MTS, Allstream say national digital TV service possible – but not for a while

Manitoba Telecom Services Inc.’s $1.7-billion acquisition of Allstream Corp. means that it will have the backbone to expand its digital TV service nationally, but executives from both companies won’t definitely confirm that’s part of their plan. Allstream president and COO John MacDonald was more bullish about the prospect of bundling telephony and Internet access with a national TV service, but adds "the combined company is going to have to make a decision in terms of how it wants to go forward." "It’s always one step at a time. Certainly Allstream has been involved in wireless from this JV (joint venture) we’re undertaking with the (Craig) McCaw interest as well as Microcell (Telecommunications Inc.). And that doesn’t have a video component to it, it’s basically voice and high-speed at this particular point," MacDonald tells Canadian Communications Reports. McCaw recently agreed to invest $50 million in Microcell. MacDonald adds, "…The two companies fit together like a jigsaw puzzle. They focus predominantly on Manitoba in particular in small business and consumers and they are girding themselves for the onslaught of competition in terms of from a cable perspective. (MTS) has a video offering in the marketplace right now." During a media conference call on March 18, however, MTS president and CEO Bill Fraser indicated it was too early to commit to a national TV service. In response to a question by CCR about whether MTS would use Allstream’s backbone to expand MTS’ digital TV system and look at bundling triple play, Fraser said, "For the foreseeable future, we don’t see expanding that beyond the Manitoba market." But he added, "Certainly again, we will consider all things. But at this point in time that’s not on our radar screen. We currently have coverage in Winnipeg - roughly 50% and we’re working very hard to expand that coverage over the next year and a half to about 85% of the city. We have been having a huge positive response to that initiative and it’s positioned us very well in terms of competition coming down the road from the cable companies." The acquisition still has to receive the approval of the CRTC, and MTS would have to apply and receive a broadcast distribution licence to serve a much larger area to expand its current digital TV service. MTS had applied for a regional BDU licence to serve the provinces of Manitoba, Saskatchewan and Alberta, but the CRTC licensed it in August 2002 only for the communities it proposed to serve as part of the initial phase of its business plan, namely Winnipeg and surrounding areas (Broadcasting Decision 2002-235). Fraser said, "We have succeeded by focusing on our core competencies and prudently allocating our capital resources to deliver services to our customers. We’re delighted to now be extending our capabilities and expertise to the national stage with Allstream, and we look forward to the opportunity for profitable growth and value creation this next step in our evolution represents." The national footprint could provide the combined company with an ingredient that will allow it to viably compete with Bell Canada and TELUS Corp. Bell Canada, which currently owns a 22% stake in MTS, said in a media release that it was weighing options since what was an investment vehicle may become a competitor. For details about MTS’ acquisition of Allstream, see the upcoming issue of Canadian Communications Reports affiliate publication Network Letter.

MTS, Allstream say national digital TV service possible – but not for a while

Broadcast | March 25, 2004

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