While television and internet prices are going up elsewhere in the country, some Vancouver residents are getting the deal of a lifetime thanks to an increasingly hostile price war raging between Shaw Communications and upstart Novus Entertainment.
Vancouver-based Novus says Shaw is going after its customers with "very, very aggressive pricing." Shaw is offering its entire lineup — including high-definition TV programming, home phone and high-speed internet — to Novus customers for $9.95 a month each, Novus says.
Novus co-president Doug Holman said Shaw is being predatory and does not offer the same deals to customers outside his firm's service area.
"That number [$9.95] is way below our cost. We don't know what Shaw's cost is, but it's hard to believe it could be that low and that their cost savings could be that much better than ours," Holman said. "If we price matched on that, we'd be losing buckets of money."
Novus, which is backed by Terry Hui, the chief executive officer of real estate developer Concord Pacific, provides television, phone and internet services through high-speed fibre-optic connections to about 225 high-rise buildings in the Greater Vancouver Area. The company has a potential reach of 30,000 households and has about 9,000 customers.
The company filed a complaint over Shaw's pricing in July with the Competition Bureau and launched a lawsuit in B.C. Supreme Court.
Calgary-based Shaw, which has more than two million customers, mostly in Western Canada, has fired back by filing a defamation lawsuit against Novus in B.C. Supreme Court.
Shaw president Peter Bissonnette said Novus is spreading misinformation. The offer isn't just targeted at Novus customers but residents of West Vancouver in general, which is a "highly competitive" market.
"They've publicly stated in the past that they're going to become the bane of the life of Shaw," Bissonnette said. "True to their word, they've embarked on this defamation campaign."
Aside from Shaw and Novus, many Vancouver residents can also get television, internet and phone services from Telus, Canada's second-biggest phone company. Holman said Novus has had no problems with Telus.
Street teams woo customers
Shaw started going after Novus customers back in February with cheap offers, but laid off a month later, Holman said. The cable provider resumed its efforts in July with a more aggressive deal, which it promoted by slipping flyers under doors and with "street teams" that would stand in front of buildings and ask people entering and exiting whether they were Novus customers. If they were, they would get the $9.95 offer, he said.
Bissonnette said Shaw has indeed used direct marketing representatives to make offers, but he added that Novus has for the past three years blocked access to Concord Pacific buildings, where Shaw has not been allowed to lay wiring while they were being built.
"Those buildings up until recently have never had access to our services," he said.
Novus is expanding service to three or four buildings each month and has plans to grow out of its core area of downtown Vancouver over the next year. The company also has a broadcast license, as well as space for a head office and satellite dishes, in Toronto, the country's largest television market.
Setting up in Toronto, however, would bring the company into competition with two firmly entrenched players, Bell Canada and Rogers Communications. Shaw also sells satellite television service in Toronto under its Shaw Direct banner, formerly known as Star Choice.
"Novus will only consider entering the Toronto marketplace if its current problems with Shaw are resolved and there is some confidence that an analogous situation would not manifest itself in the GTA," Holman said.
Both Bell and Rogers are introducing a new 1.5 per cent TV price increase on Sept. 1 to cover their contributions to a fund that will help pay for local programming in small markets. The companies are blaming the increase on a requirement from the Canadian Radio-television and Telecommunications Commission.
Neither Novus or Shaw has any plans to pass on the new regulatory charge to their customers.
"We will accrue for this fee in our accounts and will comply with the CRTC requirements when they have issued definitive instructions on such," Holman said. "It is not our intention to charge our customers an additional 1.5 per cent fee on top of their TV services at this time, unless told to do so by the CRTC."
Shaw, an outspoken opponent of such fees, is being more coy about its plans.
"We're not doing anything. We may have a different tack on this," Bissonnette said. He refused to elaborate.