News

Rogers Leads North American Charge

12/03/2000 7:00 PM Eastern

The dream of AT&T Corp. chairman Michael Armstrong to bundle telephony and cable services may have been quashed, as the company separates out its various businesses, but a similar kind of vision is being realized in a very large way north of the border by one of Armstrong's great supporters, Edward "Ted" Rogers.

The president and CEO of Canada's Rogers Communications Inc. is now in the process of integrating the sales of his many properties. They include not only Canada's largest MSO, with a customer base of 2.2 million, but magazines, broadcast stations and satellite-delivered networks. What's more, there's Canada's largest wireless phone service, with 2.6 million customers; 250 video stores and high-speed Internet access via the Excite@Home joint venture, Rogers@Home, with 300,000 subscribers. Rogers also has just added a long distance phone offering, and coming soon: local Internet Protocol-based telephony.

Nobody will be surprised if his acquisition-in-the-making, ownership of the Toronto Blue Jays baseball club, eventually gets bundled in some way as well. (Special ticket discounts for Internet subscribers, per chance?)

This comes from a company run by a man who's now 67, with only one working eye, three surgeries-involving a quadruple bypass and aneurysms-and no apparent interest in discussing the word "retirement."

"Retirement?" he scoffs. "We're going to re-pot. You just change what you do. I think it's good to move toward that. And we already are. I'm spending more time on relationships and deals."

A glance through press reports over the recent months gives plenty of indications of exactly what kinds of deals Rogers is spending time on. The large media company CanWest Global Communications, the
Toronto Star
, the Toronto Raptors National Basketball Association team, complete takeover of the partially-owned channel Sports- Net and the Maple Leafs hockey team are just a sampling of what's mentioned. And he doesn't deny any of them.

"I've always been known for making cold calls," Rogers responds. "I've put my feet up and chatted with all of them about joint ventures, but we don't have any negotiations going on right now."

CSR COOPERATION

As for the "relationships" he says he's working on, some of that involves getting the various executives of his divisions to cross-pollinate their sales efforts.

"AT&T has a separate bill for cable, wireless, long distance. There's no common billing system," Rogers says. "Whereas in our case, we've spent $200 million [Canadian] on a billing system for wireless, and we're now using it as the base to move our other products on the system."

November saw the start of that, as cable customer service representatives (CSRs) started to see information about the wireless charges for cable customers on their computer screens. A similar change will happen next February with the wireless CSRs, allowing them to help sell each other's products. "We'll be able to put out one bill for cable and wireless products," Rogers says. "I suspect that's the first in North America." Eventually, paging service charges will be added as well.

Already, Rogers is giving so-called "VIP" customers 10-percent discounts on their cable bill, Rogers Video rentals and purchases, Rogers AT&T wireless services, Rogers @Home Internet service and RadioShack brand merchandise.

"We find that the [wireless phone] churn rate for those customers is less than half of the normal wireless churn rate. That's worth a fortune," he said.

Rogers also began offering magazine subscriptions to the VIPs at discounted rates about a year ago. The magazine subscriptions never expire; instead subscribers are billed monthly. That offer may roll out to wireless customers as well.

"The publishing company spends 80 percent of their [circulation] revenue on acquiring the customers and renewing them," Rogers says. "You know, you get those damned letters about renewals-and postcards and phone calls. It's expensive and pisses off the customers. What we're focusing on is making life simpler for the customers-to surprise and delight them."

In a similar way, he's empowered clerks in his 250 video stores to sell wireless products with proper software and expertise.

For Rogers, change can't happen quick enough.

"Ted has a tendency that once he has an idea made up in his mind, he can't see why it can't instantly happen," relates Nick Hamilton-Piercy, the longtime vice president and chief technology officer for Rogers Cable Inc. "He'll say, 'How about next week? 'And we'll say, 'Next year, Ted.'"

"The secret for us is we're just 'up and at 'em,'" says Rogers. "We go into these things and don't spend a lot of time planning. Our idea of planning is to get into the field and do it."

PAST INNOVATIONS

Past manifestations of that occurred when Rogers' engineering team invented the concept of fiber ring plant architecture, according to Dick Green, president and CEO of Cable Television Laboratories Inc. Another leader-of-the-pack event occurred several Western Shows ago, in the early 1990s, when Rogers

Cable dropped word that it had deployed cable modems-at a time when CableLabs' executive committee was just announcing that it had decided to develop a standard for modem interoperability.

It can well be said that the Canadian cable industry as a whole is at the forefront in North America with digital technology and new revenue streams such as ISP service. "Rogers, together with [the MSO Shaw Communications Inc.], have really led the pack in the launch of Internet services. They have penetration rates miles ahead of any U.S. cable operator-13 to 15 percent of all their customers," says John Grundy, a telecommunications analyst at Yorktown Securities in Toronto.

Jim Shaw, CEO of Shaw Communications, explains that part of the reason that Canadian MSOs have made so much headway over many U.S. operators is because the Canadian government gave systems incentives to upgrade their infrastructure, at a time when many U.S. MSOs were busy acquiring more systems.

Clearly one of the big motivators for Rogers is a desire to beat Canada's monolithic Bell Canada Enterprises at its own game. "Rogers is the only cable player competing with the telcos for wireless," says Janet Yale, president and CEO of the Canadian Cable Television Association. "They got in in the early days of cellular, and they were pioneers in the long distance business [when Rogers was] a minority partner in Unitel, which is now AT&T Canada."

Today, Rogers is partnered with AT&T Canada and British Telecommunications plc in its wireless phone company, Rogers AT&T Wireless. A few weeks ago the company started offering long distance by reselling AT&T. "If you buy Rogers @Home," Rogers explained, "it's $39.95 [Canadian]. But we give you 125 long distance minutes for $5 a month. We're just starting it." That concept is in response to a new Bell Canada offer coupling long distance discounts with Digital Subscriber Line service. "They're going to wish they didn't get out of bed," quips Rogers.

Rogers is eyeing Bell Canada on another front as well. The telco is now seeking approval from the Canadian

Radio-television and Telecommunications Commission regulatory body on its deal to acquire CTV, the large commercial program network, which owns stakes in 11 specialty channels. BCE competes with cable through its direct-broadcast satellite service ExpressVu. And the cable industry argues that if the deal is approved, the CRTC needs to change rules that have restricted MSOs from owning more than 20 percent of analog specialty channels.

"It would be an absolute outrage if Bell was allowed to own specialty channels and Rogers was not allowed to own them," said Rogers. "But we think common sense will prevail."

SOME WOES @HOME

His @Home customers have been hoping common sense will prevail at Rogers for quite some time. Chris Weisdorf, president and technical director of a consumer group called Rogers @Home Users Association reports that there have been a massive amount of mail server problems, and often a hold time of 45 minutes on the customer support phone lines. Weisdorf explains that the problem largely is because Rogers@Home's provisioning is done at Excite@Home's facilities in Redwood City, Calif. "They're superior in many ways to their DSL counterparts in Canada, but that doesn't excuse them from the major problems we've been seeing."

The financial community is certainly taking note of the @Home problem in rating Rogers after its recent third-quarter report. Yorktown's Grundy says, "The telcos have been asleep for quite some time in terms of marketing Internet services. But they're now awake and capturing as much as half of all the new high-speed Internet customers."

Relief, however, is apparently on its way, as Rogers says that he plans to offer IP telephony as soon as DOCSIS 1.1 cable modems are approved by CableLabs. And when that occurs, it only makes sense for Rogers to start doing its own provisioning in Canada, he says. "I'm on CableLabs' executive committee for that, and I'm sure it will be certified in 2001," Rogers adds.

In the meantime, there's plenty else to do. Rogers Cable just started offering WebTV-thanks to a Rogers investor, Microsoft Corp.-and much more sophisticated forms of interactive TV, including VOD, will roll out next year.

Not even losing the bidding war for Canada's large MSO, Le Groupe Vidéotron Ltée, a few months ago seemed to slow Rogers down. Shaw explains it with a story: Recently Rogers flew to Shaw's home base, Calgary, to close a system swap transaction. "He came in for that, but he didn't need to. My father [J.R. Shaw] was getting an award from the broadcasters that night, and Ted said he wouldn't miss that. He didn't stay for the speeches because he had to fly to New York to give a speech in the morning. Two weeks ago he flew down for a dinner for Mike Armstrong, and he told Mike, 'I want to come down and show you my support and thank you for being my friend.'"

"He's very committed to traditional values," Shaw adds. "It's based on family and friends."

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