Last month, Winnipeg resident Lynn Ramsay switched from Shaw to MTS TV, a new telecom choice that only recently entered the market.

"We'd purchased a Shaw digital cable box, but it was only useful for one TV," Ramsay says. "Now with MTS, the digital is hooked up to all three sets in the house."

Previously, Ramsay's cable TV and Internet services were from Shaw Cable and her home and cellphone provider was Manitoba Telecom Services (MTS), Canada's third-largest national communications provider.

When MTS called offering what she says was "a less expensive option" - combining her cellular, high-speed Internet and digital TV services into one package - she bought in.

Roy Sherbo

Only a year ago, the division between communications service providers to the province was clear. Phone service was the responsibility of MTS and Calgary-based Shaw provided basic cable to 194,000 Manitoban subscribers.

But now that voice and data signals can be sent using Internet protocol (IP) technology, phone companies can offer TV service and cable companies can direct phone calls through their respective broadband networks.

This opened up the market to aggressive competition between MTS and Shaw - both vying for Winnipeggers' living rooms.

"We knew at some point that that the cable TV industry would get into voice telecommunications," says Roy Sherbo, vice-president of MTS TV Services. "We felt it important to get into (TV) so we could serve customers with a broader mix of telecom services."

MTS TV was introduced in 2002. At that time, coverage was available to only nine per cent of Winnipeg, jumping to 42 per cent by the end of 2003. By the end of 2005, complete city coverage is anticipated.

To date, Sherbo says MTS TV has more than 45,000 customers in Winnipeg, representing about 20-per-cent market share - a number that has doubled since 2004.

"One of the things our customers like about us is that we're here. We've got 3,500 to 4,000 employees based in the community and so we spend a lot of time focused on local content."

For years, Shaw Communications was champing at the bit to get MTS' phone business. In July, it introduced Shaw Digital Phone to Winnipeg, representing the company's third major-market launch of the service since February.

"We've competed for the last two years on the basis of our Internet and video products, but with a hand behind our back because we were up against a telephone product as well," says Shaw president Peter Bissonnette. "Now that we have our telephone product we have something to offer customers who really did want to stay with us but wanted (phone service) as well."

In the first three months of offering residential phone service to Calgary and Edmonton customers, Shaw signed up more than 20,000 customers. Although the company's fourth-quarter results were not available at press time, Bissonnette is optimistic about what the Winnipeg numbers will reveal.

Peter Bissonnette

"We're really encouraged by what we've seen in Manitoba. It is our most competitive market."

Both Shaw and MTS offer single-provider bundling packages, saving customers money if they accept more than one service.

Sherbo says it's a little too early to say how many MTS customers have chosen to bundle, but that there's been a lot of interest to date.

"Awhile ago, we started bundling with high speed and had very good uptake with that. More recently, it's been with wireless. It's too new to know exactly what the numbers are, but there's been lots of interest," he says. "We have seen more and more TV customers becoming high-speed (Internet) customers, so that share has grown."

"The value becomes more apparent to them," says Bissonnette, of customers' reactions to bundling. "Certainly, cost is a big driver and then convenience - because what we're seeing is that they're bringing all of their products to us.

"In fact, 23 per cent of new customers had no products with us before. Of that 23 per cent, over three-quarters are bundling into all of our products. We're really pleased."

When it comes to bundling, a scuffle between MTS and Shaw over local customers wanting to switch phone service providers recently captured public attention.

"We had some issues with MTS refusing to port numbers," Bissonnette says, explaining that Shaw went to the Canadian Radio-television and Telecommunications Commission, accusing MTS of making it difficult for customers to move to Shaw while keeping their existing phone number, a process known as porting.

Shaw has since withdrawn its formal complaint against MTS and the two companies have reached an agreement.

"We're hoping to see some real improvement in their porting process as well as porting all customers who want services - whether they be video, Internet and telephone or any combination there of," says Bissonnette. "We're hoping that it starts to become a more regular process."

Just as Shaw Communications is not the only cable firm getting into the phone business, MTS is not the only telco in TV.

SaskTel and Aliant Telecom have launched TV services, while Bell Canada and Telus have plans to follow suit.

"Chronologically, SaskTel started this service before we did, but we certainly have the largest customer base in Canada, perhaps in North America," says Sherbo.

"Winnipeg is probably the most competitive environment in North America," says Bissonnette, listing a multitude of satellite providers in addition to Shaw and MTS. "There's tons of opportunity and choice for our customers to the extent that (they are in a position to) tell us what they want."

Sherbo agrees that the customer stands to gain the most from competition.

"I think that when it's all said and done, it's made it a very attractive for our customers. Winnipeggers benefit from that competitive aspect to get the selection and services that are available to them."

(Barbara Chabai can be reached at chabai@businessedge.ca)