Wednesday, June 29, 2005
Mr Rogers' Neighborhood - Red All Over - Including Me
How's that for a cryptic headline? Read on, and I'll explain.
Today Rogers Communications announced their much-anticipated foray into consumer telephony. Branded "Home Phone", this service will be offered July 1, and marks the true beginning of the battle of the bundle in Ontario. More on that in a moment.
Without a doubt, this offering has the least to do with VoIP of all the plans out there in Canada. "Home Phone" has no connotations about IP, or anything leading edge, for that matter. There's no mention anywhere about this being VoIP - they describe it simply as "reliable, fully featured cable telephone service". What the hell is that???? Sounds more like EastLink than something that's going to keep Bell up at night. Eastlink is Canada's original, and only cable telephony service up until the recent entries, but it's TDM, not IP.
As the press release explains, the pricing options are only for local access and features. LD is extra, and there's no bundling here with other Rogers services. Furthermore, the pricing is nothing to get excited about. It's cheaper than Shaw, but more than Videotron. So, a safe middle ground that will save consumers a little bit of money, but who is going to buy VoIP that doesn't give you some level of LD? On the other hand, you have give them credit for bringing sanity to pricing. At least they'll make money on the service, and I think they can feel safe offering this service without LD in the wake of Bell dropping their loss leader LD deal, where you get 1000 minutes for $5/mo if you take a Bell bundle. They have seen the folly of bringing the pricing bar down so low - eventually these guys have to make money, and it won't happen at $5/mo.
I digress. The real reason they're pricing and offeing it this way is to keep in line with what Sprint Canada's residential customers (Call Net)already have. Rogers made a very savvy move recently in acquiring Call Net. Not only did that bring them the required CLEC license, but it gave them an instant market of about 500,000 residential subscribers. Talk about a great way to leapfrog into the game. So, their first priority is to protect these customers, and bring them over to IP - without calling it IP. Call Net has historically been an LD provider, and Rogers has to carefully manage the transition of this business into their overall operations. As such, Home Phone is a very conservative entry, and is not ready yet to take on Bell head on. Of course, Rogers has that luxury since Bell isn't in the Ontario market yet with VoIP, but it's just a matter of time for that.
So, to my earlier comment about the battle of the bundle. For over a year now, I've been saying that in North America, Ontario is THE market to watch. First, it's a large, highly urban market with over 11 million people, which puts it on par with the majority of US states in terms of size. More importantly, the telco, Bell is the most sophisticated ILEC in North America, and in many ways is way ahead of the RBOCs. Likewise, Rogers, is the dominant MSO, and no U.S. cableco can come close their breadth of offerings. Both operators can offer the Grand Slam, and I can't think of any comparable scenario anywhere in the U.S.
So, the ingredients are all there. With all this buildup, what do we get? First, a CRTC ruling that will effectively keep Bell out of the VoIP market here for a little while. Second, Home Phone from Rogers is not what I had in mind to get this battle underway. It's not even bundled. So, they gave a war, and nobody came. Go back to your trenches, and re-tool. Looks like the battle hasn't begun yet - guess I spoke too soon - but I still stand by my thinking. This will be a great market to watch when it happens.
Now, back to the headline. Mr Rogers, of course, is Ted Rogers. This is the classic family-run cable empire, but he's turned it into something so much more that it's hard to put a label on them. That's one thing I love about Rogers, and they may be the model for the service provider of the future in an all-IP world. They have all the pieces - coax cable, high speed service, voice, LD, wireless and content.
Mr. Rogers' neighborhood can be a very nice place - unless you're Bell Canada. They are by far the dominant video provider in Ontario, and have a very strong high speed subscriber base here. The only thing they really lack is a dial up subscriber base who can be upsold to high speed. By acquiring Microcell, he's made Rogers the #1 wireless player in Canada, and with the favorable CRTC ruling, Rogers is in a great position to enter the voice market. The Call Net acquisition gives them a built-in phone market, so they don't have to buy their way in like Vonage - they become players overnight. They may be carrying a lot of debt, but I'd sure love to be their investment banker!
So what's the deal with "Red All Over"? I already explained that I'm red all over by calling the battle of the bundle too soon. Bear with me, though - it will happen.
The other red stuff is about Rogers and their timing of the announcement.
- Red is their corporate color
- Red is also the corporate color of both Sprint and Call Net. Hmm - do I see a pattern here?? Vonage Canada was smart to brand themselves orange - that would clash badly with Rogers - in the unlikely event they were to become a target! :-)
- Red is Canada's official color, and guess what's coming this weekend? Canada Day! July 1 here is comparable to July 4 in the U.S., and it doesn't hurt for Rogers emphasize this connection.
The timing of the July 1 launch also coincides with a few other things...
- That's the date the Call Net acquisition is to become official, which makes things neat and tidy, and Rogers doesn't skip a beat in making this move pay off, and re-branding Call Net under the Rogers name.
- July 1 marks the 20th anniversary of Rogers' wireless launch - and I've been a subscriber almost that long. They truly were pioneers with wireless in Canada, and now they want to do the same with cable telephony. I see the connection, but so far, they're not reinventing anything with voice.
- Today was their annual shareholder's meeting
- July 1 is Canada Day weekend, a time to celebrate big things that make us proud to be Canadian. Am not sure that this launch achieves that, but the sentimentality will probably work nicely for them.
- July 1 also marks the beginning of the second half of the year, and Rogers wants Canadians to know that when they come back from their cottages this long weekend, there will be a new kid in town, and that true telecom competition will be underway.
Small sidebar - it's also worth noting that today was Nortel's AGM here in Toronto, so Mr. Rogers sure made it hard on the media. Everyone wants to hear how Bill Owens is going to steer Nortel, but Ted must be heard too. Egos will do that I guess. Anyhow, Mark Evans provided some nice real-time Nortel coverage on his blog - worth a read. He also had some good comments about the Rogers news.
Today Rogers Communications announced their much-anticipated foray into consumer telephony. Branded "Home Phone", this service will be offered July 1, and marks the true beginning of the battle of the bundle in Ontario. More on that in a moment.
Without a doubt, this offering has the least to do with VoIP of all the plans out there in Canada. "Home Phone" has no connotations about IP, or anything leading edge, for that matter. There's no mention anywhere about this being VoIP - they describe it simply as "reliable, fully featured cable telephone service". What the hell is that???? Sounds more like EastLink than something that's going to keep Bell up at night. Eastlink is Canada's original, and only cable telephony service up until the recent entries, but it's TDM, not IP.
As the press release explains, the pricing options are only for local access and features. LD is extra, and there's no bundling here with other Rogers services. Furthermore, the pricing is nothing to get excited about. It's cheaper than Shaw, but more than Videotron. So, a safe middle ground that will save consumers a little bit of money, but who is going to buy VoIP that doesn't give you some level of LD? On the other hand, you have give them credit for bringing sanity to pricing. At least they'll make money on the service, and I think they can feel safe offering this service without LD in the wake of Bell dropping their loss leader LD deal, where you get 1000 minutes for $5/mo if you take a Bell bundle. They have seen the folly of bringing the pricing bar down so low - eventually these guys have to make money, and it won't happen at $5/mo.
I digress. The real reason they're pricing and offeing it this way is to keep in line with what Sprint Canada's residential customers (Call Net)already have. Rogers made a very savvy move recently in acquiring Call Net. Not only did that bring them the required CLEC license, but it gave them an instant market of about 500,000 residential subscribers. Talk about a great way to leapfrog into the game. So, their first priority is to protect these customers, and bring them over to IP - without calling it IP. Call Net has historically been an LD provider, and Rogers has to carefully manage the transition of this business into their overall operations. As such, Home Phone is a very conservative entry, and is not ready yet to take on Bell head on. Of course, Rogers has that luxury since Bell isn't in the Ontario market yet with VoIP, but it's just a matter of time for that.
So, to my earlier comment about the battle of the bundle. For over a year now, I've been saying that in North America, Ontario is THE market to watch. First, it's a large, highly urban market with over 11 million people, which puts it on par with the majority of US states in terms of size. More importantly, the telco, Bell is the most sophisticated ILEC in North America, and in many ways is way ahead of the RBOCs. Likewise, Rogers, is the dominant MSO, and no U.S. cableco can come close their breadth of offerings. Both operators can offer the Grand Slam, and I can't think of any comparable scenario anywhere in the U.S.
So, the ingredients are all there. With all this buildup, what do we get? First, a CRTC ruling that will effectively keep Bell out of the VoIP market here for a little while. Second, Home Phone from Rogers is not what I had in mind to get this battle underway. It's not even bundled. So, they gave a war, and nobody came. Go back to your trenches, and re-tool. Looks like the battle hasn't begun yet - guess I spoke too soon - but I still stand by my thinking. This will be a great market to watch when it happens.
Now, back to the headline. Mr Rogers, of course, is Ted Rogers. This is the classic family-run cable empire, but he's turned it into something so much more that it's hard to put a label on them. That's one thing I love about Rogers, and they may be the model for the service provider of the future in an all-IP world. They have all the pieces - coax cable, high speed service, voice, LD, wireless and content.
Mr. Rogers' neighborhood can be a very nice place - unless you're Bell Canada. They are by far the dominant video provider in Ontario, and have a very strong high speed subscriber base here. The only thing they really lack is a dial up subscriber base who can be upsold to high speed. By acquiring Microcell, he's made Rogers the #1 wireless player in Canada, and with the favorable CRTC ruling, Rogers is in a great position to enter the voice market. The Call Net acquisition gives them a built-in phone market, so they don't have to buy their way in like Vonage - they become players overnight. They may be carrying a lot of debt, but I'd sure love to be their investment banker!
So what's the deal with "Red All Over"? I already explained that I'm red all over by calling the battle of the bundle too soon. Bear with me, though - it will happen.
The other red stuff is about Rogers and their timing of the announcement.
- Red is their corporate color
- Red is also the corporate color of both Sprint and Call Net. Hmm - do I see a pattern here?? Vonage Canada was smart to brand themselves orange - that would clash badly with Rogers - in the unlikely event they were to become a target! :-)
- Red is Canada's official color, and guess what's coming this weekend? Canada Day! July 1 here is comparable to July 4 in the U.S., and it doesn't hurt for Rogers emphasize this connection.
The timing of the July 1 launch also coincides with a few other things...
- That's the date the Call Net acquisition is to become official, which makes things neat and tidy, and Rogers doesn't skip a beat in making this move pay off, and re-branding Call Net under the Rogers name.
- July 1 marks the 20th anniversary of Rogers' wireless launch - and I've been a subscriber almost that long. They truly were pioneers with wireless in Canada, and now they want to do the same with cable telephony. I see the connection, but so far, they're not reinventing anything with voice.
- Today was their annual shareholder's meeting
- July 1 is Canada Day weekend, a time to celebrate big things that make us proud to be Canadian. Am not sure that this launch achieves that, but the sentimentality will probably work nicely for them.
- July 1 also marks the beginning of the second half of the year, and Rogers wants Canadians to know that when they come back from their cottages this long weekend, there will be a new kid in town, and that true telecom competition will be underway.
Small sidebar - it's also worth noting that today was Nortel's AGM here in Toronto, so Mr. Rogers sure made it hard on the media. Everyone wants to hear how Bill Owens is going to steer Nortel, but Ted must be heard too. Egos will do that I guess. Anyhow, Mark Evans provided some nice real-time Nortel coverage on his blog - worth a read. He also had some good comments about the Rogers news.
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