WINNIPEG IS ONE OF THE HOTTER bundling battlegrounds in Canada.
While Shaw is the incumbent video provider and a nascent voice company in the Manitoba capital, MTS Allstream, the provincial telco (which is also a national wholesale and enterprise player) has claimed about 55,000 video customers with MTS TV in Winnipeg – the only city in the province in which it has a cable license.
Customers like the simple bill, the fact they can re-jig their channel lineups on screen or even see e-mails and caller ID on their TVs. Finally, last month, MTS TV added a key piece of the video equation: HDTV.
So what is the Winnipeg competitive market like? Who’s winning the war for bundled telecom and TV (and wireless and Internet) customers and what’s next for the telco with the most terrestrial digital video customers in Canada?
Recently, MTS Allstream consumer markets president Kelvin Shepherd sat down with Cartt.ca editor and publisher to give his point of view. What follows is an edited transcript.
Greg O’Brien: I was reading your bio that you used to work with SaskTel?
Kelvin Shepherd: I was with SaskTel about 20 years.
GOB: That’s a company with a long history of video experimentation.
KS: I was actually one of the ones involved quite heavily when the company developed its first digital video over DSL offering. I came to MTS in late 2000 but I was involved in getting (SaskTel’s) TV technology up and running before I left there and had very early versions of their TV technology in my home in Regina for a year or so there.
GOB: How did it work then?
KS: Pretty terrible, to be honest with you. To be fair, this was very early in the technology stage. We were learning a lot then and a lot of the issues early on were actually in the set top.
GOB: I knew (former Cable Regina president) Fred Wagman pretty well when he was running the cable system and he told me a few times about SaskTel and its experimentation. You were into video on demand pretty early there, too.
KS: Yes. I headed the R&D group way back when and there was a fellow that worked for us who built a fibre-to-the-home video-on-demand trial. Really, it was more of what I would characterize in the way of R&D than a serious kind of market deployment though.
GOB: That would have been when? Mid-90s?
KS: Oh, probably about 1994, ’95 time frame maybe.
GOB: Well if you don’t experiment, how are you going to find out what to do, right? Let’s talk about your current service. You’ve got high definition out there now, but I’m a reporter so I always want to know what’s next. You know, is PVR on the horizon?
KS: Well, we’ve had video-on-demand out for some time… available in standard definition.
GOB: Even the cable companies don’t have HD on demand.
KS: We’re going to have some more interactive stuff. We recently launched an e-mail service so you can get your messages on your TV screen… We’re working on similar types of ideas around that. For example, like being able to take digital photos and be able to have those appear as a display on your TV.
Again that will be kind of a similar, cross-Internet-TV-wireless type of service allowing you to kind of share photos and display them on any one of those three kinds of services.
Beyond that, we’re certainly looking at enhancing services like our “soft-care” capabilities: Things like being able to do on-line programming, line-up changes and things like that, typically over the Internet.
We’re also working on things like being able to go on the Internet and bookmark maybe a movie that you want to watch and then when you look at our portal on a TV, you would be able to see those bookmarks there. Those types of interactive services that actually start to merge Internet, TV and our wireless business.
GOB: Do you envision taking it the other way, where, you know, you’re able to watch MTS TV on your PC or laptop?
KS: Well, we certainly have got some service developments that are going to deliver video type content over wireless but I wouldn’t necessarily call it watching MTS-TV on wireless. I think we’re looking at it more as a capability where you would be able to download a three, four or five-minute video program or video clip.
GOB: So, not like Mobi-TV type of thing.
KS: No. You know, there are certainly people out there doing that but we’ve probably thought that customers are less likely to actually want to do that. But certainly early on, we see some opportunity to provide them a kind of range of video content, but more in a short clip type of format that a mobile user might find more convenient or more usable.
GOB: And that type of thing is hard to commit to because you don’t really know where that particular market is going and not many are making money at video-over-wireless.
KS: I think it’s a tough sell. It’s kind of an extension of a ring tone or the types of downloads people are used to on wireless – giving them access to things like our EVDO network, which really enables a lot quicker downloads. And it can give them some video content I think will be useful. But in terms of broadcast TV over cellular, it’s certainly not in the near term, in our plans.
We’re also interested in looking at the Internet piece. Of course, there are a lot of issues, as you would know, when you start to talk about actually delivering TV or movies over the Internet.
That’s quite a different thing than what we’re doing with our current TV service. We certainly are doing some service development work around the idea of being able to provide more content and work with some of our content providers to provide it; perhaps over the Internet type of connection.
The interesting thing to figure out whether there’s really a different model out there where companies will be interested in giving their content to a storage-type of download format where maybe viewers don’t really want to watch 200 linear channels, but they would be quite interested in having that content delivered over the Internet and stored perhaps on a type of multimedia PC – and then have it accessible to their TV screen. That’s where there’s a little bit of a disconnect. You can certainly get a lot content over the Internet to your PC, but then conveniently getting it onto your TV is a bit of a leap.
It’s doable, but it’s going to take a little bit more work… It’s certainly interesting, mainly because we have a much bigger DSL Internet footprint (throughout the province) than we do a TV footprint.
GOB: You’re still just in Winnipeg for TV, right?
KS: Yes.
GOB: Do you anticipate going beyond Winnipeg, into Brandon or any other cities?
KS: We’re not planning on it in the near term. It’s certainly something we continue to look at, but, we’re focused really more on our Winnipeg market at this time. We haven’t made any decision to go really beyond that.
GOB: How would you describe the competitive market in Winnipeg, given Shaw’s launch of telephony?
KS: I’d say intense. Shaw has been quite aggressive and are heavily promoting their service and fairly heavily discounting it… without getting into all the details, they clearly are using more aggressive pricing offers here in this market than they do in, say, Alberta or B.C.
That’s obviously because we probably have a different bundling proposition with TV and wireless and Internet in our portfolio than what they would face out west.
GOB: And you’ve taken, what, 55,000 customers?
KS: Yes. Clearly we’ve taken a good percentage of their customer base, and so to fight back, they’re using their telephone service as a way to enter the market here – and they’ve been pretty aggressive about it. So, certainly there’s a pretty intense competitive environment here and not one that I think is going to get less competitive going forward.
GOB: What are the tactics MTS uses in the market to battle back. Because you’re feeling similar hits like Bell and Telus, where you’re losing local lines to newcomers.
KS: I don’t think we have any secret formula. What we have done is bring as many of our services together for customers that are looking to buy their voice, Internet, TV and their wireless service from one place. So, clearly, similar to what Shaw is doing, or what they would say they were doing, I suspect. Because we’re focused on trying to build a customer base that actually buys two, three or four services from us.
It’s not that we’re not concerned about losing any customers, but I mean, at the end of the day, if we lose a voice customer and they don’t have Internet or TV from us, that’s just one thing, right?
Both (companies) want to concentrate on building up a base of customers that buy a lot of services. So, certainly that’s part of the approach we’ve taken. One of the other things we’re obviously doing, is we’re trying to differentiate our self in terms of making all these services work better together.
As another example of that, we’ve done work recently to bring services together in a more simple bill.
GOB: Have you seen any surprises in the voice side of the market? For example: a lot of Skype usage or Vonage customers or anything like that?
KS: No. Skype is a little harder to really understand why it’s happening. I certainly think there is some of that going on and interestingly enough, I hear, anecdotally, a lot of business customers may be using Skype… but it’ pretty small. You know, Vonage, hasn’t done anything different here in the market than they’ve done anywhere else. They’ve had a heavy advertising campaign and spent a lot of money on marketing. But quite frankly, I don’t think they’re having much of an impact.
GOB: I talked to somebody at Rogers that called Vonage’s impact on their own voice service the equivalent of a "rounding error."
KS: I would say that’s probably a harsh way of putting it but they aren’t very high. They aren’t the people I think of when I get up in the morning and go to bed at night. Shaw is.
GOB: It’s a much more difficult world than it used to be, than say, 20 years ago.
KS: It certainly continues to change and evolve, but there’s new players in the market and whether that’s the voice market or the video market or the broadcast business itself, that environment is going to continue to change and I can’t see it going anywhere else. But, giving people more choice , and there being more competitive choice for consumers in the end, is not a bad thing.
