As U.S. cable operators prepare to expand into the mobile TV business, they can look north for some inspiration for the potential of the quad play. Canada’s largest cable operator, Rogers Communications, was an early player in the wireless sector and is now the market’s largest wireless carrier.
Bundled services have helped Rogers maintain its status as Canada’s largest MSO, despite intense competition from Bell Canada, the market’s incumbent telco, Canada’s largest broadband provider and the owner of the satellite service that is the market’s third largest video provider.
At this year’s CTAM Summit, Rogers’ chief strategy officer Mike Lee, who is serving as the conference's co-chair, will talk about that competition and the company’s bundling strategy at a Monday panel session devoted to the triple- and quad-play bundles. He recently spoke to Multichannel News contributor George Winslow about Rogers’ success with the quad play and how he sees those bundles developing in the future. An edited transcript follows:
MCN: The Canadian market has seen a lot of consolidation in the last few years. Can you describe the competitive landscape?
Mike Lee: Canada has been slightly ahead of the U.S. market in terms of consolidation and we have a very competitive environment.
Our direct competitor Bell Canada is not only the incumbent telephone company and a very large ISP and a very very able competitor in wireless, they also own the third largest television provider in the country with the satellite offering they have under the Bell TV brand. Rogers Cable has 2.3 million subscribers and I think Bell is around 1.8 million subscribers for their satellite offering.
So for quite a while now, even before we became a full quad play provider, our direct competitor had a full TV offering they could go to market with.
MCN: How has your quad play developed?
ML: Most of the time when you see a company offering wireless in addition to the triple play it is coming from a telco. But we are a cable company that had wireless because that is where we thought the business was going quite few years ago.
Our offering is very simple. In the cable territories, we offer two ways for customer to take advantage of a multiproduct offering from Rogers. If you are moving into a territory or switching from a competitor, there is a single price point for three products: voice, data and video.
You can also opt to take one, two, three or four products. As you take more products, you get a better discount to reward you for your loyalty and for the business that you are doing with Rogers. If you take two products, then you get a 5% discount. If you take 3 products it is 10% and 4 products you get to a 15% discount.
It really does communicate to the customer that the more business you do with Rogers, the more we value that business and that is reflected in the pricing we offer.
MCN: How have those bundles performed?
ML: We definitely see lower churn when consumers take more products. The general rule of bundling seems to be that you get churn reduction.
The second thing we see is that within our cable territories — where we have more products — is that we index much higher in our market share for wireless among the wireless companies.
Generally with our multiproduct offerings, our two-product bundle is in some 60% of our base. With the three-product bundle we are getting 20-plus penetration. It has been quite effective and we are quite happy with that.
MCN: How do you see quad plays evolving in the future?
ML: I think you will see two flavors of platform development.
First, we will see the extension of features beyond just the product a consumer currently buyers. Caller I.D. on TV is a classic example of what I mean. We’ve always had call I.D. as a feature on the phone, but now it is moving over to the TV.
The second type of platform or product integration that will occur is services that are agnostic to the network. In other words, products that are currently being offering in a wired environment with both wired and wireless. A simple example of that is the BlackBerry. It is all about e-mail, which was traditionally a wired offering and now is also a wireless feature.
Another example is a product we offer under the Fido brand and our fixed mobile convergence offering. It allows a wireless customer to take a call on their wireless phone. Then as they get back into the house, we will move the call from the cellular network over to the wireline network and provide them with a better quality connection.
MCN: You also own broadcast stations and cable networks. What kind of opportunities do you see in making content available on multiple devices?
ML: We’ve done a couple of things in that area.
For example, with the World Cup, Rogers was the rights holder for broadcast, VOD, wireless, and broadband. It meant we could go out and tell Rogers customers we would offer them the most complete World Cup experience. Whether it was an SMS notification of your favorite team’s goal, or whether your wanted to watch replay of your team on VOD or updates and clips on broadband or whether you wanted to watch it on TV, you could come to Rogers as a service provider.
It was a competitive differentiator and allowed us to generate a very positive consumer experience, as well as revenue. As we go forward, we’ll see more of those kinds of product offerings.
MCN: What services have the most potential for generating more revenue from your bundles above and beyond just convincing people to take all four services?
ML: I think we have still a lot of opportunity in just selling more products to our existing subscribers and making sure we get in front of them with good value offerings to demonstrate.
I think when we look at new offerings in the future, we are moving from a environment where everyone was looking for next home run, to one where what we are really focused on singles and doubles. It will be an environment where you have to offer our existing subscribers small features and enhancements, be it call features or enhancements like security to broadband access.
Beyond that, the cross platform stuff is still in its infancy and it is difficult to predict what features will be the most interest to consumers.
MCN: What do you think American operators can learn from Rogers’ strategies for bundling triple and quad plays?
ML: Simplify the offering. Simplicity is what really resonates with consumers. We went through a period where we started creating more complex bundles. That not only created confusion with customers. It also created operational difficulties for the call centers and our marketing folks and everyone down the line and they did not work very well.
The other important thing is to focus on what your customers are looking for and what is important for their day to day lives. Wireless is obviously going to be part of that story and that is why we believe the quad play is really important.
At a Glance:
Revenue (2007): $8.3 billion
Basic cable subscribers: 2.3 million
Digital cable subscribers: 1.5 million
High speed data subscribers: 1.6 million
Cable telephony subscriber lines: 800,000
Circuit-switched subscriber lines: 255,000
Mobile subscribers: 7.7 million
Source: Multichannel News from company data. Revenue and subscriber information as of Sept. 30, 2008. Revenue has been converted from Canadian dollars to U.S. dollars.