Rogers 2005 Annual Report Download - page 88

84 ROGERS 2005 ANNUAL REPORT . MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
quarter, subject to certain exceptions, and, in the case of Wireless, is an amount equal to the greater of $8 million per
year (adjusted for changes in the Canadian Consumer Price Index from January 1, 1991) and an amount determined by
both RCI and the directors serving on the Audit Committee of Wireless.
Effective January 1, 2006, as a result of the reorganization of Cable and Telecom, Telecom will be subject to the
Management Services Agreement.
CU S T OM E R C AR E CA L L C EN T R ES
RCI is party to agreements with Wireless, Cable and effective September 1, 2005, Telecom pursuant to which RCI provides
customer service and sales functions through our call centres. Wireless, Cable and Telecom pay RCI commissions for new
subscriptions, products and service options purchased by subscribers through the call centres. RCI is reimbursed for the
cost of providing customer service based on the actual costs incurred and is held accountable for meeting performance
targets as detailed in the agreement. The assets used in the provision of these services are owned by Wireless, Cable and
Telecom. The current agreements are terminable upon 90 days notice.
AC C O UN T S R EC E I VA B LE
RCI manages 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. Coinciding with the reorganization of Cable and
Telecom in early 2006 as discussed above and as billing conversions are completed, the arrangement for the subscriber
collection activities will be expanded to include the current operations of Telecom.
RE A L E S TA T E
Wireless leases, at market rates, office space to us and our subsidiaries. RCI manages the real estate that Wireless owns.
Wireless reimburses RCI for the costs it incurs based on various factors, including the number of sites managed and
employees utilized.
WI R E LE S S S ER V I CE S
Wireless provides wireless services to RCI and its subsidiaries. The fees RCI pays are based on actual usage at market rates.
IN F O RM A TI O N T E CH N OL O GY
RCI manages the information technology function for Wireless, Cable, and effective September 1, 2005, Telecom, including
the operation of the billing and customer care systems. Wireless, Cable and Telecom reimburse RCI based on the actual
costs incurred.
CO S T S H AR I NG A ND SE R VI C E S A GR E EM E N TS
RCI entered into other cost sharing and services agreements with its 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 common services and activities. Generally, RCI provides these services to its subsidiaries and the agreements
are on renewable terms of one year and may be terminated by either party on 30 to 90 days notice. To the extent that
RCI incurs operating expenses and make PP&E expenditures, these costs are reimbursed to RCI, on a cost recovery basis,
in accordance with the services RCI provides on behalf of the subsidiaries.
Arrangements Between Our Subsidiaries
IN V O IC I NG OF C OM M ON CU S T OM E RS
Pursuant to an agreement with Cable, Wireless purchases the accounts receivables and provides invoicing and subscriber
account collection services for common subscribers who receive a consolidated invoice and for all cable telephony
subscribers. Wireless is compensated for costs of bad debts, billing costs and services and other determinable costs by
purchasing these receivables at a discount. The discount is based on actual costs incurred for the services provided and is
reviewed periodically.