Small Canadian ISPs that use unregulated wholesale access to incumbent telco and cable companies' networks are, in a way, starting to bite the hands that feed them by offering IPTV over those networks.
"Our customers are asking for bundles. Television has been one of the primary things customers were asking for and we're benefiting greatly by having it in our bundle," Matt Stein, CEO of Distributel Communications, an ISP with about 200,000 customers, told The Globe and Mail.
Distributel is partnering with Zazeem (which launched its own IPTV service) to offer IPTV in parts of Ontario and Quebec. The two companies have not revealed how many TV customers they've signed up.
Other ISPs moving into the IPTV business include VMedia, with expects to have 6,000 of its 15,000 customers signed up for TV, and TekSavvy Solutions, which is considering a plan to offer TV. About a dozen other companies have told the Canadian Radio-television and Telecommunications Commission (CRTC) that they're looking to become TV distributors.
Canadian ISPs face several challenges to competing effectively. Once licensed, they have to buy broadcast rights to channels owned by such companies as BCE, Rogers Communications and Shaw Communications along with paying wholesale rates for the Internet bandwidth they need to deliver IPTV.
This results in what Stein called a "razor thin" profit margin that caused the company to hold off the launch of IPTV "for many months out of concerns for the economic viability of the offering due to the costs of bandwidth." In the end, though, customer demand overcame those concerns.
For TechSavvy, it came down to holding onto customers, CE Marc Gaudrault told the CRTC.
"We have strong technical abilities and have creative product developers and we know we can add dynamic competition to the marketplace," he told the regulators.
Those capabilities, he said, don't offset the cost of bandwidth needed to deliver "non-crippled, good quality TV service," which he described as "prohibitive."
- The Globe and Mail has this story
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