Rogers 2005 Annual Report Download - page 89

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85 ROGERS 2005 ANNUAL REPORT . MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
DI S T RI B UT I ON O F W IR E LE S S ’ P RO D UC T S A N D S ERV I CE S
Cable and Wireless have entered into an agreement for the sale of their 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.
DI S T RI B UT I ON O F C AB L E’ S PR O DU C TS A ND SE R VIC E S
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 is reimbursed
by Cable to Wireless.
TR A N SM I SS I ON F AC I LI T IE S
Wireless has entered into agreements with Cable to share the construction and operating costs of certain co-located
fibre-optic transmission 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.
LO N G D I ST A NC E
In 2005, Telecom began to terminate long distance minutes in both North American and international markets for
Wireless. These transactions are priced at fair value wholesale rates.
AD V E RT I SI N G
Wireless and Cable advertise their products and services through radio stations and other media outlets owned by
Media. They receive a discount from the customary rates of Media. Media has also agreed to compensate Cable for the
placement of Media advertising on one or more of Cable’s television channels.
TR A N SF E R O F T E LE C OM SU B S CR I BE R S T O W I RE L ESS
Rogers Telecom and Fido were subject to an agreement whereby Telecom resold the wireless services of Fido. During
2005, the resale agreement was terminated and Wireless purchased the wireless subscriber base and related working
capital items of Telecom for a cash consideration of $6.5 million.
SU M M AR Y O F C H A RG E S F RO M (T O ) R EL A T ED PA R TIE S
We have entered into certain transactions in the normal course of business with certain broadcasters in which we have
an equity interest.
(In millions of dollars)
Years ended December 31, 2005 2004
Roaming revenue billed by AWE(1) $ – $ 12.1
Roaming expenses paid to AWE(1) – (9.0)
Fees Paid to AWE for over-air activation(1) – –
Programming rights acquired from the Blue Jays – (8.0)
Access fees paid to broadcasters accounted for by the equity method
(18.4) (19.0)
$ (18.4) $ (23.9)
(1) Amounts for 2004 are until October 13, 2004.