New IPTV service providers offer alternatives to Canadian pay TV incumbents

Entrepreneurial Canadian IPTV service providers such as VMedia and Zazeen Inc, both in the Toronto market, are launching a new breed of competitive TV services that include a package of traditional pay TV channels with over-the-top Internet TV content in an effort to challenge incumbent cable, telco and satellite providers.

The two start-ups are part of a group of about 20 mostly small, almost all regional, players that received IPTV licenses from the Canadian Radio-television and Telecommunications Commission (CRTC). Not many of the firms, a story in the Toronto Globe and Mail said, "are likely to make it," but those that do hope to make money by challenging incumbent pay TV providers with packages that offer traditional pay TV channels and also access to non-traditional content such as Netflix (Nasdaq: NFLX) and Skype.

The biggest hurdles for the new players are getting access to content and, of course, having the right technology to deliver that content. VMedia's developed a technology to compress signals and reduce the bandwidth required to run over top of existing infrastructure. It also has a set-top box that lets viewers access any app developed for the Android OS. Zazeem has spent "years of development" fine-tuning its service, the story noted.

Both need content to run over that technology.

"We learned the hard way how difficult it would be to license content when you are a no-name company," said VMedia CEO Alexei Tchernobrivets in the Globe and Mail story.

It helps that Canadian law requires broadcast companies like Bell Media and Rogers Media, associated with incumbent telco and cable operators, to sell access to their channels to rival TV distributors.

IPTV is not new to Canadians--Bell Canada (NYSE: BCE), Telus (Toronto: T.TO) and Videotron all offer their own versions--but the newcomers think they can tap a new niche of customers by moving outside the traditional pay TV channel comfort zone and into OTT.

There's also a cost consideration. VMedia's basic packages are about 25 percent less expensive than their incumbent competitors, which puts the company on a level with a Montreal-based IPTV provider ColbaNet which, for about the last year, has been offering a package of basic TV, Internet and home phone for about CAD 60 (USD 58.81).

ColbaNet also offers the two Toronto start-ups a lesson on how to make IPTV a business.

"It talks money and advertising to obtain new subscribers and nobody will ever have more money than they (incumbents) do," ColbaNet CEO Joseph Bassili told the publication. "But I don't need to be bigger than they are to grow very rich."

VMedia partner George Burger agreed with that philosophy.

"Obviously, we are in this to make a profit, but we're not trying to grab every last entertainment dollar off the table," he explained.

For more:
- the Toronto Globe and Mail has this story

Related articles:
Report sees Internet becoming an OTT battleground
AOL Canada launches AOL On