HITS QT enabling small cablecos to better compete with satellite TV rivals

HITS QT (Headend in the Sky – Quick Take) is giving small cable companies a cost-effective way of going digital and competing with their direct-to-home (DTH) satellite TV rivals. As a result, orders for Canadian Satellite Communications Inc.’s (Cancom) digital cable solution have exceeded expectations. "In a three-and-a-half month period, (with HITS QT) we’ve actually doubled the number over those with traditional HITS, and we’ve more than doubled those that have CablePlus," says Stephen O’Hara, HITS QT product manager at Cancom. "HITS QT is going to be quite successful because it’s meeting the needs of small cable operators." Warren Ritchie, general manager of Norcom Telecommunications Ltd., agrees. "(HITS QT) has kept us in the game. It’s made us absolutely competitive," he tells CCR. "You need to be able to offer the things people want – the movies, the digital quality pictures, the new channels. There’s just no way you’ll be able to launch all of these new channels if you don’t have digital. You just don’t have the analog space." Norcom has rolled out digital using HITS QT in its 3,400-subscriber system in Kenora and plans to move ahead with the technology in its Red Lake and Sioux Lookout systems, which serve about 800 customers each. David Baxter, CEO of Westman Communications Group, notes that HITS QT will enable his company to extend digital cable service to 89 per cent of its total customer base from 62 per cent previously supplied with traditional HITS. In recent weeks, Westman has rolled out HITS QT in five communities, and plans to have the service operating in a total of 12 communities by the end of June. "HITS QT is bringing digital to these communities for the first time, so we’ve more than doubled our digital customer base (to about 3,000) in the last six months," he tells CCR. "The most difficult part is keeping up with the installations and that’s just due to demand. And we’ll gladly deal with that problem any time." Nova Scotia-based Rush Communications Ltd. is another company that is enthusiastically embracing HITS QT. Jessica Evans of Rush tells CCR that the product will eventually enable the company to extend digital to 90 per cent of its total customer base. At the beginning of February, some 27 cable headends of various cablecos across the country had been outfitted with HITS QT following a test of the service last year (CCR, Aug. 15/01). That number is expected to increase by another 82 headends by this summer, largely due to an aggressive deployment by Persona Communications Inc. In contrast, seven customers representing 28 systems have signed on for CablePlus – a product that has been offered for about two years – and 15 customers representing 48 systems have traditional HITS, according to O’Hara. HITS QT costs 15 per cent to 20 per cent of the price of traditional HITS, but does not offer two-way RF communications. Some cablecos have shied away from CablePlus because that technology involves putting satellite dishes on the homes of their customers. Cancom sells all three products. Ritchie notes that there were some minor technical and administrative concerns associated with the rollout of HITS QT. For example, demand for the digital boxes was so great around Christmas in Kenora that the company had to use digital boxes earmarked for the U.S. market. But it took a week for the boxes to be authorized for customer use. "That was probably the most significant glitch we had," he explains. "We ended up falling behind on our installs. It really hurt us because we had a waiting list of up to 100 people waiting for these boxes." On the administrative front, Cancom has modified initial plans to ensure weekly reporting of customers taking pay-per-view as small cablecos were worried that bad debt could become a problem if longer reporting periods were used. Ritchie points out that higher revenues are expected with the launch of digital. He expects more people to opt for pay-per-view and some of the new digital channels. As well, he notes there’s been an increase in people subscribing to The Movie Network, and upgrading their analog services when they get a digital box. One potentially successful digital service, video-on-demand (VOD), is currently not available to customers whose digital signals are supplied through HITS QT. "Ultimately, you need a high-speed connection to a server (to offer VOD)," Baxter explains. "By the very nature of the customers HITS QT is serving – smaller communities that don’t have connections back to larger centres – that’s going to be extremely difficult to do. So we launched it with the understanding that VOD would not be necessarily something we could offer in those communities. But it does mean that we are on a level playing field with our DTH competitors as far as other services and television signals that are available." However, Ritchie is hopeful that VOD might one day be possible with HITS QT, noting that the Canadian Cable Television Association (CCTA) and Motorola are looking at some technical solutions. "There are some limitations. But from what I’ve heard, it’s not a never thing as long as people work together. It’s not built in right now, but it’s not impossible," he says. Providing more flexibility than what was initially thought when HITS QT was tested, small cablecos now have the option of creating customized channel maps. Unlike with HITS, the control functions and different services such as the program guide are encoded in the signals coming off the satellite. Therefore, if a channel coming off a transponder is mapped to channel 62 on the television dial, that slot cannot be used for any other channel. Cancom has created about seven standardized maps that can be used. But Westman, for example, is paying a little extra for four customized maps to serve its HITS QT-equipped communities. "We have different signals and different ways we package them. I think Cancom realized it needed to provide cable operators with individual solutions," Baxter says.

HITS QT enabling small cablecos to better compete with satellite TV rivals

Broadcast | March 15, 2002

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