Rogers boss defends big spending on spectrum

Rogers Communications Inc.’s CEO on Tuesday said his competitors underestimate the value of wireless spectrum — something Rogers spent multiple times more money on than any other company in this year’s 700 MHz auction — though he added his company has some “dreadful” customer service that needs to be improved upon. Guy Laurence said during the BMO Media and Telecom Conference in Toronto that his company spent almost $3.3 billion in that auction, while other companies failed to appreciate how valuable such assets will become. "We have a real fundamental belief that consumers and business will watch a lot more video on wireless," he said. "You need bandwidth for that, and for that you need spectrum." Laurence said the paired A and B blocks Rogers purchased in the 700 MHz auction is a "two-lane freeway" that gives customers better speed and better performance. "We bought it because we fundamentally believe in content consumption on mobile," he said. "We bought it because it's a 20-year bet. You can't go back afterwards and realize you made a mistake. The history of the consumption of Internet is that it goes ." Telus Corp.’s chief executive also touted the value of spectrum as vehicle for growing the industry. “We have a big appetite for spectrum; there's not a substantial wireless player on the planet that doesn't have an appetite for spectrum,” said Joe Natale. “The consumption of bandwidth is exceeding all expectations. The device in our pockets isn't a phone any more; it's become … the remote control for our lives.” BCE Inc. CEO George Cope said his company will use spectrum aggregation technologies to bring together its AWS and 700 MHz spectrum, increasing speeds for end users with compatible LTE-enabled handsets. "If you look at the model for the industry in 2015 and 2016, the ability to aggregate spectrum is really important," he said. The upcoming AWS-3 auction, Cope said, is "not really an auction," because of the large set-aside for smaller carriers, and he said the spectrum itself seemed to be "coming to the market early" because technology that takes advantage of it is at least three years away. Natale said the upcoming 2500 MHz auction will be an opportunity for Telus, as auction rules meant to prevent spectrum accumulation bar Rogers and Bell from bidding in many cities. "It's one of the most important assets we can possibly acquire for the future of our wireless business," he said. All three CEOs made reference to improving customer service. Natale said his company's wireless churn rate of 0.9 per cent, best among the big three, comes from five years of work on a corporate philosophy that puts consumers first. "Now that the others are taking a page from our playbook, the onus is on us to take this from the good things that we're doing today to the even greater things that we have on the table and in the laboratory around customer service, loyalty and retention," he said. Laurence admitted his company had a poor track record of customer service, yet did not shrink from criticizing his competitors. “Our customer care is dreadful; we're going to fix that,” he said. “Customer care in the industry is dreadful, by the way, despite what Telus said.” As part of the Rogers corporate overhaul announced in May, Laurence continued, he eliminated 15 per cent of the management at Rogers over the summer to bring him and the other executives closer to the customer. “Between me and the front line, we had 10 layers; that's more than the Catholic Church has,” he said. “We're now down to seven. We've taken out three layers of management across all the companies.” Natale said one way for the industry to pull itself out of the "regulatory penalty box" is to focus on improving customer service overall. "That's something we recognized a long time ago, and I think for that reason we've got a very good relationship with regulators," he said. Cope and Natale responded to questions about government regulation by emphasizing their willingness to cooperate with the government. “We're just going to keep reacting to these issues rather than spending a lot of energy trying to change them because that's not going to unfold,” said Cope. “We'll just have to compete in the market with whatever structure we're given.” The government has long pursued a fourth carrier in each region, something all three CEOs said is already in place. “We can't control the regulatory market,” said Natale. “We can't control how a fourth player emerges. Laurence, who has previously head of Vodafone Group PLC’s division in the United Kingdom, told the audience that the wireless network in Canada is the envy of the world “When you're talking about running fibre for 5,000 kilometres or more, there are huge costs to building networks in any country, but especially in Canada,” he said. “The question is, do you want to weaken those players that are investing that money by having too much competition?” Laurence warned that overbearing regulation could ruin an otherwise healthy infrastructure ecosystem. “It is a very brave government that starts to tinker with the industry and puts that at jeopardy when you've got a very large geographic map,” he said. “At the moment, Canada has great networks that are well run and well managed and has helped our economy to grow. Why would you further play with that market?” —With reporting by Peter Henderson at phenderson@thewirereport.ca and editing by Derek Abma at dabma@thewirereport.ca

Rogers boss defends big spending on spectrum

News | 09/10/2014 1:39 am EDT

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