Personal Business

Confusion in the skies

As the satellite TV industry takes flight, it’s a challenge just keeping track of the players

Ross Laver August 25 1997
Personal Business

Confusion in the skies

As the satellite TV industry takes flight, it’s a challenge just keeping track of the players

Ross Laver August 25 1997

Confusion in the skies

Personal Business

As the satellite TV industry takes flight, it’s a challenge just keeping track of the players

Ross Laver

Couch potatoes, take note. After several false starts, countless broken promises and one hugely embarrassing flop, the battle lines are now being drawn for the long-awaited war between the directto-home satellite TV industry and Canada’s cable companies.

For consumers, the showdown is both good news and bad. Good, because the arrival of competition in what previously was a seller’s market will mean more choice, better customer service and—with luck—lower prices. But bad because in the coming months the rival camps in this battle for eyeballs will launch a barrage of contradictory advertisements aimed at attracting or retaining subscribers. Figuring out which service offers the best package of programming for the lowest cost is going to be about as easy as filing your taxes.

It’s hard enough just to keep track of the players.

For a while, it looked as though the most formidable of the satellite entrants would be PowerDirecTv, a joint venture between Montreal-based Power Corp. and General Motors’ DirecTV, the leading U.S. satellite broadcaster. Instead, PowerDirecTv chose to bow out on the grounds that the regulations governing the industry were too restrictive and would render it all but impossible to turn a profit.

As a result, the first satellite operator to hit the airwaves was tiny AlphaStar Canada Inc., which began signing up subscribers in March with a basic package of 60 channels for $300 a year, plus $499 up front for a digital tuner and 74-cm dish. The fledgling service might have stood a chance had it not been for the fact that its parent company, Tee-Comm Electronics Inc. of Milton, Ont., was simultaneously engaged in a high-risk effort to crack the U.S. market. When that failed, Tee-Comm was forced to seek bankruptcy protection. Unable to find a buyer for AlphaStar Canada, the receivers finally shut off service to its 7,000 subscribers on Aug. 7.

Next off the launchpad was Star Choice Communications Inc. of Fredericton, which

began operations in late April. Almost immediately, Star Choice merged with HomeStar, a rival venture owned by the country’s second-largest cable firm, Shaw Communications of Calgary, which obviously wanted to cover its bets. Star Choice won’t say how many customers it serves, but claims to be on track to reach its target of 65,000 after one year. Subscribers pay $999 for the hardware and $37 a month for 53 TV and 30 commercial-free radio channels.

Although Star Choice recently launched a high-profile ad campaign, the real fireworks won’t begin until the fall when ExpressVu Inc. of Toronto finally rolls out its service after two years of delays, technical glitches and management changes. An arm of the mighty BCE Inc. telecommunications empire, ExpressVu has purchased the rights to the DISH Network brand name from EchoStar Communications Corp., a Coloradobased operator known for aggressive pricing. But while Americans can buy a basic EchoStar receiver and dish for the equivalent of $275, ExpressVu plans to sell the same equipment in Canada for $599, with more sophisticated packages costing $749 and $999. (Because they are programmed differently, a set-top box purchased in the United States will not function in Canada.) “In the United States, the various players are heavily subsidizing the equipment to attract subscribers,” says Michael Neuman, ExpressVu’s president and CEO. ‘We don’t think there’s a need to do that in Canada. If we did, we’d be leaving a lot of money on the table.”

Perhaps, but as competition intensifies, discounts are inevitable. Already, Star Choice has matched ExpressVu’s prices on set-top boxes. Meanwhile, the country’s biggest cable operator, Rogers Communications Inc. (which owns Maclean’s), is bracing for war. “I guarantee that cable will always beat satellite on price and be more than competitive on programming,” says Rogers vice-chairman Phil Lind. The satellite services, naturally, claim the reverse. Let the battle begin.