Bell will be biggest TV provider, says CEO

Ma Bell used to be known only as the country’s biggest phone company. But in the space of five years it plans to be the country’s biggest TV provider, outstripping cable companies by offering TV over the Internet.

That’s the bold promise BCE Inc. chief executive officer George Cope made Thursday to shareholders at the company’s annual general meeting in Montreal.

Bell Canada will start offering television to Internet subscribers in Toronto and Montreal later this year, he said, cities where the telco has recently opened its new Fibe fibre optic-based Internet service.

Next year IPTV will be a “major initiative,” he added.

Bell will also continue selling satellite service, called Bell TV, to suburban and rural Canadians, but IPTV will concentrate in city cores.

“So we’re fairly confident that by 2014 and 2015 we will be the largest provider in Canada of TV services,” Cope said. Bell already has 1.8 million subscribers to its satellite TV service.

Earlier in the day Cope told financial analysts that Bell IPTV’s goal is to take subscribers from cable companies.
According to the Canadian Radio-Television and Telecommunications Commission, in 2009 Rogers Communications Inc., with cable operations in Ontario, New Brunswick and Newfoundland, was the country’s biggest TV provider, with 2.3 million subscribers. Second was Shaw Communications Inc. with 2.7 million subscribers in Western Canada. However, Shaw may have leaped into number one with its purchase at the end of 2009 of a Hamilton, Ont. cable provider.

As of the first quarter, Cope told shareholders, Bell’s Internet and satellite TV revenues exceeded home phone revenues for the first time in the company’s history.

Cope didn’t say that’s partly because consumers here are following a North American trend of dumping local phone companies for voice over IP service and cellphones. It lost 99,000 business and consumer wireline phone customers in the quarter, an ongoing trend for all North American phone companies.

Because of the demand for the time of company executives at the annual general meeting, a company spokesman said no one was available to fill in details of the plan, such as pricing and what platform Bell’s IPTV offering will run on.

But Cope did tell financial analysts that Bell will not trigger a price war with IPTV.

Telus Corp. has been offering IPTV on its home turf in B.C. and Alberta for several years, but it was only when it recently switched to Microsoft’s Mediaroom and expanded its fibre optic network did subscriptions take off. With it subscribers can record a three programs simultaneously, and connect up to six HD televisions.

This week Telus said ITPV subscriptions in the first quarter soared 103 per cent over the same period a year ago.

Phone companies badly need a television offering to counter cable companies ability to bundle TV, home phone, wireless and Internet over their coaxial lines.

One of the biggest weaknesses of telcos is the twisted pair copper lines that run into households, which can’t offer the speeds cable can unless they undertake expensive fibre optic upgrades to residences.

Bell and Telus have been doing that in new neighborhoods for several years, which leaves out older areas of cities. However, recently the two telcos have accelerated the pace of installation, helped by new technology.

Cope told financial analysts that Bell has taken fibre optic to the network node to all parts of Toronto and Montreal, and by the end of the year all areas in the cities will have the VDSL2 technology that enables IPTV. That’s part of the $3 billion in capital spending Bell has allocated for this year.

Bell is also in the process of bringing fibre to every home in Quebec City, where Cope said it will offer download speeds of 100 Mpbs. It can do that because Quebec City one of the few municipalities where no phone lines are underground — all of them are on telephone poles, which makes conversion easy.

One advantage Bell has over cable is that there are phone lines going into every home in its coverage area, which is most of Ontario and Quebec. However, Amit Kaminer, a research analyst with the SeaBoard Group, a telecommunications consultancy, is that doesn’t translate into customers, especially recently with the VoIP defections.

Where Bell especially needs an IPTV product is in Quebec, he said, where cableco Videotron Ltee. is about to launch its own wireless service. That will enable it to offer the so-called quad play of four bundled products and further eat into Bell’s subscriber base.

In a session Thursday with financial analysts, Cope acknowledged that Videotron “is a very tough competitor” in home phone service.

Bell “needs this video product to compete,” he said, because the telco has been “lingering on IPTV.”

In the first quarter Bell said its revenue grew 3.8 per cent compared to the same period a year ago to $3.7 billion. Wireless revenues grew 7.0 per cent over the year ago period to $1.1 billion. helped by record Q1 wireless gross subscriber activations of 428,834 and postpaid net activations of 81,212. Some of the wireless gains came from Bell’s position as the lead telecom carrier at February’s Winter Olympics in Vancouver.

The annual meeting ended with Cope on the receiving end of a number of complaints about customer service from small shareholders. Given that improving customer service is one of Cope’s main goals, he was humbled.

“That’s completely unacceptable,” he said after one complainant’s tale of woe. “My apologies on behalf of the company.”


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