Rogers evaluating further basic cable rate deregulation; Shaw rejects the approach

Following recent applications to the CRTC for deregulation of basic cable in its Ottawa and London cable systems, Rogers Cable Inc. will soon decide whether it will be beneficial to proceed with further applications. But as Rogers considers applying for rate deregulation in more markets, Canada’s second-largest cable operator is rejecting the approach outright. Shaw Communications Inc. president Peter Bissonnette says his company has no plans to duplicate Rogers’ strategy. "We don’t believe in putting a target on a city that says we’re not doing well because satellite or whoever – the competitors – are taking our lunch," Bissonnette tells CCR. "It’s basically a bull’s eye, so we’re not planning on doing anything like that. What would we do? So we’d raise our rates and become less competitive. There’s lots of flexibility (in pricing) within the tiers and discretionary services." Basic rate deregulation is granted when cablecos can demonstrate that they have lost five per cent of their customer base. With deregulation cablecos can increase basic service rates without CRTC approval. Currently, rate increases require the commission’s okay, but decreases can be implemented without commission involvement. In a Nov. 14 letter to the CRTC, Rogers says it lost 8.8 per cent or 21,201 customers in Ottawa and surrounding area between September 1997 and August 2000, and 11.9 per cent or 14,566 in London and surrounding area in the same period. "As we go through this process (of verifying more than a five per cent subscriber loss) to see if our systems qualify for rate deregulation, then we look at the timing…Once we find we’re in a position to deregulate, it has to make sense," Pamela Dinsmore, Rogers’ VP of regulatory, tells CCR. "We may decide to go ahead, we may hold off, or we may decide to proceed in batches that make sense." Despite the deregulation applications, Rogers is downplaying the fact that its second-largest market – Ottawa with 249,000 customers – and London have taken a subscriber hit from the introduction of competitive providers. Rogers spokesperson Taanta Gupta says the "deregulation test should not be interpreted in the same way as we report numbers." The test, she explains, takes a customer base at one point in time and sees if those same customers are still around at another point in time. "The test doesn’t take into account new customers in new subdivisions as an example," she notes. And for the purposes of the test, if an address hasn’t had cable service for 30 days it is considered a lost subscriber, according to Gupta. She notes that people can move in and out of an address and take longer than that to re-subscribe to cable. Gupta says Rogers has remained "pretty neutral" with regard to its overall customer base in the Ottawa area. "Obviously, (the loss) is significant, but it’s not as significant as the test would make it appear because of the way the test is administered. Having said that, we certainly take the competition seriously," she states. Dinsmore notes that the reason for seeking basic rate deregulation in Ottawa and London is to be able to standardize basic cable prices across the operating areas of the two cities. In Ottawa, customers east of Bank Street pay a different rate than those west of it, even though both regions fall under one licence. There are two rates in London, where Rogers has two licences that it wants to amalgamate. "In Ottawa, we went to the commission a couple of years ago to try and revenue-neutralize the two rates…We wanted to bring the rates up by 25 cents on one side (of the street). However, the commission said no because it really didn’t have a mechanism to allow us to raise the rate," says Dinsmore. Dinsmore is referring to a June 5, 2000 decision in which the CRTC approved an application by Rogers to combine various cable licences in Ottawa and surrounding area into one regional licence, but denied a proposal to rebalance the rates charged to subscribers of the various systems – Decision 2000-177. Rate deregulation would give Rogers a second kick at the can, which would make marketing efforts in the city less cumbersome.Rogers’ applications for basic rate deregulation in Ottawa and London are the third and fourth such applications from the cableco. On Oct. 4, the CRTC approved rate deregulation for its St. Thomas and Woodstock ON systems, as well as the Sudbury and Timmins ON systems owned by Regional Cablesystems Inc. (CCR, Oct. 11/01). According to the CRTC’s recently released Broadcasting Policy Monitoring Report 2001, about 10 Class 1 systems appear to have lost more than five per cent of their basic subscribers between Sept. 1, 1997 and Aug. 31, 2000. That number has likely risen significantly in the past year as satellite TV operators have signed up a majority of their new subscribers from urban centres served by cablecos.

Rogers evaluating further basic cable rate deregulation; Shaw rejects the approach

Broadcast | December 6, 2001

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