Rogers eyes local phone service
globetechnology.com.
By RICHARD BLACKWELL
From Tuesday's Globe and Mail
Rogers Cable Inc. may offer local telephone service to its clients as early as 2005, chief executive officer Edward Rogers said yesterday.
While the company has yet to develop an exact plan for how and when it will roll out the service, “we're working toward 2005 for getting some sort of product in the market,” Mr. Rogers said in an interview.
Cable firms such as Rogers already compete with the big telephone companies in television distribution and Internet connections, but the missing product in their competitive lineups is local home telephone service.
Some cable firms, mainly in the United States, are in the local phone business using what is known as circuit-switch technology. Most competitors, however, are waiting for technical leaps in what is known as Internet protocol, or IP telephony, a more advanced system that uses the Internet.
Rogers is in that group, and “2005 seems to be the timing for rolling out an IP-based telephony service,” Mr. Rogers said.
As important as the technological advances, he said, is that local telephone service makes financial sense for his company. “We'll only get into the business if we can demonstrate a good return on the investment that we're going to make.”
Rogers Communications Inc., the parent of Rogers Cable, has some advantages because it already has a huge infrastructure that serves 3.5 million Rogers AT&T Wireless cellular phone customers, Mr. Rogers said. That arm could help run back-office functions such as billing.
Rogers Cable is engaged in discussions with the federal government about the rules that will govern local phone competitors, Mr. Rogers said. Still to be worked out are issues such as how much it will cost to interconnect with the existing phone companies' systems, and what rules will govern Bell Canada's efforts to try to keep its customers.
Still, Mr. Rogers said, the Canadian Radio-television and Telecommunications Commission “would very much like there to be local choice for Canadians, and we think the cable companies can offer that choice. But we're still working to get the model right.”
Of more immediate concern to Rogers in its continuing battle with the phone companies is Bell Canada's recently introduced new pricing strategy. Bell has decided to give substantial discounts to customers who buy combinations of Internet, cellular phone and satellite television services.
Several analysts issued reports last week suggesting the new “bundles” could dent revenue and profits at cable companies, particularly at Rogers Cable.
Merrill Lynch Canada Inc. analyst Glen Campbell, for example, lowered his call on Rogers Communications to “neutral” from “buy” because Bell's “aggressive” bundles “will reverse the price advantage that cable has enjoyed over satellite TV for the past two quarters.”
Mr. Rogers dismissed that view as a “simplistic comment” that doesn't take into account the complex nature of pricing cable services, and the value associated with various cable packages.
And he said the analysts have “overestimated the impact of the [Bell]
bundles.”
In recent months the pricing of cable television, high-speed Internet services and wireless telephony has become more “rational,” with less deep discounting, he said, “and we're confident that overall [rational] pricing will maintain itself.”
Mr. Rogers said Bell was essentially reacting to Rogers' own pricing policies, which have offered various forms of bundling for almost five years.
Still, Rogers is taking “a good and more thorough look” at Bell's bundles to see “if we need to adapt any of our existing bundles,” he said.
“If there is a gap in the price point for any product, irrespective of bundles, we'll match that price point.”
Mr. Rogers is the son of Rogers Communications president and CEO Ted Rogers. There has been much speculation about his future role in the company, and whether he will one day run the parent organization.
Yesterday he would say only that “my aspirations right now are to do a good job at Rogers Cable,” where he has been CEO for only a few months.
He would not speculate on management changes when his father, 70, retires. “My father is a young man and looks forward to many years of active engagement,” he said. “The senior leadership of the company right now works very well as a team — I think better than it has for a long time.” |
