Telus looking to offer VOD in Toronto’s CityPlace residential complex

A subsidiary of Canada’s second larg est telephone company has applied for a licence to provide video-on-demand to CityPlace, a massive downtown Toronto residential condominium development expected to house about 7,000 people within ten years – Broadcasting Notice of Public Hearing 2002-2. Telus Entertainment Inc., a unit of Telus Corp., would offer the service in conjunction with an Intranet service available to all condominium residents. James Goliath, VP of multimedia solutions at Telus, says the VOD service would be offered to residents via separate wiring and require a digital set-top box different from that needed to receive television service, which is being supplied by Shaw Communications Inc.-owned Star Choice Communications Inc. Revenue Base AssumptionsYear 1Year 2Year 3Year 4Year 5Year 6Year 7Digital households served by VOD1,2792,2263,5764,3765,1765,5265,776% of digital households VOD active15%22%23%24%25%26%27%No. of movies sold33.53.7544.254.254.25Cumulative monthly buy rate for movies4321,3972,7453,9045,1096,0396,413Source: Telus Entertainment Inc. application to the CRTC for a VOD licence, Sept. 14, 2001. While Telus proposes in its licence application that residents would lease or buy the set-top box, Goliath tells CCR that the cost of the receiver would be included in monthly condominium fees. The VOD service would be offered as part of an Intranet portal that includes content such as a regular residential newsletter and entertainment listings, limited access to the Internet, and the opportunity to book meeting rooms and watch what is being recorded by web or security cameras around the CityPlace community. These services would be accessible via the TV, and personal computers of residents who subscribe to Telus’ high-speed Internet offering. But VOD would be the only programming service offered over the Telus set-top box, according to Goliath. He adds that Telus is still working out pricing for the VOD service. It could include a combination of a set monthly fee enabling a specific number of VOD titles to be watched and a fee-per-title-viewed model. The revenue projected in the licence application is based upon an average retail price of $6.12 per title. Goliath says Telus is still working on the costing, but notes that the service "will be competitively priced" with VOD services provided by other companies such as Rogers Cable Inc., which is looking at charging about $4.99 per title (CCR, March 01/ 02). Telus estimates the VOD service at CityPlace will cost about $2.419 million to implement. It is projecting revenue from its VOD service to grow from $48,907 in year one of operation to $650,971 in year seven. Revenue would increase as more residential units are added to the development, and Telus anticipates that the average monthly buy rate would rise from three movies in year one to four and a quarter in year seven. But it doesn’t anticipate breaking even by year seven. It has estimated a $258,830 loss in year one, which would be reduced to a yearly operating deficit of $23,997 by year seven. It assumes a take-up rate of 10 per cent to 25 per cent of residents. Goliath expects films and adult entertainment to continue to be the driver of VOD. "But the industry is just beginning its evolution so it’s unknown whether they’ll be demand for things like educational or demonstration kinds of videos such as how to install hardwood floors or that sort of thing," he says. "You have to recognize that CityPlace may also have a very specific demographic. For example, we might have a very high ethnic population (move in). So we may find that Asian content or something like that becomes very important." Telus is asking for few restrictions on the content it can offer on the VOD service so that it can evolve with new developments. The company says it will not offer live events, but Goliath says there’s a possibility that it could offer edited highlights from live events. Telus notes in its application that its VOD service should have little impact on existing programming services, as it would be geographically limited to CityPlace and all the subscribers would be new. Telus also expects Star Choice to have pay-per-view options with its television service. Telus plans to manage all program acquisition, including content encoding, formatting and scrambling encryption of the digital signals for its VOD service, which would run from Telus servers located at CityPlace. Goliath says there are no bandwidth limitations to how many titles could be offered, but customer demand will dictate how many servers are added to store content. In 1999, Telus signed a deal with CityPlace developer Concord Adex Developments Corp. to design and build a "digital neighbourhood" at CityPlace, a $1.5-billion development on Toronto’s former downtown railway lands beside the SkyDome. Fibre is being installed in all buildings to deliver a broad suite of communications services at CityPlace, which will eventually comprise more than 6,000 residential condominium units in 18 high-rise towers. At the end of this year, about 1,500 occupants are expected to have moved in. Telus submitted its VOD licence application to the CRTC on Sept. 14, 2001. The application will be considered at a public hearing in Hull QC on May 6. The deadline for written interventions was April 11.

Telus looking to offer VOD in Toronto’s CityPlace residential complex

Broadcast | April 12, 2002

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