Rogers CEO Won’t Take “No” for an Answer

On Friday, August 23rd, telecom journalist Greg O’Brien of Cartt.ca published an interview with Nadir Mohamed, CEO of Rogers Communications titled “WIRELESS: Rogers is not taking “no” for an answer, says Mohamed. Government ignoring all outsiders.”

The topic of the interview is the now familiar debate about the fairness (or perceived lack thereof) of the government’s plans to encourage a fourth national player in the Canadian wireless market through spectrum auction rules that favour new entrants. Rogers (along with Bell and Telus) thinks the rules aren’t fair, while the Conservatives are standing behind their policy, hoping more competition will promote lower prices and better service for Canadian consumers.

While reading the interview with Rogers’ CEO, I experienced a moment of cognitive dissonance; Mohamed was quoted as saying “I still firmly believe the best answer comes from dialogue and debate and discussion, and that’s the process we’re in.” Given the title of the article, I have to wonder exactly what Mr. Mohamed’s concept of dialogue entails? Ever tried debating someone who ‘won’t take no for an answer?’ It can be a frustrating experience.

Rogers, for the record, is just as guilty as Bell when it comes to asking for favours from the government and then claiming it’s unfair when competitors get the same treatment. In 1983, the government granted Cantel (Rogers’ wireless subsidiary) a license to offer national cellular service, while delaying its competitors’ licenses until 1985. They did this intentionally to give Rogers a head start, since until that time Rogers had only been in the cable TV business, while the likes of Bell and BCTel (today Telus) already had decades of experience operating modern telecommunications networks.[1]

At the same time, the Department of Communications also forced the telcos to allow Rogers to interconnect to their existing networks.[2] Without this condition, Rogers’ cellular customers would only have been able to call other Rogers customers; might as well buy a walkie talkie. Similarly, any new company setting up shop in Canada must be allowed to connect to existing networks, otherwise their customers would lose service once they left the city limits. No one would sign up.

Rogers Wireless could never have gotten established if the government hadn’t forced its competitors to let it connect. As I’ve said before, to this day they rely on network sharing agreements (for instance it has one with MTS), but Rogers uses its existing market position to bargain for favourable terms. New companies trying to get established don’t have a market position, so they need the government’s help, just like Rogers did 30 years ago.

Today Rogers argues their competitors shouldn’t be allowed to “piggyback” on their networks – talk about kicking away the ladder!

In the interview, Rogers’ CEO makes three claims, all of which smell of bologna.

Rogers: Existing Spectrum isn’t an advantage.

First, Mohamed attempts to dispel the notion that his company’s existing spectrum holdings constitute an advantage. He points to the “exploding growth of data traffic” on their existing networks as the reason Rogers needs access to more radio waves. This claim was debunked earlier this year in a post by Michael Geist, who showed that Canadian wireless companies like Rogers are the least efficient spectrum users of 10 major countries, including the US, Britain and Japan. In other words, instead of clamouring for more spectrum, Rogers could simply use what it’s got more efficiently.

Some of the numerous frequencies Rogers already has (like 850MHz) could be repurposed to supplement their existing 4G LTE network, which currently runs on the AWS spectrum they acquired in 2008, while still leaving plenty of spectrum for their existing customers. Contrary to the implications of Mr. Mohamed’s argument, 700MHz spectrum is not a requirement of expanding LTE coverage.

Rogers has already begun to repurpose other bands for LTE, although the offerings are extremely limited. Also, the’ve currently got dibs on AWS spectrum that Shaw has been hoarding since 2008.

Rogers: We’re not squatting on spectrum, we swear.

The claim that Rogers isn’t hoarding spectrum is, quite frankly, laughable. On top of the fact that Canadian carriers are inefficient users of spectrum, Rogers and Bell jointly own a company called Inukshuk Wireless that holds licenses in the 2600MHz band of spectrum. Rogers currently offers its customers LTE over this band – but only on 1 phone, the LG Optimus G. Further, the rural customers who were served by this spectrum were abandoned by Rogers in early 2012, in order to offer improved service only to urban users of 1 particular phone.

Without 700MHz, Rogers won’t be able to offer the newest smartphones.

Contrary to Mohamed’s assertion that Verizon coming to Canada may somehow block Rogers from offering the latest phones, iconic companies such as Apple and Samsung already make their phones compatible with LTE on a wide variety of spectrum bands, most of which Rogers already has a share of in Canada. Verizon doesn’t control the worldwide production of smart phones and tablets. If they come to Canada, Rogers will still have access to all the newest and best devices.

Put simply, Rogers wants you to believe that without access to the 700MHz spectrum, they’ll be unable to offer the newest wireless technologies. This just isn’t true. Even if Rogers somehow winds up without a block of 700MHz (an unlikely scenario), it will still be able to offer both LTE and the latest devices for years to come.

Rogers is essentially being faced with a choice: invest in updating their existing network, or gain access to new spectrum. The former requires costly equipment and installation, while the latter has the double benefit of requiring less capital investment and making sure competitors are at a disadvantage. It’s obvious which choice they’d prefer; appealing to Canadians’ sense of national pride with a series of misleading ads and media interviews is far cheaper than investing in new equipment. If only those uniformed consumers and pesky government would just play fair!

I have a novel idea for the management at Rogers, Bell and Telus: why not take the millions you are putting towards misleading advertising and PR campaigns and put the savings toward fair prices for wireless services? Wouldn’t lower prices speak for themselves?

[1] Globerman, Steven with Carter, Deborah. Telecommunications in Canada: An Analysis of Outlook and Trends. The Fraser Institute, Vancouver, B.C. 1988. p 44.

Cantel had the added advantage of being the only company given a national license at the time; every other licensed cellular provider was given the same amount of spectrum but corresponding only to their operating areas, i.e. SaskTel in Sask, MTS in Manitoba, Bell in Eastern Canada, etc.

[2] ibid, 44.

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2 comments

  1. guyviatori · ·

    “Some of the numerous frequencies Rogers already has (like 850MHz) could be repurposed to supplement their existing 4G LTE network…”

    Refarming spectrum is no small task. It require regulatory approval, and networking equipment has to be repurposed/purchased.

    Carriers also have to source handsets that are capable of working with the new frequencies. The 850 MHz spectrum licences held by Bell, Rogers, and TELUS equate to Band 5 LTE (CLR). LTE Band 5 is mainly used in South Korea by LG U+ and SK Telecom. The economies of scale involved in purchasing handsets that would Band 5 would work out poorly. Further, it would lead to a severely fragmented network as it would be difficult, if not impossible, to convince a hardware manufacturer to make a handset that supports not only Band 5, but Bands 4 (AWS) and 7 (IMT-E). In the end, the average Canadian will be picking up the tab for the extra costs.

  2. I don’t think that repurposing spectrum from GSM to LTE requires regulatory approval, or if it does, it can’t be that hard to get. Case in point: Rogers’ recent switch from WiMax 2600MHz to LTE.

    As far as I can tell, the iPhone 5 that Bell, Rogers etc use is already capable of supporting band 5 LTE.

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