Rogers’ Laurence emphasizes Internet ‘need for speed’

Rogers Communications Inc. made it clear that Internet speeds are a key focus for the company on a conference call Thursday, stating Rogers' strategy is to get consumers to a baseline 100 Mbps service in order to encourage future scaling to its gigabit service. “We need to focus on the need for speed,” Guy Laurence said in a call with analysts Thursday morning, following the release of the company’s second quarter results. “So the fact that we can offer up to one gig allows us to have multiple sales opportunities with the customer.” He said he would like to see customers who can access 100 Mbps service have that speed as their “baseline.” “And then depending on their needs — which depends on the number of people in their house, how much 4K they consume … how much content they’re consuming — they can then scale up towards 1 Gbps.” The company began making its gigabit service available late last year. Laurence added that Rogers is forecasting that in the future, there will be an average of 21 devices connected to a router, compared to 11 now. In a Thursday press release highlighting the quarter that ended June 30, the company said it continues “to see an ongoing shift in product mix to higher-margin Internet services,” with its gigabit service now available to two million homes. It added it’s on track to offer gigabit service it to its “entire cable footprint” (about four million households) by the end of the year. Rogers reported its best second quarter for Internet net additions in eight years, with 12,000 net adds, improving by 8,000 from the same quarter last year. Total Internet subscribers increased to 2,076,000 for the quarter, compared to 2,008,000 in the same quarter last year. Overall Internet revenue grew 15 per cent to $376 million from $327 million in the same quarter last year. “Why anyone would go with less than 100 Mbps of speed is just a puzzle to me,” Laurence said in the call, though later he acknowledged that “there’s a certain economic group that probably doesn’t want to stretch as far as 100 Mbps, but at least for the time being we’re seeing positive momentum.” Rogers supported a basic service of 5 Mbps download earlier this year. In comments filed with the CRTC ahead of its basic service hearing this Spring, Rogers said the evidence showed that broadband Internet service at that basic speed “enables a broad range of activities.” It added that “almost one-third of households rely on service with download speeds of less than 10 Mbps, even though higher speeds are available to 85 per cent of households.” Rogers offers two tiers above its Ignite 100 service, which includes its 250 Mbps and gigabit packages. In the second quarter, the company reported a profit of about $1.34 billion, versus about $1.33 billion for the same quarter last year. Overall revenues increased two per cent in the quarter to $3.45 billion, compared to $3.4 billion in the same quarter last year. All major segments were up, including a one-per-cent gain in wireless, three per cent in business solutions, and a six-per-cent gain in media, largely on the strength of the Raptors and the Blue Jays. Its cable segment remained stable. Laurence said the first 81 games of the Blue Jays season averaged 825,000 viewers on Sportsnet, up more than 50 per cent from last year, which “sets a record for Rogers for the first half of a season.” He added that “sports is becoming increasingly important in the media sector,” citing a recent CRTC report that showed sports made up half of Canada’s top-10-grossing specialty channels. The strength of wireless additions and Internet revenues surpassed expectations for some analysts. Canaccord Genuity’s Aravinda Galappatthige said in a research note that the postpaid net adds of 65,000 were “way ahead of our 35k estimate.” Similarly, RBC Capital Market’s Drew McReynolds had postpaid net adds at 33,000. The company added 543,000 postpaid and prepaid wireless subscribers in the quarter, compared to 467,000 for the same quarter last year, with blended monthly average revenue per user increasing slightly to $60.18, as compared to $60.01 in the second quarter of 2015. On Internet service, Galappatthige said that while he expects “video and telephony revenue declines to potentially steepen going forward,” especially considering the introduction of the CRTC’s pick-and-pay regime, “and the Ontario market is expected to remain highly competitive, we are encouraged by the strength of the product.” Subscribers on the television side dipped, with the company reporting about 1.8 million TV customers compared to about 1.9 million in the same quarter last year. Fielding a question on how Rogers’ IPTV product will affect the back-end of the year, Laurence said the product will only be rolling out “in the dying days of this year." “We’ll put it out there in the public to check to see if everything works and then we’ll scale it in 2017, so it’ll have zero impact this year and a very moderate impact in the early part of 2017.” — With reporting by Ahmad Hathout at ahathout@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Rogers’ Laurence emphasizes Internet ‘need for speed’

Broadcast | July 21, 2016

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Rogers’ Laurence emphasizes Internet ‘need for speed’

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