Canadian cable TV turns interactive: Microsoft, Rogers to bring enhanced broadcast services home

Microsoft announced last week that it is venturing north, linking up with the cable television division of Toronto-based Rogers Communications Inc. in an effort to bring interactive TV services to Canadian residential users.

The three-pronged agreement calls for Rogers to support 1 million advanced set-top boxes with the Microsoft TV client software platform. Rogers also will deliver an e-mail product powered by MSN Hotmail and other services based on Microsoft property, including Microsoft Passport, MSN Search and MSNBC. Microsoft, in return, will invest $400 million in Rogers - marking Microsoft's first Canadian cable investment.

"Our two companies share a vision of advanced broadband networking in meeting the demands of customers today and into the future," said Frank Clegg, vice president of the central region U.S. and Canada for Microsoft.

Rogers plans to begin deployment of first generation set-top boxes early next year, offering an "exciting range of capabilities" that will feature Web browsing and other interactive functions, said John Tory, president and CEO of Rogers Cablesystems Ltd.

The next generation devices will have an even greater degree of interactivity, including "educational opportunities, interactive games, interactive advertising and an awful lot of opportunities for e-commerce," he added.

Ultimately, users will be able to "go behind television programming and get information," he said, explaining that someone watching a cooking program, for example, will be able to easily access a recipe.

"It really is about making the television experience interactive for people," Tory said. "The set-top boxes literally broaden the range of services we can offer." Marcel LeBrun, CEO and president of iMagicTV, a company that currently offers Canadian telcos interactive TV solutions, said he views the Microsoft/Rogers agreement as positive. Microsoft's infusion of capital in Rogers will allow Rogers to be more aggressive, in turn increasing the pressure on iMagicTV's customers to move faster. "That means our market will develop faster," LeBrun said. Because cable companies are offering multiple services today, he added, telcos must get into the video business if they want to stay competitive. LeBrun said he plans to offer telcos features that will "take the entertainment experience up a notch."

iMagicTV's Past TV, for example, will allow users to go back in time and watch something that was on an hour ago. And, Network VCR moves the functions of a VCR into a telco's network, similar to what voice mail did for the answering machine. Software for both services is being developed.

In the end, LeBrun predicted that customers will see similar services from cable companies and telcos, compelling competition to be based primarily on service, brand, pricing and bundling.