Interview with Sean Ruzicka, Director, Future Friendly Home, Telus TV, Telus Communications, Canada

This interview is the second in a series taken at the iptvworldforum in March 2005. More interviews will follow soon.

Q. Can you give a quick outline of where Telus are positioned in the IPTV market at the moment?

At Telus we are in the midst of introducing an IPTV solution in the form of Telus TV. We are driving towards the overall digital home, and Telus TV is the crown jewel of that digital home. Being a telco, we are looking toward the triple play and quadruple play markets. We want to stave off competition and at the same time grow our business, and do so profitably.

 We are driving to market to offer customers the only true Quadruple play available in our market, and in so doing, create customer and shareholder value at the same time. Our approach to the future Friendly Home is ultimately driven by the desired customer experience, fundamentally grounded in consumer feedback, and that sets service development priorities.

Q. How do you see the way the relationship with content and content providers will change in the future?

The fact is that we are a new entrant to the TV market, we are doing so with new technology, and we only have a very small number of subscribers right now. That makes it difficult to get the content owners to be able to take us as seriously as we would like. That said, we are part of a huge industry so we’re not being ignored. But it is going to take some time to have the same sort of equal and economical access to content as the incumbent TV providers currently have.

 What we would like to be able to do is leapfrog them in terms of the extra value that we can add to the delivery of content in the form of interactive services, enhanced information with linear broadcasts, and then more on- demand content in all categories. So examples of that would be re-broadcast of linear content, re-packaging of that for on-demand access and then of course just the ‘a la carte’ model, the ability to buy just discrete segments of different types of broadcast, whether that be movies or installations of a series.

The ultimate thing we are trying to do is give consumers more choice and control over their viewing experience. We’re hoping to be able to charge a premium for some of those services and be able to develop new sources of revenues in the service provider space.

And that flows back upstream. There are new ways for the broadcasters to be able to squeeze more out of their content. An example of that is video-on- demand. For content that was considered premium three, five or fifteen years ago, by repackaging that content, we can breathe new life into programmes that would otherwise sit dormant on the shelf.

Q. How do you see the digital home developing?

As a telco, we obviously have a connection to the home, and that started with basic telephone services, but with Internet, we now have a hi-speed digital connection to the home. We want to be more than just the commodity access provider because there’s not a lot of extra value that you can realise out of that model. We are also under threat of competition from new entrants who can provide a similar connection.

So what do we do? We move to develop our capabilities to be able to participate in greater breadth and depth in the digital home value chain, and that starts by enabling the connected home. So we look at issues like how do we extend the network presence in terms of the digital connection across the household and also on the move outside of the home. We do that with home-networking as a start, by providing extra access to other computers in the home and enabling connections to new consumer electronics devices.

Ultimately, as the consumer electronics industry and content industry proceeds apace with us, we start to be able to support transport of content and services within the home, from device to device. So what the consumer needs is support in making sure that sort of service is set up properly and continues to work without causing them any concern. It is hyperbole at this point in time, but it’s about accessing information, entertainment, and communications where and when you want it.

That’s pretty much theoretical at this point, some geeks are able to do it, but the average person is certainly not able to do it and even if they could, they wouldn’t pay much for it right now because they may not fully appreciate the benefits such services can offer. So we need to be able come up with a service that makes that a lot easier for them to do, and takes advantage of our network, and provides the extra value add in terms of the service support that we can add to customers. We are deep in the development curve of that right now.

This entails what such services looks like, based on what customers want and the economics of providing these services. We really want to take a customer driven and needs based approach to this. There are certainly opportunities where we can serve needs heretofore un-requited, much of it in terms of basic services, such as offering easy access communications, when and where you need them, and similar access to information and entertainment.

Q. What sort of security issues are linked to IPTV and the digital home?

There is a fear with bigger and bigger pipes, it becomes easier and easier for ‘video napsterisation’ to occur. This is obviously where DRM comes in. The content owners have better control about how and where their content is used. The flip-side of that is that you have to be able to provide what the consumer perceives as a liberal fair use policy, and also make it easier for them to be able to make use of that fair use policy. Just because the content owners say customers can do something, with respects to DRM, that doesn’t mean customers can figure out how to port it from their TVs, to computers, or to mobile devices.

 Q. How is the market developing towards subscription services?

That’s what Microsoft is trying to enable with their DRM schema - the notion of subscription based content, most notably for music. That’s a big idea to get people’s heads around. Most of the provision is a la carte, where you buy it, download it and own it in one spot, whereas with the subscription based model you can have unlimited access to unlimited content as long as you continue to pay your monthly subscription.

If you consider this with respect to your MP3 player, say for the sake of argument you pay a dollar a download. The player is capable of holding 5,000 songs. Well, do you want to pay $5000 to fill it, or alternatively do you want to pay, for the sake of argument $20 or $25 per month for a service like Rhapsody where you have unlimited access to content as long as you continue to pay your subscription? If you look at the total number of titles that Rhapsody has in its catalogue, which is north of 400,000 titles, you’ll find it’s possible to fill an MP3 player hundreds of times over, as long as you don’t let your subscription lapse.

But you let your subscription lapse, there’s a time sensitive protocol in the DRM, and then you would no longer have access to that content. This is a much more economical way for the consumer to be able to get access to the content, and the subscription based price I think makes that fairly attractive. But consumers don’t really perceive that as a better way to go at this point, mostly because of education. It’s a fair point to arguer that consumers may never make that leap. It’s unfortunate, because the value is so compelling when you thing that it could cost $5000 to fill the MP3 player once, or $25 a month to fill it innumerable times!

Q. What are some of the key challenges to telcos in delivering these new digital services?

The challenges that we have aren’t limited to these digital services. It extends backwards to our legacy services. For instance, on the wireline side things are still quite unsophisticated, ironically meaning that many legacy services are difficult to use. You don’t have a visual interface to manage calling features, whereas most VoIP offers include this functionality. Even on the mobile side, you can stumble your way through visual navigation, and maybe find the right setting you are looking for.

 But what if we could make management of your calling a visual task? It could all be managed on your screen. Set your call forwarding, number of rings, or even your overseas dialling – click on the country and region you want, and all you would need to enter is the local number. So those are examples of how the challenge extends to new and legacy services, but the overarching thing here is that there is a fairly simple set of values that should underpin all of our services.

The challenge is, how do we simplify all these potentially complex services to be more accessible for consumers to be able to take advantage of? That’s the customer perspective that we must take. From the shareholder perspective, how do you do this so that consumers can take greater advantage of your services, develop new sources of revenue, increase ARPU and reduce losses to competitors?

And then there are the support costs. Support costs can be a huge factor in these types of service offerings, and we are confronting the complexity of offering customers they support they need at a cost that is reasonable to the business. We work to do this on a daily basis in developing and delivering these new services.

http://www.telus.com