Telus licensed to sell television service
DAVE EBNER 00:00 EDT Thursday, August 21, 2003
Telus Corp., Canada's second-largest telephone company, yesterday was licensed to sell television services in British Columbia and Alberta, further blurring the line between the telecom and cable TV businesses.
"We need not look any more at telephones as boxes connected up in the kitchens, dens and bedrooms of millions of Canadians, but instead as devices that connect them to what they need, [such as] their favourite television show," said consultancy SeaBoard Group in a new report that assessed the quickly shifting communications landscape.
Telus's move into television follows the same strategy that other phone companies such as Manitoba Telecom Services Inc. have already launched. By adding television service, phone companies hope to protect their core business -- the local telephone connection -- from competitors in the cable TV business as that sector prepares to offer phone service.
Cable TV companies in the United States are now selling phone service using older circuit switched equipment. EastLink, based in Halifax and owned by privately held Bragg Communications, is the only cable TV firm in Canada doing the same.
Most industry players say the widespread adoption of new Internet protocol gear this decade will advance the cable TV industry's telephone efforts. Rogers Communications Inc. of Toronto, Canada's biggest cable TV company, has said it wants to sell fixed-line phone service but it is waiting until the idea makes financial and technical sense.
Vancouver-based Telus was licensed by the Canadian Radio-television and Telecommunications Commission to sell TV service in 16 Western Canadian cities, including Victoria, Edmonton and Calgary. The process has thus far been slow. The application was filed more than a year ago. Telus said it plans service trials with its workers in a "couple of months" and has no "firm dates" as to when it would begin broader service.
"We want to make sure all the technical aspects are nailed down," said James Goliath, Telus vice-president of marketing and multimedia.
Telus TV would take on cable TV rival Shaw Communications Inc. of Calgary, with which Telus already battles for Internet customers. Other competitors include Shaw's satellite service, Star Choice, and the leading satellite TV player, Bell Canada's ExpressVu.
Telus's plan for television is to deliver the signal over the traditional copper wires of its telephone network, using technology known as asymmetrical digital subscriber line. ADSL gear is also used for high-speed Internet. Provincially owned Saskatchewan Telecommunications took the same route and has sold TV service since last fall.
The Regina phone company said it has about 8,000 TV customers in nine cities and hopes to have about 13,000 by the end of this year. By 2006, SaskTel aims to serve about 60,000 customers, a quarter of the 250,000 or so customers its television network can reach, said company spokeswoman Michelle Englot.
SaskTel's basic package includes around 25 digital TV channels, 61 radio stations and high-speed Internet for $60 a month. Larger packages include more than 150 digital channels.
Manitoba Tel began its TV service in January and has more than 3,000 customers. Its goal by the end of this year is to have 6,000. The Winnipeg phone company uses VDSL, very high-rate digital subscriber line. It has more capacity than ADSL but a shorter range.
By 2005, Manitoba Tel wants to have the service available to 85 per cent of Winnipeg and generating operating and final profit, according to a recent Merrill Lynch Canada Inc. report.
Some analysts worry that Manitoba Tel is spending too much to develop TV service.
"We remain cautious," said analyst Peter MacDonald of Griffiths McBurney & Partners Corp. of Toronto. In a recent report, Mr. MacDonald said TV accounts for a seventh of Manitoba Tel's total 2003 capital spending budget.
Bell Canada, owned by BCE Inc., has focused its television efforts on satellite provider ExpressVu, although it is now getting ready to go after apartment buildings in Toronto using VDSL.
"The expansion of our video product is a very high priority for us and we'll be pursuing that aggressively over the coming months," Michael Sabia, BCE president and chief executive officer, said in late July. (BCE also controls Bell Globemedia, owner of The Globe and Mail and the CTV television network.)
Bell's focus is Toronto but Mr. Sabia said the company is also looking at Montreal and other cities. The VDSL effort emerges as ExpressVu's satellite service has attracted fewer new customers this year than expected. ExpressVu signed on 31,000 customers in the first six months of 2003, 71 per cent less than the 107,000 signed on in the first half of 2002.
"Recent data show that the cable industry has begun to win back ground lost to satellite over the last few years," analyst John Grandy of Orion Securities Inc. said in a report earlier this month.
Digital cable TV is now widely available, Mr. Grandy said, taking away the digital-over-analog quality advantage satellite once enjoyed. Mr. Grandy said digital cable and Internet are more easily packaged than Internet and satellite TV. Bell, however, did introduce a "surf and watch" package in June, selling Internet and ExpressVu together.
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