Bell postpones launch of Land-line IPTV Service

CATHERINE MCLEAN AND GRANT ROBERTSON

Globe and Mail Update

October 25, 2007 at 10:13 PM EDT

A month into the new fall television season, there's one player that's not on the air. Bell Canada, expected by some to launch its land-line TV service this fall, has reportedly put the long-anticipated project on hold.

On a conference call this week, Astral Media Inc. chief executive officer Ian Greenberg explained that within the past 10 days Bell went from going "full steam ahead" on launching the TV service to putting it "on ice."

Astral's specialty programs are part of the TV packages offered by cable and phone companies.

Astral and cable operator Rogers Communications Inc. had expected Bell would launch its TV service this fall, though Bell itself had not publicly set a date.

Bell's apparent decision to put TV on hold was known among key players in the industry, a source said.

A spokesman for Microsoft Corp., which makes the software that Bell is using for its so-called Internet Protocol TV (IPTV) service, confirmed Bell is still a trial, rather than a commercial, customer.

The spokesman, Jim Brady, declined further comment.

Bell spokesman Mark Langton said he doesn't comment on product rollouts, but insisted the company remains committed to its IPTV vision.

Astral's comments once again raises the question of when Bell's IPTV service will appear.

What is clear is there is a growing gap between telephone companies in Canada and the United States in introducing the service.

In the U.S., Verizon Communications Inc. and AT&T Inc. have at least 641,000 land-line TV customers and are adding tens of thousands of subscribers every quarter.

Canadian phone companies have about 200,000 land-line TV subscribers, according to estimates from Toronto-based Convergence Consulting. A majority of those clients, however, belong to SaskTel and Manitoba Telecom Services Inc., two pioneers in the IPTV market who initially gave Canada a lead in the field.

Telus and Bell have been slower and less aggressive in entering the TV market than their U.S. counterparts.

"We used to be the beacon of light for the U.S. to look up to," said Brahm Eiley, president of Convergence. "We're no longer."

Bell was already behind in launching IPTV before the latest reported holdup. It has been talking about IPTV since at least 2003, and initially wanted to bring the new service to market in 2006. A year ago, Bell said it would wait until Microsoft brought out a more advanced version of its IPTV software in six or 12 months.

Phone companies want to offer TV services in order to compete with the cable operators, which sell bundles of phone, TV, Internet and even wireless services.

Bell already has 1.8-million TV subscribers, but most use satellites to receive signals. The company offers a land-line TV service to some apartment dwellers in Montreal and Toronto. However, observers said the company also needs a land-line TV service for homes throughout its territory in Ontario and Quebec. Some people don't like satellite dishes or aren't allowed to them on their homes, for example.

But rolling out land-line TV is costly because Bell needs to run fibre-optic cables closer to customers' homes.

Along with the costs of IPTV, Mr. Eiley said Bell faced the threat that it would cannibalize the satellite business. "There's difficulty in launching a product if you're competing with yourself at the end of the day," he added.