Canada's largest telecommunications companies are squaring off in a fight about the future of television.
Rogers Communications Inc. and BCE Inc. are in talks with Apple Inc. to become Canadian launch partners for its much-hyped Apple iTV, a product that has the potential to revolutionize TV viewing by turning conventional televisions into gigantic iPads.
While the iTV product remains cloaked in secrecy, sources say Cupertino, Calif.-based Apple has approached Rogers and Bell as it actively pursues partnerships with Canadian carriers.
"They're not closed to doing it with one [company]or doing it with two," said one source who is familiar with the talks. "They're looking for a partner. They're looking for someone with wireless and broadband capabilities."
Another source, also speaking on the condition of anonymity, said Rogers and Bell already have the product in their labs.
All three companies declined comment.
Last month, Apple reported stunning financial results for the quarter ended Dec. 31 – $46.3-billion (U.S.) in revenue and profit of $13.1-billion on the strength of huge sales of the iPhone and iPad. But television remains an area of technology it has yet to conquer, and rumours about Apple's next big thing centre largely on the concept of a big-screen television that would essentially put a large-screen iPad in living rooms around the world.
The product reportedly integrates Siri, Apple's voice-recognition software that acts as a personal assistant on the latest iPhone, into television sets to help viewers make programming choices.
Viewers can then control the TV by voice or hand gestures, all from the comfort of a couch. An on-screen keyboard, meanwhile, can also be activated in a similar manner, allowing viewers to surf the web, conduct video chats and use social media sites such as Twitter and Facebook – all without any physical interface.
Jeffries analyst Peter Misek said an analysis of Apple's patents suggests its iTV product will likely be interoperable with mobile devices, while also functioning as a gaming platform.
He notes Apple is in a good position to "leverage" potential partnerships with carriers to gain access to a wide array of content. "We believe it is likely to be offered by AT&T and Verizon in the U.S. and Bell and Rogers in Canada," he wrote in a research note on Monday.
At first blush, Apple's initial talks with Rogers and Bell appear to put rival Telus Corp. at a competitive disadvantage.
However, sources say Telus is on the brink of unveiling new technology that would give its customers the ability to control its Optik TV product through voice commands and hand gestures. Those new features could be facilitated by existing Xbox 360 hardware and would position Telus to be first out of the gate with such an offering.
Additionally, other imminent enhancements would extend its Optik TV service to computers and tablets over a home WIFI connection and to smartphones on its wireless network.
Broadcasters, meanwhile, are keen to avoid the fate of record labels, which saw their sales drop dramatically when Apple turned its gaze toward the recording industry. By experimenting with Apple's products now, the content owners can try to position themselves to benefit from the partnership.
Consumers are already moving away from conventional programming to watch shows on their own terms. TiVo released a survey in January that showed 38 per cent of viewers don't actually watch shows "live," choosing to record their favourite shows. If you include on-demand services such as Netflix, that drops to 27 per cent.
But both Rogers and Bell are major content holders, which means even if they lose subscribers, they will be able to generate revenue through licensing agreements.