to-home (DTH) satellite TV rivals. Privately owned and family-run Source Cable and Wireless Ltd., serving about 16,000 cable customers in Hamilton Mountain, introduced its all-digital offering on February 12. Mountain Cablevision Ltd., serving about 37,000 cable customers in the Hamilton area, followed close behind, launching its all-digital option a week ago. Persona Communications Inc. introduced an all-digital lineup in Kirkland Lake ON in 2001, but did not continue to offer signals in analog, as Mountain and Source are doing (CCR, Sept. 13/01). "Basically, (Bell) ExpressVu had those commercials about being all digital. To be competitive, we had to give our customers the option of 100% digital signals. When you have a digital box now, all the signals are digital. Whereas before, customers received digital signals for the digital TV channels but analog signals for the analog channels," Alison Stott, marketing manager at Source Cable, tells Canadian Communications Reports. "It has a lot to do with customer retention. Hopefully, if our customers get a digital box, they will be more apt to stay with cable rather than go with a competitor." Pat Kiely, director of business operations and development at Mountain Cable, echoes Stott’s reasons for deciding to invest in duplicating delivery of the analog signals in digital. "It’s our belief that as the market shifts to digital television, it is important to be in a position to offer great pictures on big-screen television. It’s a competitive strategy to remain a player and…our intention is to say to our customers that they do not have to look at a DTH provider in order to get great pictures," he says. "I think we will see customers having more reasons to remain with our (cable) service over the long range, and our intention is not to see an erosion in our customer base over the next number of years. I think there is enough glue there for us to be able to compete against DTH. If one of the issues for customers migrating to get better pictures, then now they don’t even have to give that a thought." Kiely tells CCR that being a smaller cable operator with adequate bandwidth has enabled Mountain to introduce the all-digital offering. As well, the availability of a low-cost digital cable set-top box, the Motorola DCT700, will make the option more price-friendly for customers (CCR, Sept. 4/03). "As a smaller company, I think we’ve been able to go all-digital. Both of us (Mountain and Source) operate single headends. That’s one luxury that we have and, therefore, logistically, we only had to look at doing this project once. If I’m a distributor with multiple headends, this project might take me a year or two to logistically figure out and then to put the capital together to do it," he points out. Source Cable, which has an 860-megahertz system, and Mountain, whose plant is 600 megahertz, have the capacity to duplicate the analog signals in digital. Kiely says going all-digital has been expensive, because now, like ExpressVu and Star Choice Television Network Inc., the cableco has to digitize and encode all the off-air analog signals for delivery in digital. "That comes at some expense," he says, without revealing any specific figures. "There’s a fair amount of equipment and engineering that goes into that." Stott says that Source Cable has put out 80 to 90 digital boxes to customers in the first week since beginning a special promotion this month for the all-digital service. The cableco reduced the price of its digital box from $199.99 to $99.99 during March, with a rental option of $8.95 per month. Next month, Source Cable will return the price of its digital box to $199.99, according to Stott. However, she points out that Source Cable is expecting a shipment of the DCT700, which it will sell for $99.99, within a week. Mountain is also awaiting the arrival of the DCT700 to push its all-digital offering. "There are owners who are in the position of having a (TV) set that works perfectly well in the world as it exists today, and they don’t have any motive from - a picture-quality point of view - to upgrade to a more modern set, with more inputs and outputs. And frankly, that’s still 70% to 80% of the market," says Kiely. "So the entry level DCT700 set-top box fits the bill quite nicely and is inexpensive enough for customers." He says that Mountain hasn’t yet set a price for what it will charge for the purchase or rental of the DCT700, but that the set-top box cost would be the only additional cost to tuning into the cableco’s all-digital lineup. Continuing to offer the analog option, notes Kiely, gives the cableco a leg up on its satellite TV competitors. "Our customers now have a choice about what they use on second and third sets. So a second outlet or a third or fourth outlet in the home doesn’t necessarily need any equipment to enjoy the 70 channels of analog that we have always offered," he says. "We think we are strategically straddling what is a transition in television to a much more sophisticated world of audio and video." Canada’s larger cablecos have also discussed plans to duplicate analog channels in digital. During a February 4 conference call, Rogers Cable Inc. president and CEO Edward Rogers stated, "With the size of the spectrum that we have, we aren’t going to be under pressure like some cable companies of let’s say 550 megahertz and lower. We are talking about replacing all of our analog channels with a full digital lineup." He noted that Rogers was also considering digitizing some of the analog services that could be offered in conjunction with its digital service. "But, when we look at our competitiveness against the satellites, we have a lot of benefits over satellite that we’ll continue to put pressure on," he added. Cogeco Cable Inc. has also said that it is evaluating an all-digital model.

Hamilton cablecos duplicate analog signals in digital to compete against satellite TV

News | 03/11/2004 5:00 am EST

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