WHILE WE CAN’T SAY for sure that Compton Communications will be the smallest North American video on demand provider when it launches this fall, we figure it’s pretty unlikely that many other 5,000-customer cable companies in Canada or the U.S. are planning on offering it that soon.
It’s a very expensive technology, fraught with difficult to solve issues, especially for a small operator. Think Paramount’s EVP of programming will have Compton’s VOD launch on his priority list, for example?
Compton Cable (which serves the Port Perry, Ont. region, about an hour’s drive northeast of Toronto, on Lake Scugog) has always been a leader among Canadian cable companies. Its size, however, has meant it’s a little less ballyhooed than some of the others.
It was the first Canadian cable company to offer the Motorola 6208 HD PVR to its customers – in November of 2003 – ahead of other noted Canadian Motorola users Shaw Communications and Cogeco Cable, for example.
So, you had to expect video on demand would be in this operator’s sights. The company has left voice over IP on the back burner for now – for reasons you’ll read – and in October, will launch VOD, becoming the fifth traditional cableco to have it.
What follows is an edited transcript of a recent chat between www.cartt.ca editor and publisher Greg O’Brien and Compton Communications general manager Ed Olsen (right).
Greg O’Brien: Let’s talk video on demand. I hear it’s coming soon?
Ed Olsen: Let me give you a little history of it. We’ve been thinking of video on demand for quite some time. We applied for a license in the spring of 2003… and got it in spring of 2004, but our planned launch was always the fall of 2005.
We’re roughly on schedule with that – give or take a couple of weeks. It just depends on how things go with our installation and testing, which we’re in the process of doing right now.
GOB: So, you’ve got your own VOD servers installed?
EO: Yeah. We bought the Seachange product. It’s here. It’s in our headend and we’re just ironing out the technical difficulties between that and our national HITS and i guide and all the things we have to tie together.
GOB: What have been the biggest challenges you’ve had to overcome?
EO: I don’t know if we’ve overcome them all yet (laughter).
GOB: Well, which ones do you still face then?
EO: A couple of issues. One is, we know we don’t have the size – at all – to go out and ask for content from any of the studios. But, we are signing an agreement with TMN On Demand and that’s what we’ll launch with. It’s our hope that then we’ll also proceed with Treehouse On Demand and some other types of content like that.
It’ll be a subscription video on demand service to begin with – and we’ll roll in more content over time. But, we wanted to start off with something we thought would be very pleasing to our subscribers and TMNOD seems to be an excellent product,
GOB: Is it possible – you’re close enough to Rogers – to piggy-back on their VOD (content) deals and working something out that way?
EO: Well, I would hope to, but I’m not sure how easy that would be. We haven’t explored that opportunity because it’s something we’ll have to talk through with them and who their contacts were and whether the studios would be interested in dealing with somebody our size – or whether it’s going to have to be something that the CCSA (Canadian Cable Systems Alliance) has to do on our behalf.
GOB: That was one of my other questions – has the CCSA started to do that yet?
EO: I know they’ve had thoughts on it. There was some discussion – probably almost a year ago about content and looking into that but to my knowledge, they’ve put a fair bit of that on hold because maybe there hasn’t been the demand from their other members.
GOB: Even the CCSA’s biggest members, EastLink (230,000 customers) and Persona (215,000) have not gone with VOD yet.
EO: That’s another challenge for us. We’re only a small member of the CCSA so we’ve had to go out and do a lot of this on our own. We knew that and we’ve been researching it and looking into how we could offer it for quite a period of time. We had the plant designed a number of years ago to make sure we could move into these types of services.
GOB: You’ve got, what, 6,000 customers out there?
EO: Five thousand. And we have, right now, a digital penetration of about 15% and it’s been going up fairly rapidly lately. We now have a full high definition offering and have PVRs and bundling and our Internet penetration is doing very well at 35%.
GOB: My next question is why do this? VOD is very expensive, especially for a small operator such as yourselves.
Why we want this and chose to invest – because it’s a fairly large investment to go VOD… why I believe in it is that we, as a small operator, have continually fought the battle to be as good or better than what our competitors offer and this, to me, is the one product that our plant is capable of offering that their (DTH) plant with their type of technology, isn’t able to.
We believe we match them now and (VOD) gives us the ability to go one step beyond. It’s a great marketing tool and an excellent retention tool, so that’s why we made the investment – plus we think we can grow that side of the business.
GOB: Obviously, you’re not looking at making money off this any time soon. This is sort of a loss-leader for you, I guess we could say, to use a retail term?
EO: I believe so, yes. Digital in general was a bit of a loss-leader. But, you had to make a decision, Either you’re going to go down that road and know that’s where the future is, or you just pull your horns in and just stay small from a service point of view and limit your investments.
We chose to go the other way – and that’s why we went with a national HITS (headend in the sky) rather than (the cheaper) HITS QT. It was a more expensive launch but it allowed us to stay with the more current technology and current set top boxes so everything we have with customers doesn’t have to be changed out. We can just go forward and launch VOD and other advanced services.
GOB: Right. And, if memory serves you were the first one to launch the Motorola PVR (Model 6208) in the market.
EO: Yes.
GOB: Have there been questions from your customers on video on demand? You’re close enough to Toronto and you serve some pretty high-end neighbourhoods in some regions who may want video on demand after hearing about it in Toronto.
EO: We’re starting to hear more of it and we actually have it on our web site that it’s coming. Some people are talking to our employees when they call in and they’re interested when it’s coming and maybe what it’s all about.
It’s a bit of an education process for those who haven’t come from a Rogers area and not already experienced it, so it’ll take a bit of time to educate them and we’ll have to market it effectively to make people happy with it.
GOB: Well, that runs through the VOD questions I had.
EO: I’m surprised you didn’t ask me about voice.
GOB: All right, let me ask you about voice then.
EO: That seems to be the pretty hot topic. I’ve noticed that quite a few of the operators have chosen to go the voice route rather than video on demand. We actually did a lot of testing on our network for voice over IP and were at the next stage of launching it with a partnership arrangement with BIAC Broadband. We had some friendlies installed but I always felt a little nervous until we knew what the CRTC was going to say about it.
And, until we know a little bit more about where that’s all going to go, we’ve put that on the back burner.
GOB: So, you’re waiting on the incumbent telcos’ appeals and the local forbearance hearings in September?
EO: Yes, and the CCTA (Canadian Cable Telecommunications Association), on behalf of its small members, have gone to the CRTC to ask for, hopefully, a little bit of leniency on some of the restrictions that are in place.
Right now, you have to become a CLEC (competitive local exchange carrier) and some of the issues you have to deal with from a CLEC perspective, a small company… just can’t deal with them.
GOB: Are you talking about 911 service and those types of requirements?
EO: I think 911 is do-able. It’s when you have to start offering complete number portability and a choice of long distance provider, then you have to be able to have somebody either provide your CLEC responsibilities for you, which is what Mountain Cablevision is doing with Allstream or you have to spend a ton of money to make sure you have interconnection agreements with all the carriers which we just can’t do out in this area.
We don’t really even have a CLEC like an Allstream that’s close enough to us to partner with like Mountain did.
So, for those situations, what the CCTA is trying to say is: “Is there an opportunity for a smaller company to still get into this game and maybe meet the majority of the obligations but not all,” and I don’t know how that’ll come out so that’s what we’re waiting for.
