No border for broadband

Apr 30, 2001  •  Post A Comment

Just when American cable operators thought they had spotted every imaginable competitive threat-from direct broadcast satellite to home networking applications-a stealthy adversary has sneaked across the Canadian border to deliver an impressive suite of services to broadband subscribers.
Canadian telecom giant Aliant, which is known as the broadband service provider of choice for Canada’s oil and gas industries, is hoping to unveil within the next several weeks a PC-based broadband video-on-demand service for consumers in Maine and New Hampshire. Later this year, the telco will supplement that VOD offering with a live datacasting service that will stream regularly scheduled television programs onto customers’ PCs.
At a time when a crunch in the American venture capital markets is forcing many would-be cable assassins, such as Paul Allen’s RCN broadband network, to scale back their ambitions, well-heeled Aliant is entering the U.S. new media marketplace armed with a $5 billion Canadian ($3.3 billion U.S.) market capitalization .
Prexar, Aliant’s telecom affiliate in New England, is one of a growing family of Competitive Local Exchange Carriers in the recently deregulated U.S. telecom industry that are providing high-speed Internet, cable television and telephony services to customers for a subscription fee of about $40 per month. The telephony services enable customers to manage advanced telephone features such as voice mail, call waiting and caller ID from their personal computers.
Innovatia, the broadband entertainment software arm of Aliant, is molding the Prexar offering by borrowing Kassena’s video streaming technology, iMagicTV’s multicasting solution and InfoInteractive’s set of telephony tools.
“The telcos are finally embracing broadband,” said Joe Mosher, general manager of interactive television services at Innovatia. “They’re finally realizing broadband is more than just high-speed Internet.”
As part of Prexar’s $40-per-month broadband subscription package, customers will soon be able to view shortened video replays of recent television broadcasts on their PCs. Securing the vast quantity of content necessary to satisfy subscribers is one of the biggest challenges that Innovatia faces. So far, the company has signed a deal with the Weather Channel and is hoping to soon come to terms with other cable networks to add a variety of news, sports and entertainment clips to its VOD collection, Mr. Mosher said.
The multicasting service, which would be offered for about $10 a month in additional subscription fees, would feature live programming from WABI-TV, a local station situated near Prexar’s headquarters in Bangor, Maine. Mr. Mosher acknowledged if economic conditions don’t improve, the additional subscription fee for the multicasting service might drop to near the $5 per month range. “We’ll see what the market will bear,” he said.
Prexar, which was established little more than a year ago, has been busy during the past few months purchasing several small telecom networks in New England in an effort to expand. The broadband service now reaches more than 34,000 regional subscribers. Still, Prexar is dwarfed by RCN, a publicly traded CLEC whose subscriber base of more than a million customers is composed largely of disgruntled cable defectors in urban areas of the United States.
Some television executives fear that some nimble, localized broadband networks such as Prexar will force cable and satellite TV operators to offer a wider array of services. Such a responsibility may be burdensome for major cable and satellite broadcasters, given the weighty economies of scale that bind them.
Cable operators, while growing skeptical about the promises of enhanced digital services because of their high digital “churn” rate (the percentage of a cable operator’s customers who cancel the digital service option after the initial trial period ends), which is in the 60 percent to 80 percent range, still stand to lose customers if a telco’s broadband offerings gain in popularity.
And satellite television networks such as DirecTV, which had experimented with offering exclusive pro football programming that was bundled with the basic satellite service, are now starting to back away from the exclusive programming schemes after being rebuffed by antitrust lawsuits. As a result, cable and satellite operators are scrambling to introduce enticing services such as personal video recording and video on demand.