Toronto -- Canada isn't very good at creating original
cable-TV channels: Most of today's crop, including The Sports Network and The History
Channel, is made up of clones of proven U.S. formats.
But when it comes to rolling out digital services, Canadian
cable TV is proving to be a world leader.
Among the adherents to that claim is Richard Green,
president and CEO of Cable Television Laboratories Inc., the U.S. cable industry's
research-and-development arm. "The first data-modem service in the world was at
Rogers [Communications Inc.]," he said, while "Shaw [Communications Inc.]
operates a digital uplink and transmission facility."
Green added, "Andre [Chagnon at Le Groupe Vidéotron
Itée] is pioneering IP [Internet-protocol] telephony in Montreal, and Louis [Audet] at
Cogeco [Cable Canada Inc.] has been a leader in the distribution and use of DOCSIS [Data
Over Cable System Interface Specification] standards-based modems."
Take cable modems, for instance: "Of all of the modems
[currently in use], about one-third are in Canada," said Nick Hamilton-Piercy, vice
president and chief technology officer at Rogers.
Shaw leads with 95,000 subscribers, making it the biggest
@Home Network affiliate in terms of actual customers. Meanwhile, Rogers has 60,000 data
subscribers, while Cogeco clocks in at 28,000.
Cogeco's cable-modem rollout is unique because the
company was the first anywhere to commercially deploy DOCSIS modems. As of January, about
12,000 Samsung Telecommunications America Inc. "InfoRanger" modems had been
deployed in Ontario.
Cogeco took the plunge -- even before the DOCSIS
standard's approval -- because the company had faith in the Samsung hardware, said
Denis Belanger, Cogeco's vice president of engineering and development.
In other words, any upgrades that might be necessary for
future "open-standard" compatibility could be made by changing the
InfoRanger's onboard software.
"We're normally pretty aggressive in deploying
technologies," Belanger added. "Once we've decided to move forward, we
Meanwhile, Shaw is in the midst of rolling out digital
set-top boxes -- General Instrument Corp.'s "DCT-2000" and
"DCT-5000+" -- to most of its 1.5 million subscribers by May.
Vidéotron has also begun to roll out digital services, and
Rogers should be close behind.
Finally, there's IP telephony. As Green said,
Quebec's Vidéotron is committed to voice-over-IP in a big way.
In fact, "the plans are [for Vidéotron] to be an
active player in our geographical area in both local and long-distance telephony,"
says Michel Deschênes, Vidéotron's director of telephony products. He added,
"Our current plans are to launch a public service around the start of the year
Cogeco, too, is weighing IP telephony carefully, with
trials set to start this summer.
Taken as a whole, Canada's "Big Four" MSOs
seem to be blazing digital trails. The reasons for the aggressiveness are rooted in the
Canadian cable environment.
First, because Canadians yearned for U.S. stations -- and
because they're so hard to receive north of the border -- cable operators had no
trouble signing up customers when services began in 1952. Today, penetration of homes
passed (10.3 million) stands at 81 percent, versus 67.4 percent in the United States.
Second, the Canadian Radio-television and
Telecommunications Commission's cable-TV regulations have had a number of positive
effects. Cable companies had monopoly protection until very recently, along with stable
fee structures. For consumers, the CRTC ensured that operators provided decent service,
and it pushed them to innovate.
Third, Canada's major MSOs have always been
engineering innovators. Rogers invented fiber-ring architecture, while Vidéotron
pioneered commercial interactive services in the 1980s.
Finally, the fear of competition from direct-broadcast
satellite and the telcos drove the Canadian cable industry to upgrade throughout the
1990s. Hence, two-way plant was installed long before uses for it -- like the Internet --
were commercially established.
Canadian MSOs are also drawing the attention of Wall Street
cable analysts looking for undervalued stocks at a time when U.S. cable stocks are trading
for high multiples.
Salomon Smith Barney recently gave tops marks to both
Rogers and Vidéotron, rating their stocks as "outperform, high-risk."
Analyst Spencer Grimes considered the two companies'
stocks "substantially undervalued," adding, "Balance-sheet improvements,
noncore-asset dispositions and broadband recognition could combine to produce multiple
expansion similar to the U.S. cable-multiple explosion in 1998."