Shaw plans transition to new satellite technology; Bell says it’s ‘impractical’

GATINEAU—Shaw Communications Inc. said Tuesday it plans to move to a new, more efficient compression technology for its satellite distribution services, but Bell Canada said high costs are holding it back from making its own transition. On Tuesday the CRTC opened a hearing to review its direct-to-home (DTH) satellite television policy. Right now, some local communities cannot get their local television stations through their satellite television services. On Sept. 1, 2011, satellite distributors Bell TV and Shaw Direct will face a requirement to offer more channels. But broadcasters say the increase is not enough. They argue distributors should be required to distribute all conventional television stations, and that all local stations should be offered in the local communities they serve. The distributors argue that they cannot carry all local stations because their satellites are already at maximum capacity. One solution to increase satellite capacity is to upgrade video compression technology from MPEG-2 to a more efficient MPEG-4 standard. But this upgrade is complicated by the fact that the great majority of receivers in people’s homes are not compatible with the new technology, and need to be replaced. Shaw told the commission Tuesday it is working on a plan to transition to MPEG-4. The company recently entered an agreement to build and launch Anik G1, a new $300-million satellite, by the fourth quarter of 2012. The new satellite will be capable of carrying up to 100 high-definition services in the MPEG-4 standard. This fall, the company also began rolling out receivers that are compatible with the new technology. But Shaw cautioned that speeding up the rollout could negatively affect its customers. “This rollout must be carefully executed to manage costs and ensure that customer experience is not negatively impacted by a need for equipment changes. Only one per cent of our customers’ receivers are currently MPEG-4 capable,” Gary Pizante, Shaw Direct’s vice-president of business development, told the commission. “However, the cost of immediate conversion of our entire system to MPEG-4 would be $600 million and would overwhelm our business.” Pizante said Shaw cannot transition to the new technology until Anik G1 is functional in 2012. He added that although Shaw has plans to transition to the new technology, the exact details of how and when it will reach that goal remain undetermined and will depend on market pressures. “We have something of a vision, I suppose,” he said. Pizante said the company previously worked on a plan to upgrade its existing MPEG-2 receivers to MPEG-4, but the upgrade didn’t work out. “We spent considerable resources … and it turned out to be unfeasible. It didn’t provide the level of service our customers would expect,” Pizante said. Bell told the commission Tuesday that switching to MPEG-4 is too expensive. “Only 25 per cent of our set-top boxes can decode MPEG-4 signals,” Mirko Bibic, Bell’s senior vice-president of regulatory and government affairs, said. “Upgrading all of the signals to MPEG-4 would require a replacement of 75 per cent of our boxes at a cost approaching $1 billion. This is roughly comparable to the cost of a new satellite. This cost is both operationally and financially impractical.” Bell is now rolling out MPEG-4 compatible set-top boxes to new customers, but that doesn’t mean the company has plans to make the transition, Bibic said. “We’re selling boxes that are MPEG-4 enabled in the event that one day we do transition to MPEG-4, but right now we only uplink in MPEG-2,” he said. Heather Tulk, Bell’s senior vice-president of residential products, said the company is considering the investment, but will wait until it is confident of a reasonable return on investment. “We’re evaluating methods by which we may be able to stage that migration. Because of that limited number of MPEG-4 boxes in our installed base, if we were to let natural evolution take place, it would be a number of years, potentially decades, before we would have a base able to receive signals in MPEG-4,” she said. “We are looking at various ways by which we can stage an investment that could help speed that along, but at this time we don’t have firm plans and we have not started that transition.” CRTC chairman Konrad von Finckenstein said it would be in the company’s self-interest to increase its capacity in light of the growing demand for high-definition services. But Tulk said there is no business case for Bell to spend $1 billion on upgrading its satellite services right now. The company is focusing its investments on its new Internet protocol television (IPTV) service, Fibe TV. New satellite entrant FreeHD Canada Inc. will roll out all of its service in MPEG-4, but said Tuesday its launch has been delayed. “Insufficient satellite capacity is available for FreeHD Canada to launch in time for the Aug. 31, 2011 digital transition,” David Lewis, the company’s founder and CEO, told the commission. The launch has been postponed until the first quarter of 2012, when the company expects additional satellite capacity to be available in the Canadian market. FreeHD will also use spot beam technology to deliver its service, which it says is more efficient than the national beams used by Bell and Shaw. Lewis said he is surprised the incumbent providers have yet to make a move towards spot beam technology. The hearing is scheduled to continue Wednesday and Thursday in Gatineau. kfournier@thewirereport.ca

Shaw plans transition to new satellite technology; Bell says it’s ‘impractical’

News | 11/16/2010 9:41 pm EST

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