Telcos getting more TV businessFrom today's National Post:
Telcos to snag 5% of TV market, analyst says
Customers to come at the expense of cable companies
Mark Evans, Financial Post
Published: Tuesday, January 31, 2006
Canadian telecom carriers are expected to grab more than 5% of the television market over the next three years as they go head-to-head with cable companies for the wallets of couch potatoes.
Bell Canada, Telus Corp., Manitoba Telecom Services Inc. and SaskTel will attract 1.38 million subscribers by Q3 2008. Most of these customers are expected to come from cable companies such as Rogers Communications Inc. and Videotron Ltee, which will see their total number of subscribers decline from 7.38 million in Q3 2005 to 6.04 million in Q3 2008.
Jeff Leiper, director of Yankee Group's Canadian market strategies, said the key to carriers winning market share will be price because IP-TV technology is not developed enough to let the carriers outmanoeuvre cable rivals on features.
"If the pricing is not perceived by customers as providing real value, then IP-TV growth will be less than we are forecasting," he said.
Mr. Leiper said he anticipates Bell and Telus will use aggressive marketing programs to win business, including large discounts to customers who purchase a quadruple-play bundle of TV, wireless, high-speed Internet access and local telephone service.
SaskTel and Manitoba Tel have been offering IP-TV service for about two years, and have 48,000 and 44,000 customers respectively. Telus, meanwhile, is testing its TV service in Calgary and Edmonton, while Bell is expected to launch its service later this year.
Canadian carriers have high hopes for the introduction of TV service as a way to punch back at cable companies who have been taking away their lucrative local phone customers using VoIP technology. Moody's Investors Services expects cable companies will have 1.2 million local phone customers, or 11% of the $10-billion market, by year-end.
In Manitoba and Saskatchewan, Manitoba Tel and SaskTel have been making major inroads by up-selling TV service to their high-speed customers.
During an interview last week, SaskTel chief executive Robert Watson said the government-owned carrier receives average revenue of $74 a month from its IP-TV customers.
Bell is expected to provide more details about its IP-TV strategy tomorrow during its annual analyst day in Toronto. Bell, which has been working with Microsoft Corp.'s television software, will likely roll out a service similar to what Telus recently introduced. It features the ability to purchase theme-based channel bundles as well as individual channels.