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Rogers Communications (NASDAQ: ROG) is one of Canada's largest communications companies. Their products include: wireless communications, cable television, and home phone and Internet. Rogers is currently headquartered in the Rogers Building in Toronto, Canada.

Rogers Communications is currently Canada's #1 mobile phone carrier, with about 9 million subscribers across the country [1]. Rogers Cable, a subsidiary of Rogers Communications, is also #1 cable TV provider in Canada with around 3.5 million subscriptions. The cable subsidiary oversees all of Rogers Internet, landline telephone, and cable TV services. Rogers Media is the company's broadcasting and publishing subsidiary. Rogers Media holds a controlling interest in the Toronto Blue Jays Baseball organization and the Rogers Centre sports complex. Rogers Communications and all of the subsidiaries are owned by the family of the founder, Ted Rogers.

Business Overview

Rogers Communications Inc.

Rogers Communications Inc. is a Canadian communications and media company. They are primarily engaged in three businesses: Rogers Cable and Telecom, Rogers Wireless, and Rogers Media. Rogers Cable and Telecom is the largest internet, phone, and cable TV provider in the country. Rogers Wireless is Canada's largest wireless communications provider, and Rogers Media is the premier leader in media assets. Rogers Media is a collection of businesses in radio and television broadcasting, televised shopping, publishing and sports entertainment.

Rogers Cable and Telecom

Rogers Telecom is a very competitive and successful Cable company in Canada. 90% of their customers are located in Ontario, New Brunswick, Newfoundland, and Labrador. Their digital cable service provides high-definition television and video-on-demand services. Rogers Hi-Speed Internet, co-marketed with [Yahoo.com Yahoo!], provides subscribers with broadband internet services.

Rogers Telecom is a very competitive telephone carrier in Canada. With the acquisition of Call-Net, Rogers Telecom has been very successful in the lucrative home and business telephone market. As of 2007, Rogers Telecom has been fit in with the Rogers Cable business unit.

Rogers Wireless

Rogers Wireless is Canada's largest wireless communications provider. Under the Rogers, Fido, and Chatr brand names, Rogers Wireless has amassed about 9 million subscribers across the country.

Rogers Media

Rogers Media is one of Canada's largest publishing and broadcasting companies; containing more than 70 consumer and business publications, 51 radio stations, Sportsnet, OLN, G4 Tech, The Shopping Channel, and City TV.

Sports

Rogers Media operates the Toronto Blue Jays baseball team through the Rogers Centre. Rogers also owns the naming rights to the Vancouver Canucks arena, the Rogers Arena. Through Rogers Sportsnet, Rogers Media holds a 50% interest in Dome Productions, a mobile distribution which provides high definition television and broadcasting in Canada.

HAHAHHAA!

Industry Overview

The Canadian cellular services industry is comprised of approximately 15 cellular providers. These operators employ approximately 16,000 individuals [2] and generate more than CAN$10B in revenues annually, which represents almost 30 percent of the Canadian telecommunications market [3]. According to IDC, the Canadian wireless industry has been experiencing an annual growth rate three times that of any other Canadian telecommunications sector. This is very significant as Canada is in the top 10% in the world for broadband penetration.

Trends

Cellular Infrastructure

Spending in developed and mature markets of North America, Western Europe and parts of Asia Pacific will come from the evolution to 3G to support enhanced mobile data services. Emerging markets will represent the majority of the worldwide subscriber growth. Canadian companies hold the number two position in Code Division Multiple Access (CDMA) infrastructure sales and number three in Gigabit Ethernet switching equipment [4].

Cellular Devices

Research in Motion (RIM) has attained the largest market share of the worldwide PDA market in 2005, based on worldwide markets. Sales of cellular devices and smart-phones will continue to grow in developed and maturing markets. The fight for smartphone market share has intensified largely in the last few years. The biggest players being Apple, Android, RIM, and Windows Phone. With the growth seen in developing nations, cheaper handsets will become more popular as well.

Financial and Operating Metrics

  • Wireless communications generate a total economic value of some $39 billion for the Canadian economy.
  • Canada's wireless carriers invest more than $1 billion in mobile phone communications infrastructure each year.
  • At the end of December 2010, Canadian wireless phone subscribers numbered 24.5 million.
  • Wireless revenues in Canada totalled $16.9 billion in 2009[5].
  • Wireless market sector revenues are the largest component (41%) of total telecommunications revenues.

Wireless Provider Revenue Market Share

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Competitors

Bell Canada Enterprises (BCE)

Bell Canada has been in the wireless business for many years serving customers across Canada as Bell Mobility. Bell Canada has been a leader in all of the industries it is involved in, and with wireless telephony it is no different. As time progressed, other competitors entered the wireless business, and with that Bell Mobility lost a vast majority of its share. Once the leader in the wireless market, it now sits back and watches Rogers Wireless tear away at its subscriber base. Apart from falling as market leader, Bell has continued to be the premier wireless company that employs the CDMA wireless technology. To compete with Rogers, it has strategic alliances with companies such as Samsung and Microsoft, so Bell will continue to combat Rogers in regards to exclusive handhelds.

Bell provides a satellite TV service called Bell ExpressVu that directly competes with Rogers Cable. Bell markets their satellite TV service as a provider who gives customers more HD shows and movies. Rogers Cable combats Bell by saying cable will never cut out in bad weather as satellite TV tends to do. Bell is currently the leading satellite provider in Canada with 1.8 million subscribers [6]. Currently, Rogers Cable and Telecom has attracted much more subscribers, reaching 3.5 million subscriptions[7].

TELUS Corporation

TELUS is one of Canada’s leading telecommunications companies. The revenue of the company is generated mostly through residential and corporate phone service. Telus has also announced plans to deploy an LTE network early in 2012; aiming to take more market share from Rogers and Bell. Construction is planned to begin in major urban markets in the second half of 2011.

Porter's 5-Forces Model

Bargaining Power of Customer's

In the wireless communications industry, as well as the cable and telecom industry, customers have choices in who they wish to subscribe with. Providers have competed on price in the history of the telecommunications industry, but with new technologies available, companies are trying to differentiate their products. The cable and satellite industry have recently been fighting for HD broadcasting dominance over one another, both claiming to provide more HD channels. The wireless communications industry has also tried to differentiate themselves through strengthening their networks and acquiring exclusive rights to handheld devices high in demand. Overall, there are many television and wireless providers customers can choose to go with, providing customers with a mid to high range of buying power.

Bargaining Power of Supplier's

The wireless Industry fights very hard to get exclusive deals with certain wireless handsets. Wireless companies can acquire more customers based on having the newest and most advanced phones available. It is up to the supplier of the handset to which wireless provider they will make a deal with. The suppliers does have some power in this industry, but overall, all providers get most cellular devices that are currently available.

Threat of New Entrants

It comes as no surprise that in the capital-intensive telecom industry, the biggest barrier to entry is access to finance. To cover high fixed costs, serious contenders typically require a lot of cash. When financing opportunities are less readily available, the pace of entry slows. Meanwhile, ownership of a telecom license can represent a huge barrier to entry. In the U.S., for instance, new telecom operators must still apply to the Federal Communications Commission (FCC) to receive approval and licensing. There is also a finite amount of "good" radio spectrum that lends itself to mobile voice and data applications. In addition, it is important to remember that solid operating skills and management experience is fairly scarce, making entry even more difficult.

Threat of Substitutes

Cable TV and satellite operators now compete for buyers. They try to differentiate from each other by offering the same service in competing and different ways. Satellite providers compete based on the fact satellite channels are 100 percent digital quality and offer better reception across the channel lineup than cable[8]. Cable companies say satellite reception is far more dependent upon weather than cable, and thus, cable is more efficient, especially in volatile climates. Cable companies, with their own direct lines into homes, offer broadband internet services, and satellite links can be substituted for high-speed networking needs.

There are many wireless providers available to consumers. Most providers offer relatively the same plans for customers as well. Unless a particular service has an exclusive agreement for a particular phone, the threat of substitutes is high in both the cable provider and wireless communications industries.

Rivalry Amongst Competitors

Competition is fierce; "cut throat". New technology is prompting a raft of substitute services. Nearly everybody already pays for phone services, so all competitors now must lure customers with lower prices and more exciting services. This tends to drive industry profitability down. In addition to low profits, the telecom industry suffers from high exit barriers, mainly due to its specialized equipment. Networks and billing systems cannot really be used for much else, and their swift obsolescence makes liquidation pretty difficult.

SWOT Analysis

Strengths

Rogers Communications is currently the only true national GSM cellular provider. It is the international standard and is best suited for international roaming [9]. For anyone looking to travel, GSM reaches a lot more users, servicing about 1 billion. GSM also allows users to browse the internet while they are calling someone.

Weaknesses

Canadian wireless rates are among the highest in the world. In a bid to improve service and prices through competition, the Canadian federal government has licensed four new operators. Rogers is also feeling the brunt of the slowness in the economy. The general softness in the Canadian and the Ontario economy has negatively impacted Media’s advertising sales, and lowered net additions of most cable and Internet products. Rogers Shopping Network has also been in a constant decline based on the current recession.

Opportunities

If Rogers decided to follow suit of the American carriers and offer unlimited plans, they could potentially gain large market share. New technologies, such as LTE, Rogers could capitalize on the emerging "4g" market and be in control of the fastest market in Canada. The graph below shows a comparison of 4g and 3g.

Threats

Wireless Providers in Canada, as of today, do not offer any unlimited plans. If a new company decided to move into the Canadian Wireless Market and offer Unlimited Plans, subscribers may switch to the new provider. If the Canadian companies also chose to switch to unlimited plans, the increase in mobile traffic would be transferred to them. With the increased traffic, wireless providers would also have to strengthen their networks to handle the increase[10]. To combat this, Rogers executives have come out and said their strategy is to gradually introduce pricing plans for data applications such as wireless email, music downloads and Web browsing only as they are needed [11]. The current market recession is also a threat to the company. For families going through tough financial times, they may switch to a cheaper carrier or even cancel if they have multiple lines. There is fierce competition in the wireless and cable industries as well, where all companies are constantly competing for more market share. The regulatory authority of Canada has proposed the imposition of a TV-tax which may increase the monthly bill of cable TV subscribers to a large extent. This may result in a significant drop in the number of cable TV customers and impact the entire broadcasting industry[12].

Marketing Strategies

Price

Canadian Cellular Services are some of the highest in the world. There are no unlimited plans, as the United States has, and there is no speculation that they will come anytime soon. It is the lack of wireless competition that, as now RIM and Google both note, leads to pricing that places Canadians at a significant disadvantage compared with other developed countries [13].

Promotion

All providers routinely advertise online, on television, and through the mail. Companies fight hard to get their name out to consumers, be it Rogers Arena or Bell Centre. Wireless and television services also go after each other, noting that their service is better in comparison to their competitors. Facebook and Twitter are also used to create hype over new products and services.

Product

Satellite and cable services compete with one another for market share. Either a direct cable connection for hi-speed internet, television, and home phone is supplied, or consumers may choose to have a hook-up through a satellite dish and receiver. There is short-comings and strengths for each product, and depending on your living situation, there is no simple answer to which is a superior product.

The wireless communications industry is pretty consistent across providers. Most services provide the same types of phone and very similar signal strength. The way wireless companies look to compete with each other is by acquiring exclusive agreements with the most attractive cellular devices. Recently there has been many innovations in wireless technology. The new LTE network, which promises the next generation of mobile download speed, is a way companies are differentiating themselves. Wireless providers are also strengthening their infrastructure constantly every year. Telus investing into Alberta’s infrastructure, following up on last year’s $700 million investment with another $650 million in 2010 [14].

Place

Locations of providers are in every city across Canada. Companies such as Best Buy and Futureshop also have set up places inside their stores where you can purchase cellular plans, phones, satellite dishes, and cable boxes. Almost every mall has a kiosk or store set up to give consumers the availability to walk-in any day of the week. All the service providers also have large customer support centers set up to help customers with any need. Television and Satellite businesses have support centers set up in many cities as well, allowing them to drive directly to consumers homes to provide support.

Corporate Governance

Alan D. Horn, C.A.

  • Chairman and Acting Chief Executive Officer

Philip B. Lind, C.M.

  • Vice Chairman

William W. Linton, C.A.

  • Senior Vice President, Finance and Chief Financial Officer Rogers Communications Inc.

Nadir Mohamed, CA

  • President and Chief Operating Officer, Communications Group, Rogers Communications Inc.

Ronan D. McGrath, CA

  • President, Rogers Shared Operations and Chief Information Officer

Anthony P. Viner

  • President and CEO, Rogers Media Inc.

M. Lorraine Daly

  • Vice President, Treasurer

Kenneth G. Engelhart

  • Vice President, Regulatory

John G. Gossling, CA

  • Vice President, Financial Operations

Jan L. Innes

  • Vice President, Communications

Bruce Mann, CPA

  • Vice President, Investor Relations

Graeme H. McPhail

  • Vice President, Associate General Counsel

David P. Miller

  • Senior Vice President, General Counsel and Secretary

Kevin P. Pennington

  • Senior Vice President, Chief Human Resources Officer

Melinda M. Rogers

  • Senior Vice President, Strategy and Development

David J. Watt

  • Vice President, Business Economics

References

  1. Yahoo!
  2. CWTA, Direct Employment of Cellular/PCS Providers in Canada
  3. IDC, Wireless Wars 2: Canadian Wireless Forecast and Analysis, 2005–2009
  4. Dell'Oro Group: Mobility Infrastructure Market Revenues Climb 29% in 2004
  5. CWTA
  6. Lounge0101
  7. Yahoo!
  8. MoveUtilities.com
  9. CelluTIPS
  10. The Star
  11. The Star
  12. MSN Money
  13. MichaelGeist.ca
  14. Telecom Blog

1. Yahoo Finance

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