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This week, Shaw Communications launched its new premium TV platform BlueSky, an app-like interface designed to take back the market from telephone companies.

Jeff McIntosh/THE CANADIAN PRESS

A voice-controlled television remote. A command to find shows you watched recently. Sports, weather and traffic information displayed seamlessly in-screen as you watch. A kids zone with children's programming locked by a parental password.

These are some of the features Shaw Communications Inc. is offering in the new premium TV platform it launched this week, dubbed BlueSky. It's the type of intuitive app-like interface that consumers have come to expect after years of watching movies and TV programming online thanks to a proliferation of Internet streaming services.

But it's a revelation for Shaw. As with other traditional cable operators, the Calgary-based company – once a dominant force in the TV market – has seen its edge crumble as telephone company rivals found a way into the game with Internet protocol television (IPTV).

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The original telephone networks weren't built to deliver video signals, but telcos started building fibre-optic connections directly to new condo developments and made big investments to upgrade their copper networks in other areas to improve Internet speeds and begin offering video services using IP-based technology.

Telephone leaders BCE Inc. and Telus Corp., previously restricted to satellite offerings, could now sell TV to more urban customers and win the all-important bundle of Internet and home phone services in the process.

As IPTV grew more advanced over the past half decade, customers were drawn to easy-to-use features that allowed them to record, pause and resume watching shows on multiple devices and additional TV sets. Soon, cable was up against an array of inexpensive Internet options as well as IPTV platforms. And it was losing.

Telus, Shaw's rival in British Columbia and Alberta, grew its TV business to more than one million by late 2015, up from just 170,000 in 2009. Meanwhile, Shaw was steadily losing cable customers by 2011 and has since lost a total of more than 600,000. A similar trend played out in the East, where BCE launched Fibe TV in Ontario and Quebec in 2010 and had almost 650,000 subscribers in 2014 (just before acquiring Bell Aliant along with its Atlantic Canada TV customers). Rogers Communications Inc. has lost more than 450,000 cable customers in Ontario, Newfoundland and New Brunswick since 2011.

Now, after years of watching subscribers walk away, cable companies across Canada are fighting back with their own Internet-like platforms and features.

"We had [telephone companies] across the country who had probably gotten the upper hand for a few years because of IPTV," said Jim Little, Shaw's chief marketing officer, in an interview last fall as the company was preparing to unveil BlueSky. "And they came out with what was, at the time, about four or five years ago, the next-generation video product. This is going to allow us to leapfrog that."

But, the road to market has been long and expensive, particularly for the two largest players: Shaw in the West and Rogers in eastern Canada.

Both initially planned to develop their own versions of IPTV, but, by mid-2015, Shaw took a $55-million writedown and cancelled its program. Instead, it licensed cloud-based technology known as X1 from U.S. cable leader Comcast Corp., used the platform to launch a companion TV app for mobile devices last year and last week launched its premium home TV service.

Comcast has thousands of engineers in Silicon Valley, Washington and its headquarters in Philadelphia and has been perfecting its X1 technology for several years. About 10 million of its 22 million television customers now have the platform at home.

In Canada, just more than 11 million households in total subscribe to cable, IPTV and satellite services. That's partly why Shaw president Jay Mehr says his company looked to Comcast.

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"It's not something we had the scale to do ourselves," he said last week, noting that Comcast engineers are constantly building new features. "Global scale is going to matter as we compete with the Netflixes and the Amazons."

After its own in-house effort dragged on for years, missing deadline after deadline, Toronto-based Rogers decided in December that it also needs access to that scale. The answer? Follow Shaw's lead. It, too, has struck an agreement with Comcast and hopes to offer the X1 platform next year.

The change in direction was costly.

Former chief executive Guy Laurence had been a champion of the IPTV project, which he pledged would start a "turnaround" at the company's flagging cable division in 2017. He planned to launch it early this year, but within two months of his departure, the board halted the program, announcing it will take a charge of up to $525-million.

Rogers had around 1,000 people working on the project, about 140 internal employees and the rest from 30 to 40 external vendors, many of whom worked temporarily out of the company's sprawling campus in Brampton, a suburb of Toronto. An individual who worked for one of the external vendors and asked not to be named said the product – which several thousand Rogers employees had been testing in beta mode – worked, but had a number of problems.

Rogers wanted the best technology for every piece of the platform, the individual said, noting that the array of different components "didn't necessarily play well together," the way an off-the-shelf platform might. The external vendor employee said it was difficult to make changes or updates to the near-finished project, comparing it to building a house and then having to rewire the electricity and rip out the plumbing before you could hang a painting on the wall.

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Wim D'Hondt, principal at IBB Consulting Group, consults often on TV projects for telecom companies. He says as cable companies work to build platforms and upgrade their networks to work in IP environments, many find they don't possess the talent necessary to do so in-house.

"You either spend a lot of money or you find a partner," he said. "There are a lot of advantages to IPTV – you just need to make it work. That's the tough part."

Partnering with Comcast comes with the cost of licensing fees, but Scotia Capital Inc. analyst Jeff Fan says that means spending on success, not the hope of one day succeeding.

"You're removing some of the execution risk, taking away a higher-risk capital expenditure piece and then turning it into a success-based operating expense. Because if customers don't subscribe to X1 at Shaw, you don't have to pay the licensing fee."

Rogers is likely to benefit from Comcast's experience deploying X1 with its first Canadian partner in Shaw. But Tony Werner, president of technology and product for Comcast, says both companies will benefit from increased awareness of the product.

"If you have somebody in Toronto who gets a taste for it and they get transferred to Vancouver or Calgary … they say, 'Hey, when I get there I want it again.' I think it's good across Canada," Mr. Werner said last week.

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Those potential successes won't come overnight, particularly for Rogers, which is not yet close to launching the new platform.

Barclay's Capital analyst Phillip Huang says he's impressed with Shaw's X1 product – which could one day also integrate smart-home features such as lighting and temperature control. But his optimism comes with a caution: "It will take several quarters for consumer awareness of BlueSky TV to grow and we expect the improvement to cable subscriber trends will be gradual."

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