IT’S NOT OFTEN THAT a family-owned cable company will bring in an outsider to run it. Especially a telco guy.
But, when that cable operation is in the middle of turning into a telephone company, too, it doesn’t seem like such a bad idea after all. Until June of this year, John Piercy was working as a consultant to Hamilton’s Mountain Cablevision, working out the kinks in its telephony offering, leading up to this past summer’s launch.
That’s when Owen Boris (Mountain’s founder) and his son Les asked Piercy (right) to come aboard full time as president. Les is still the CEO.
Prior to launching his own consulting service, Piercy was an investment partner at BCE Capital and served in previous roles as president of OnSite Access Canada and vice-president of marketing for Leitch Technologies and AT&T Canada (now Allstream).
Mountain, even with its small size (about 38,000 customers) is seeing significant uptake on its VOIP service, just like all the other cable operators offering voice to their customers.
What follows is an edited transcript of an interview last week between Piercy and cartt.ca editor and publisher Greg O’Brien
Greg O’Brien: Many Canadian cable companies – most of them, really – don’t hire from outside of the family when it comes to the most senior posts. So, what brought you here?
John Piercy: Funnily enough, I’m a telco carrier guy if you look at my background. I came here because I had a friend at Allstream who sold Mountain Cable this wholesale voice service and Mountain was struggling a bit with pulling together all the pieces and doing the system integration work.
I had done a similar thing already, using Allstream as a wholesale carrier, in Toronto in the SOHO real estate market so I was asked to come in as a consultant originally, to come in and get the project co-ordinated and to kind of bang down some of the barriers that were slowing the launch down. Six months in, when the thing launched, the owners came to me and said: “People like you, you seem to understand the technology and you can learn the cable side, why don’t you run it for us?”
So when I came here, I was coming in just to help out, not to be in the position I’m in now.
GOB: How has it been for you, coming to the cable industry and to Mountain as an outsider?
JP: It’s not been a problem. There’s such a good team here and I had the six months working with them so they all knew me. They were looking for someone that was going to be here every day and help with the business decisions, so acceptance from the staffing point of view was easy and as you know, Mountain has a very strong team, both technically and business operations-wise.
I wasn’t coming to solve any problems because there weren’t any. The company is very well run.
The biggest issue was learning the other side of the business. As a telecom guy, we always considered the cable stuff to be kind of archaic and simple and thought: “it’s only RF on co-ax, how hard can it be?”
I couldn’t get over how complex the whole hybrid-fibre system is and the whole up-channel and down-channel loadings and regulations around what you have to carry and where – it’s a much more complicated business than I ever envisioned, so I’ve been drinking from the fire hose trying to learn that side of the business while we still try to keep the telephone side of the business running and growing.
GOB: With the regulatory climate, you were probably surprised to find that, for example, you have to carry APTN and TVA.
JP: I was surprised at the how the whole analog carriage issue – especially being in the shadow of Toronto as we are – puts strain and stress on you whole plant. You’re carrying so many of these channels that are free and off-the-air so they have to be free on the cable plant. It’s really sort of unfortunate, as a data guy, to look at all this infrastructure that we’re not using efficiently or as effectively as we should.
But, rules are rules and hopefully they’ll change as digitization comes along.
GOB: You’re fully digital right now, correct carrying both (as a digital simulcast)?
JP: Yes. And we’re now, through incentives on DCTs and the like, doing everything we can to entice customers to jump from analog to digital. Our last rate adjustment, we actually raised only the analog prices and left digital prices almost as-is in order to narrow the gap – so there isn’t nearly as much price difference between the two.
GOB: How is digital penetration for Mountain?
JP: It’s not bad. It’s not as good as some other cable companies, but I’d say we’re at 20% penetrated and most of that came in the last 18 months. We’ve done a lot of work in the last 18 months… it was slow off the mark.
GOB: Has high definition helped?
JP: It has. Although, the high def subs are still not a huge number. It’s growing at a steady state and we’re still going to see the blips at Christmas time when people buy their new toys.
I believe the statistics that say of the people who buy high definition TVs, only one out of two of them actually buy a high-def service (from a cable or satellite company). The rest are just using it for DVDs and keeping their standard analog or maybe digital as the feed.
We’re seeing more and more content, which will drive that buying decision. When you can see the same PBS program seven times a day, it’s just not compelling enough. But, with some of the sports networks coming with high definition and some of the new channels and production going to more hours of high def, I’m optimistic.
GOB: What about the Internet side? You’ve won a few local awards for your speed and service. What’s the penetration like there and how is it growing?
JP: It continues to grow but it’s interesting because we’ve heard from some local computer suppliers and they think the high speed Internet market is saturated. People don’t see three months of free cable Internet as being a selling feature because they already have Internet and they’re replacing their old PC with a new one.
We’ve heard that, but we’re still seeing growth and hopefully, that’s because people hear about what great service we give – and they’re migrating away from our competitors.
Hamilton’s got to be one of the most competitive markets there is and we’re still seeing growth in Internet. We are anticipating digital telephone will be another growth product on the Internet side.
GOB: Is your digital telephone now out there across the whole plant?
JP: It’s out there across our entire Hamilton plant… we haven’t launched into the towns as of yet (such as Dunville and Cayuga) and that has to do with some backhaul capacity which we’re in the midst of laying some fibre to address.
GOB: When did it officially launch in the community and how has it gone so far?
JP: It officially launched in July. But it actually launched in May. So many of our customers who were and hit by the Entourage strike were saying “I can’t get telephone until September, can you help me?”
So, we just said, since you’re a new customer, we have this trial thing where we just put them on, even though we couldn’t bill them. Our trial of 200 friendlies just creeped up every week. So, we had a soft launch then and an official launch in July.
It’s gone phenomenally well. There is huge pent-up demand here – similar to what other cable companies have experienced. The moment people hear you have the service – at any type of price differentiation – with the ease of getting a single bill from a local service provider who they can call and a tech shows up to fix their jacks – they love that stuff.
We’ve got more orders than our CSRs can handle and more than our installation techs can handle (by selling word-of-mouth mainly, thus far).
GOB: You’ve read the Shaw and Videotron results. Would you say the take up rate among Mountain customers is sort of at that rate or interest level?
JP: Our pricing is between the Shaw and Videotron pricing. We’re not 55-bucks (Shaw) and we’re not 15 dollars (Videotron). A triple play customer gets a line with three features for $25 – sort of on par with what Rogers is doing. So, yeah, we’re seeing that same level of demand.
GOB: Has it been price or service or just “I hate the telephone company” that’s been driving people to Mountain’s voice service?
JP: Yes to them all. I think you need to have a better price to drive the demand. People aren’t going to switch for the same price. The sales come because people have called in for support on the Internet side and the TSR will say “we have phone” and we’ve done such a good job on the Internet side, that people say “yeah, we’d love to hear about it.”
It’s driven by trust, too. After 47 years here, they know us and its also driven by our techs being able to drive out to the customer’s house when there’s a problem (that can’t be fixed over the phone).
It’s all those things but it’s price that really gets the attention. The other things make it an easy sale.
Another key thing is that we launched a Packet Cable-based service because we thought it was easy to move a subscriber away from their current provider to us using PacketCable. We do believe that SIP will eventually become a service that people will want – or at least some of the SIP features. I think it’s easy to move somebody that’s already a customer to your service. It’s very hard to get someone to move to a new supplier for a new service. There are just too many moving parts and people get nervous.
With Packet Cable – being able to say it’s just like Bell with battery backup and full 911 and all of the various features and functions work – even voice-mail is all the same keys, it’s so much easier for someone to understand the service.
GOB: Any thought to go to the quadruple play, with wireless, with Rogers, for example?
JP: We’ve actually had discussions with Rogers about emulating the deal they have with EastLink. We’re currently talking about whether that would be better to work with the CCSA (Canadian Cable Systems Alliance) as a centralized group to get common practices in place and having the smaller operators fall under that rather than each of us cutting our own deal.
GOB: Well, it certainly makes sense. Almost all of the areas served by the CCSA members are also served by Rogers Wireless.
JP: I think there’s room for a win-win there.
