Telcos rave about success of TV services

The TV services offered by telcos are attracting more customers than anticipated and are proving to be a valuable tool in the fight with cablecos for consumers, according to representatives from Manitoba Telecom Services (MTS), Saskatchewan Telecommunications Holding Corp. (SaskTel) and Aliant Inc. The three telcos were the first out of the gate with TV in Canada, with TELUS Corp. recently rolling out its offering in select areas of Calgary and Edmonton and Bell Canada’s expected to launch sometime next year. A November 21 Scotia Capital conference on Internet Protocol Television (IPTV) and Voice over Internet Protocol (VoIP) gave executives from each of the three firms a chance to discuss their plans for TV and related services. SaskTel president and CEO Robert Watson called the firm’s Max interactive service the "fastest growing product ever launched" by the telco. About 42,000 customers, representing an 18% penetration rate, have signed up for the TV service since it launched in September 2002. He noted that in comparison it took eight years for Bell ExpressVu to reach an 18% penetration, and seven years for Shaw to get to 27%. Watson hinted that not only would the service be expanded within the province, but also potentially outside of it. Demand for Max’s video-on-demand (VOD) offering is increasing monthly, he noted, with VOD movies priced at $3.95 per film. Other features include phone caller ID on the television screen for $2.50 a month. Future offerings for Max TV include personal video recorders (PVRs) by March 2006, and the introduction of high-definition (HD) programming by the end of 2006, at which time Watson claimed the Max TV service will be comparable to cable, with "some features well and above cable." Watson said that SaskTel added 12,000 net TV subscribers this fiscal year alone, and that the telco was adding between 500 and 700 new TV subscribers a month. An upgraded TV product should reduce customer churn and draw even more viewers to the service, and he anticipates that Max will break even by the beginning of 2008. MTS president Cheryl Baker noted that the Manitoba-based telco’s TV service was proving more popular than many analysts had predicted. MTS’s TV service launched in 2003 to a test group of about 200, but the customer base grew to 50,000 by early November 2005 to reach a 22% penetration level in just under three years, Baker said. "Every month gets better now that Shaw’s in the market," she pointed out. "Competition seems to be good; competition is good for everyone." In the era of bundled services, Baker said that the telco had no choice but to add a TV service. Offering TV with other services, such as mobile wireless and high-speed Internet, has meant "loyalty and stickiness" from customers. MTS TV subscribers can view their email on the television, and will soon be able to easily change the TV packages to which they subscribe with a click of their remotes. Baker said that interactive games and an expanded VOD service – both of which are coming soon – should also attract customers. Due to studio concerns over piracy, only Fox and Alliance Atlantis Communications have agreed to supply product to MTS’ VOD service, but Baker says that once a digital rights management system is established for the TV service other studios will hop on board. The current limited VOD service generated $50,000 in revenues last month, she noted, with customers on average spending about $6 a month on VOD. "We see a huge opportunity with VOD, once the digital rights management is finalized," she said. Aliant senior VP and CFO Glen Leblanc noted that the company’s IPTV service had been rolled out to about 8,500 homes in Halifax, with the number expected to reach 10,000 by year end. The company’s TV footprint would be expanded within that city and later to five other Atlantic cities, he said, adding the rollout will be more aggressive in any area that Aliant feels threatened by rival EastLink. Leblanc said the IPTV service in Halifax is helping to reduce the rate of customer erosion. He estimated that Aliant had lost about a 30% market share over the last five years in markets served by EastLink, but now that customer churn is slowing. Aliant’s IPTV service targets more price-sensitive analog TV subscribers with a digital TV product costing 60% less, he said. But the firm’s TV strategy is two-pronged, he added, because customers wanting a top-notch digital TV product can have Bell ExpressVu bundled in with Aliant’s high-speed Internet and phone services. In the past, Aliant offered a TV service known as VibeVision, but it was discontinued in 2002 after it managed to sign up only 3,300 subscribers since launching in January 2000 (CCR, June 21/02).

Telcos rave about success of TV services

Broadcast | November 29, 2005

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