CRTC creates east-west split for wireless cable distribution competition in Canada

SkyCable Inc has been given the mandate it needs to become a major wireless cable TV player in Western Canada following a CRTC decision to grant the Manitoba-based company its first major urban licence. Craig Broadcast Systems Inc was facing off against Canada’s largest MDS operator, Look Communications Inc, for a regional broadcast licence serving British Columbia. For Look, which had aspirations of creating a national footprint for both its wireless cable and Internet services, the regulator has sent a clear message that it supports a competitive market for MDS in Canada. Securing this licence was crucial for SkyCable and its parent Craig Broadcast, which feared that Look was on its way to becoming a monopoly provider of MDS services in Canada’s largest markets. Appearing before the CRTC’s public hearing in Vancouver February 25, Boyd Craig, VP of SkyCable Inc (Craig’s MDS division) warned regulators that licensing Look would "marginalize SkyCable and move toward a policy of licensing a single MDS operator in Canada". "Such a policy would stifle technical and service innovation and reduce price competition... The MDS technology and opportunities are too important to entrust to one company. We think that Look has plenty of challenges ahead to complete a successful roll-out of its services in central Canada," Craig said at the hearing. Look already has licences to serve more than six million homes in Ontario and Quebec, and has signed up about 40,000 subscribers. In comparison, SkyCable’s signal reaches most of Manitoba, with 12,000 customers signed up to date. It also operates MDS systems in the U.S. and New Zealand. The new licence – awarded to SkyCable Pacific Inc July 6 in Decision 2000-220 – will expand Craig’s market to include 70 per cent of BC homes. The licensee will use seven transmitters to provide service to Vancouver, Victoria, Abbotsford, Chilliwack and Penticton within the first year. Within 24 to 30 months, the company plans to extend its service to include Kamloops, Nanaimo and the Hope region. In weighing its decision, the commission took into account the fees that consumers would have to pay to get the service. SkyCable proposed a monthly fee of $17.99 which included the cost of the antenna and decoder equipment and free installation, while Look indicated it would charge $20.95/month with an installation fee of $125. The commission notes in its decision that SkyCable’s plan not to charge subscribers an installation fee "eliminates a significant barrier that discourages potential customer from considering MDS as an alternative to cable or DTH satellite services." During the hearing, SkyCable described itself as a "lean and mean" company that can rollout an MDS network faster and for less money than Look. It reminded the commission that Look was proposing to spend about $11 million over the licence term to acquire fibre optic trunking services and $10.7 million on IT expenditures. "We simply don’t understand why Look is proposing to build such an expensive system, with huge expenditures on items like IT or fibre optic networks," Craig told commissioners. "These may be useful for providing other non-MDS services, but they would not be part of the plans of an efficient MDS operator." While it appears that Look’s national expansion plan has been dealt a significant set back, company executives say it will not have a major impact on their business. "Not receiving the MDS licence for BC will in no way hamper our efforts or in any way delay implementation of our plan," Look’s president and CEO David Parkes wrote in a statement. "Indeed our business plan does not assume that we would be granted the BC MDS licence." Through its ownership in MCS spectrum winner Inukshuk Internet Inc (RoW, April 3/00), the company was seeking to become a national provider of a bundled voice, Internet and broadcasting services. The contiguous MCS and MDS bands would have given the company the capacity it needed to offer a national bundled service package.

CRTC creates east-west split for wireless cable distribution competition in Canada

News | July 24, 2000

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