pay for

Stentor

plan?

Canada’s telephone consortium, Stentor, has named itself contractor for the information highway, promising to upgrade its systems by 2005 to support an interactive voice, data and video thruway accessible by 80% to 90% of Canadian homes and businesses. The plans, announced in a cross-country video conference, were met by cablecaster skepticism and questions on why Canadians should help pay for a system somewhat parallel to cable.

But, taking the public relations high road, Stentor is sidestepping direct comparisons between its plans for a ‘world first’ coast-to-coast information network (a broad-band net with video switching capability) and the existing cable television infrastructure. It’s also downplaying the significance of entertainment products and emphasizing the potential advantages to ordinary consumers, health care providers, educators and such cultural outlets as museums.

That’s not to say that the telcos intend to spend an estimated $8 billion to $10 billion, over 10 years, for the good of society. The president of Maritime Telephone and Telegraph, Ivan Duvar, is on record saying he doubts the plan qualifies as a marketing gamble and making the obvious point that the Stentor partners wouldn’t be spending the money if they didn’t expect the system (billed as The Beacon Initiative, Guiding Canada’s Information Highway) to turn a profit.

Beacon is described as an undertaking in which participants, including Stentor members plus independent telcos and Telesat Canada, have agreed to ‘pool their resources to upgrade their local, regional and national networks to provide multimedia services into homes, offices, hospitals and schools across the country.’

The costs break down as follows: $8 billion to upgrade local phone networks over 10 years to allow for broad-band capability for multimedia applications and $500 million over six years to provide what Stentor calls ‘seamless connectivity.’ Stentor will announce details this summer on plans for a Toronto-based multimedia company, with offices elsewhere, to test and supply multimedia services and applications. It will also set up a venture capital fund to help multimedia developers ready products for the info highway.

Of course, current crtc regulations forbid telcos from distributing video signals. And there’s some difference of opinion over whether the crtc examined the telco-video issue sufficiently in last fall’s telecom hearings, where the subject of telco-cable convergence was raised repeatedly, or whether the federal regulator ought to hold a hearing specifically on that subject.

Jocelyne Cote-O’Hara, president of Stentor Telecom Policy, says the telecom hearings did review the issue of the suitability for telcos to deliver prepackaged video or multimedia products. She says she’s expecting the crtc to issue its findings on those hearings towards the end of the summer, adding that, meantime, the crtc has sanctioned the various video-on-demand trials currently underway.

On the subject of whether Stentor has applied for clearance to route broadcast signals over phone lines, Cote-O’Hara says Stentor has not yet decided if it will seek broadcast rights before the crtc. She maintains the telcos would always respect existing broadcasting regulation.

But in Phil Lind’s mind, there’s little doubt as to Stentor’s agenda. Lind, vice-chairman of Rogers Communications, says the phone companies may claim they’re not interested in competing with cable, ‘but what they want to do is get into the cable tv business.’ He says there must be a separate hearing to examine the financing, regulation and overall suitability of telcos distributing video and data.

He adds that cablers are aware they will face competition soon – with the DirecTv dbs satellite set to beam programs to Canadians within months and with announcements such as the Beacon Initiative coming along. But Lind says two questions arise following Stentor’s announcement of the Beacon Initiative. First, is the service going to be regulated and, second, who’s going to foot this multi-billion dollar bill. He says phone companies have a history of cross-subsidizing: financing for non-phone projects ‘on the backs’ of phone subscribers.

Cote-O’Hara says ‘a good percentage’ of Beacon participants’ earned income will go towards the fibre-cable network expenditures but she would not specify whether that spending would affect shareholder earnings, or say how much the project would add, if any, to telephone bills.