Shaw Communications Inc. is partnering with Xplornet Communications Inc. to offer a new telecommunications product bundle designed exclusively for rural Canadians traditionally disadvantaged by the digital divide.
The two companies are expected to jointly announce a marketing agreement on Wednesday to offer a value package that offers rural consumers discounts for combining Shaw Direct satellite television with Xplornet's high-speed Internet service.
Bundles have long been offered by cable and telecom providers as a strategy to bolster client retention in exchange for multi-product discounts. Consumers in sparsely populated areas, though, generally do not have the access to the same array of bundles offered in urban centres.
Both companies are betting this new loyalty play will boost their respective market shares as they battle increased competition, while also driving new subscriber growth in rural markets.
Although the bundle's pricing is still being determined, the initial rollout will target markets in Ontario, Quebec and Alberta in early May before being offered nationally by the end of this year. There are roughly 2.4 million rural households across Canada.
"I've been in this industry for 35 years – this is the most intensively competitive time we've ever had," said Peter Bissonnette, president of Shaw Communications. "Our loyalty and those things we can do to ensure that our customers really want to receive the services from us – anything we can do in that regard is a good thing."
Calgary-based Shaw began offering Shaw Direct bundled withcable, Internet and home phone in its existing cable markets after a favourable regulatory change last fall. However, the vast majority of Shaw Direct customers are located outside its cable footprint, which makes rural broadband provider Xplornet an ideal partner for the bundle offer.
Shaw Direct had roughly 910,000 satellite TV subscribers at the end of 2011, according to Convergence Consulting Group Ltd.
About 510,000 of its customers subscribed to its high definition service at the end of last year. The planned launch of its new Anik G1 satellite later this year will be a pivotal step in increasing its HD channel lineup and attracting new customers.
Woodstock, N.B.-based Xplornet, meanwhile, is also eager to increase its national subscriber base, which stood at 150,000 at the end of 2011. With an eye to quadrupling that number in four years, it began the rollout of its national 4G (fourth-generation) network last year and recently launched its first of two scheduled 4G broadband satellites.
"Bundling works," chief executive officer John Maduri said. "It is good for customers. It is good for the carrier."
The companies were not disclosing the financial terms of their deal, Mr. Maduri said. "The broad reach and appeal of Shaw Direct's video service, this initiative will support the adoption of high-speed Internet in rural Canada as well as our business growth."
Xplornet's founders, meanwhile, are not strangers to the satellite television business. Brothers Bill and Ed Barrett, who are now minority shareholders in Xplornet, previously handled the national sales and installation network for Star Choice, the previous name for Shaw Direct.