In looking at Videotron‘s pricing strategies, we have already mentioned the unique market position that is found in Quebec, with cable penetration rates running about 10% lower than the rest of the country (see Statistics Canada publications here).
In most of Canada, telcos and cablecos look at service bundles as a way to leverage their existing customer base to offer more products at marginal incremental costs. In Videotron’s case, basic cable is far from saturation levels, with about 40% of homes passed opting not to subscribe. For Videotron, the quadruple play represents an opportunity to add brand new customers to leverage the existing cable plant.
Wireline telephony is more of a zero-sum game. Most subscribers won by the cable companies were at the expense of telcos. On the other hand, there are still a large number of homes with no cable TV. Many of the early wins for Bell Expressvu were in unserved, often rural territory. There are still many who are living with over-the-air signals.
Digital, HDTV and video-on-demand are the kinds of services that will help to convert non-believers. How do phone companies respond to serve homes with multiple HD feeds?
Verizon is spending billions to install fibre to the home. Will the current strategy by Canadian carriers to build fibre to the node be sufficient?