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Candian cable ops band together

Tue, 12/31/1996 - 7:00pm
James Careless

Despite the absence of a cable modem standard, and the fact that many of their systems aren't two-way ready, Canada's major cable companies launched a nationally-branded Internet Service Provider (ISP) product called "WAVE" and announced it in November.

In many ways, WAVE appears to be utterly groundbreaking. First, there's the product itself: two-way, high-speed connectivity to the Internet, at speeds that easily outpace those offered by the telcos. (These speeds vary depending on the cable modems installed, the slowest of which are rated at 500 kilobits per second, about four times faster than a telephone ISDN connection.)

Second, there's the quality of access offered by WAVE: instead of paying an hourly rate, WAVE subscribers can get unlimited 'Net access for as little as U.S.$41.00 a month. (With this price-tag comes five e-mail addresses and 5 megabytes of server space for personal web pages.) Of course, sign-up to the network is extra; namely, about U.S.$111 for the hookup of the service (including the installation of an Ethernet card in the subscriber's own PC, about $U.S.150 if it's a laptop or Macintosh) to the cableco's network, software included.

Third, there's the fact that WAVE marks the first time Canada's various cablecos have joined together to nationally market a product with the same name, features and price. The fact that WAVE itself has been officially rolled out by "vision.com," the industry's new business consortium, speaks volumes about the unity of purpose that's behind this product launch; prior to this, Canada's MSOs pretty much did their own thing when it came to product launches.

Still, the fact remains that the companies who've announced their WAVE rollouts including Rogers, Shaw, Videotron, Cogeco/Cablenet and Western Co-Axial are by no means ready to offer the service to all of their subscribers.

Speaking at the WAVE Launch, Rogers Communications President and CEO Ted Rogers told the assembled crowd that "by the end of the year, Rogers Cablesystems will have over 200,000 WAVE-ready homes" in its networks. That's an impressive number, until you consider that Rogers itself has 2.2 million homes passed in its territory.

Jim Shaw Jr., president and CEO of Shaw Communications, told a similar story: his company only has 20,000 homes WAVE-ready, out of a total of almost two million homes passed.

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These numbers are only temporary: with two-way cable plant rebuilds proceeding feverishly across Canada, it's worth noting that Rogers' homes passed number should reach "approximately 1.5 million by December 1997," adds Ted Rogers, while Shaw says his will exceed "400,000" by mid-next year.

Still, the reality is that Canada's largest MSOs aren't really rolling out WAVE Internet services nationally at all. Instead, they're doing it on a market-by-market basis, as completed rebuilds allow. (Currently, the technical model is to dedicate one 6-MHz analog video channel to two-way WAVE service, fed via fiber to nodes ranging in size from 500 to 2,000 subscribers.)

Where they are rolling out WAVE, these MSOs are taking a risk by using a range of different cable modem technologies, none of which will necessarily be compatible with the yet-to-be-decided North American cable modem standard.

So why take this risk now? The reason, says Shaw Senior Vice-president of Planning Michael D'Avella, "is that you've got to get this service out because there is a certain amount of pent-up demand. You can't wait for the standardization process before you launch."

"The objective is not to turn customers off," he adds, particularly at a time when cable's fiber/coax networks give it a substantial transmission speed advantage over the telcos. "We've got thousands of people calling us saying they want high-speed access, and we want to be able to fulfill as much of that demand as possible, which means that we're building extremely aggressively, and we're making available whatever technology we have."

"In some respects it's a good thing," says Rogers WAVE President Dave Samuel, when asked about the absence of a cable modem standard. "It keeps as many vendors in the game as possible. They're out there still competing, and we're not captive to just one vendor."

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Still, Samuel accepts that a cable modem standard will be chosen one day, and that when it is, Rogers could be caught short. But if that happens, the company will simply "change out" its nonstandard units, he says, adding that the company knows that it will "end up either spending a couple of million to pull them from the field, or redirecting them to a university environment."

"When there is a modem that is standardized for Canada, or hopefully for North America, we'll go with it," adds Denis Bélanger, vice president of engineering for Cogeco Cable. But "that doesn't mean we'll remove the 500 kilobit service. I can easily envision two types of modems, one being the Zenith, which would be like a basic cable modem reasonably priced and reasonably fast, and higher speed modems at higher cost, because the service is better. And they can coexist.

"That 6 MHz chunk, I can use half of it with Zenith, and half of it with Motorola, because they all have their frequency slots," he observes. "It's not a big deal."

Despite his lack of concern about nonstandard cable modems, Bélanger isn't blase about adding WAVE to his product lineup. That's because the process of becoming a cable ISP "is not that straightforward," he says.

The biggest challenge? For Bélanger, it's transforming Cogeco's plant from one-way to two-way transmission. To do this, "you have to rebuild the system: bring the fiber in and rearrange the coax, and sometimes change cables, and sometimes change amplifiers, because there are some types of amplifiers that can't accept two-way," he says.

"Our Quebec systems had to be totally rebuilt," Bélanger adds. "We kept the cable and the service drops, but we changed all the active amplifiers and redesigned it, and that is something that cost (about) U.S.$150 per cable sub."

In the areas where Cogeco's rebuilds are complete, "the biggest challenge is to control the level of ingress (of line noise at the subscriber end), have the system tight and maintain it tight, and get the technicians up to speed on the techniques that are needed to do that. It's a technological challenge, but it's also a training and human challenge," says Bélanger.

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Meanwhile, Samuel says training is his biggest issue. That's because "the technology works, and works quite well," he says. "We've had the Zenith modem in the field for almost two years, and I can't remember the last time we had a modem problem."

However, getting staff up to speed is another question. Doing so requires giving each of them "four to five days" of classroom time, says Samuel. Unfortunately for Rogers, it puts "a strain on our systems to pull the techs out" for this training.

Because of this, Rogers has learned to set aside six months for bringing a WAVE-ready system into actual ISP operation. The window allows not only time for training technicians, but also for technical trials using 50 to 60 "friendlies," who take WAVE for free in exchange with enduring its teething pains.

"What we've done is launched the process in 11 different cities," says Samuel. "We start with pockets of WAVE in each city, which allows the maintenance staff to start working with a two-way plant." Once it has the expertise, Rogers can then afford to expand its WAVE offering in each center, knowing that its people have the technical know-how to keep the system up.

Even with these problems tackled, WAVE is a big gamble for the cable industry. Operators have spent a fortune rebuilding their systems to support it, engendering resentment from subs who've paid for the improvements through rate hikes, and who are now being wooed by competitive services such as DBS.

However, considering cable's subscriber base of 8 million, the gamble may well prove to be worth it, says Shaw's D'Avella.

That's because "the penetration (growth) forecast over the next five years is somewhere in the order of about 15 percent," says D'Avella. "My personal view is that this is going to change, as web TV, network computers, and the linkages between the Web and television broadcasting whether it's in the form of specialty services or conventional broadcasting really grab hold."

There's proof that this synergy between TV and the Web is already happening, he adds. For instance, "CNN is quite active in promoting its CNN interactive services. If you ever watch CNN, every 30 minutes there's an invitation to visit their web site.

"That's going to become a very powerful cross-promotional tool as we move forward."

On WAVE's overall potential, D'Avella says, "This is probably one of our most significant new developments, and it's one that we clearly have a competitive advantage in today.

"It's difficult to say whether it's going to become a 15- or 25- or 50-percent product. . . But as the medium evolves and it becomes more consumer-friendly, and as people begin to value the information delivered, and they begin to tie it into their daily activities, it could become quite big. I don't know whether it will ever become as big as cable television, but it will become a very, very important part of our cable offering."

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