Rogers 2004 Annual Report Download - page 64

62 Rogers Communications Inc. 2004 Annual Report
Call Centres
We are party to agreements with Wireless and Cable pursuant to which we provide customer service and sales functions through its call
centres. Wireless and Cable pay the Company commissions for new subscriptions, products and service options purchased by sub-
scribers through the call centres. We are reimbursed for the cost of providing customer service based on the actual costs incurred. We,
under the agreement, are held accountable to meet performance targets as detailed in the agreement. We cannot charge additional
amounts that exceed an agreed upon cost per call rate multiplied by actual call volume. The assets used in the provision of these services
are owned by Wireless and Cable. The current agreements are in place until December 31, 2005, and are terminable upon 90 days notice.
Accounts Receivable
We manage the subscriber account collection activities of Wireless and Cable. Wireless and Cable are responsible, however, for the
costs incurred in the collection and handling of their accounts.
Real Estate
Wireless leases, at market rates, office space to us and our subsidiaries. We manage the real estate that Wireless owns. Wireless reim-
burses us for the costs they incur based on various factors, including the number of sites managed and employees utilized.
Wireless Services
Wireless provides wireless services to us and our subsidiaries. The fees we pay are based on actual usage at market rates.
Information Technology
We manage the information technology function for Wireless and Cable, including the operation of the billing and customer care systems.
Wireless and Cable reimburse us based on the actual costs incurred.
Cost Sharing and Services Agreements
We have entered into other cost sharing and services agreements with our subsidiaries in the areas of accounting, purchasing, human
resources, accounts payable processing, remittance processing, payroll processing, e-commerce and the RCI data centre and other com-
mon services and activities. Generally, these services are provided to our subsidiaries by us and are on renewable terms of one year and
may be terminated by either party on 30 to 90 days notice. To the extent that we incur expenses and make PP&E expenditures, these
costs are typically reimbursed by us, on a cost recovery basis, in accordance with the services provided on behalf of our subsidiaries by us.
Corporate Opportunity
We have agreed with Wireless under a business areas and transfer agreement that we will, subject to any required regulatory, lender
or other approvals, continue to conduct all of our cellular telephone operations and related mobile communications businesses through
Wireless. As a result of our acquisition of the minority interests of Wireless, it is proposed that this agreement be terminated.
Minority Shareholders Protection Agreement
We had entered into a shareholder protection agreement with Wireless that extended certain protections to holders of Wireless’ Class B
Restricted Voting shares (“RWCI’s Restricted Voting shares”). As a result of our acquisition of the minority interests of Wireless, the
Minority Shareholder Protection Agreement has been terminated.
ARRANGEMENTS BETWEEN OUR SUBSIDIARIES
Invoicing of Common Customers
Pursuant to an agreement with Cable, Wireless purchases the accounts receivables of Cable for common subscribers who elect to receive
a consolidated invoice. Wireless is compensated for costs of bad debts, billing costs and services and other determinable costs by purchas-
ing these receivables at a discount. The discount is based on actual costs incurred for the services provided and is reviewed periodically.
Distribution of Wireless’ Products and Services
Cable and Wireless have entered into an agreement for the sale of our products and services through the Rogers Video stores owned by
Cable. Wireless pays Cable commissions for new subscriptions equivalent to amounts paid to third-party distributors.
Distribution of Cable’s Products and Services
Wireless has agreed to provide retail field support to Cable and to represent Cable in the promotion and sales of its business products
and services. Under the retail field support agreement, Wireless’ retail sales representatives receive sales commissions for achieving
sales targets with respect to Cable products and services, the cost of which to Wireless is reimbursed by Cable.
Transmission Facilities
Wireless has entered into agreements with Cable to share the construction and operating costs of certain co-located fibre-optic trans-
mission and microwave facilities. The costs of these facilities are allocated based on usage or ownership, as applicable. Since there are
significant fixed costs associated with these transmission links, Wireless and Cable have achieved economies of scale by sharing these
facilities resulting in reduced capital costs. In addition, Wireless receives payments from Cable for the use of its data, circuits, data
transmission and links. The price of these services is based on usage or ownership, as applicable.
In addition, we continue to look for other operations and activities that can be shared or jointly operated with other companies
within the Rogers group. Specifically, is the consideration of the expansion of inter-company arrangements relating to sales and mar-
keting activities as well as other arrangements that may result in greater integration with other companies within the Rogers group.
Cable also may receive billing and other services from Wireless in connection with its launch of voice-over-cable telephony services. In
the future, market conditions may require us to further strengthen our arrangements to better coordinate and integrate our sales and
marketing and operational activities within the Rogers Group.