OTTAWA – If rollouts go according to plan, Canada’s telcos will collectively have over a million terrestrial video customers by the end of 2008, says a recent report by Yankee Group.
The report looked at the existing terrestrial video delivery systems from Manitoba Telecom Services and Sasktel and notes that when compared to each company’s high speed Internet customers, MTS and Sasktel boast TV penetration rates of 39% and 44%, respectively, of DSL high speed Internet customers.
The report goes on to predict that as long as Bell Canada and Telus go ahead with their full launches of Internet protocol television service this year, the two companies can look forward to TV penetration rates of 38% and 34%, respectively, of their high speed DSL customers.
Taking the most recent numbers from Bell Canada (2.2 million DSL customers as of the end of 2005) and Telus (736,000 DSL customers at the end of Q3 2005), and applying Yankee Group’s penetration projections, there would already be well over a million IPTV customers just from these two companies. The number will likely be even higher, "in the third quarter of 2008."
And despite all the companies’ claims about rational pricing and fighting the competitive battle based on extra features, customer service and picture quality, the battle will come down to price.
"Canadian households are least concerned with qualitative factors such as picture quality," writes the report’s author, Jeff Leiper. "The highest dissatisfaction levels are recorded on the issue of price. It will be difficult to encourage competitors’ customers to churn on the basis of features because Canadians tend to be pleased with such important considerations as channel selection. There is little publicly available data on the popularity of interactive features that differentiate the various services. The availability of games, weather, horoscopes and other web-like content on digital cable and DTH services has not been proven to either churn or retain subscribers.
"Where the opportunity to attract customers based on feature differentiation appears limited, price must be the focus. SaskTel already had to lower the price of its service once to compete with a cut by rival Access Cable."
