Rogers 2006 Annual Report Download - page 36

32 RO GER S CO MMU NIC AT ION S IN C . 20 0 6 ANN UA L RE PORT
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
C AB L E A ND T EL ECOM
CABLE AND TELECOM’S BUSINESS
Cable and Telecom is one of Canada’s largest providers of cable tele-
vision, cable telephony and high-speed Internet access, and is also a
national, full-service, facilities-based telecommunications alternative
to the traditional telephone companies. Its business is comprised of
the following four segments:
The Cable and Internet segment has 2.3 million basic cable sub-
scribers at December 31, 2006, representing approximately 30% of
basic cable subscribers in Canada. At December 31, 2006, it provided
digital cable services to approximately 1.1 million households and
high-speed Internet service to approximately 1.3 million residential
subscribers.
Through the Rogers Home Phone segment, Cable and Telecom offers
local telephone and long distance services to residential customers
with both voice-over-cable and circuit-switched technologies and
has almost 716,000 subscriber lines as at December 31, 2006.
The Rogers Business Solutions segment offers local and long distance
telephone, enhanced voice and data services, and IP access and
application solutions to Canadian businesses and governments of all
sizes, as well as making most of these offerings available on a whole-
sale basis to other telecommunications providers. At December 31,
2006, there were 205,000 local line equivalents and 31,000 broadband
data circuits.
The Rogers Retail (previously Rogers Video) segment offers digital
video disc (“DVD”) and video game sales and rentals through
Canada’s second largest chain of video rental stores. There were
297 stores at December 31, 2006, many of which provide customers
with the ability to purchase any of the four prime residential Rogers’
services (cable television, Internet, telephone and wireless), to pay
their Rogers’ bills, and to pick up or return Rogers digital and cable
modem equipment. During January 2007, Rogers Retail acquired
approximately 170 retail stores owned by Wireless.
Beginning in 2007, the Cable and Internet and Rogers Home Phone
segments will be combined to better align with management and
internal reporting.
Cable and Telecom’s Produc t s and Services
Cable and Telecom has highly-clustered and technologically
advanced broadband networks in Ontario, New Brunswick and
Newfoundland and Labrador. Its Ontario cable systems, which com-
prise approximately 90% of its 2.3 million basic cable subscribers,
are concentrated in and around three principal clusters: (i) the
Greater Toronto Area, Canada’s largest metropolitan centre; (ii)
Ottawa, the capital city of Canada, and (iii) the Guelph to London
corridor in southern Ontario. Its New Brunswick and Newfoundland
and Labrador cable systems in Atlantic Canada comprise the balance
of its subscribers.
Through its technologically advanced broadband networks, Cable
and Telecom offers a diverse range of services, including analog and
digital cable, residential Internet services, and voice-over-cable tele-
phony services.
As at December 31, 2006, more than 85% of Cable and Telecom’s
overall network and 97% of its network in Ontario has been
upgraded to transmit 860 MegaHertz (“MHz”) of bandwidth. With
approximately 99% of Cable and Telecom’s network offering digital
cable services, it has a richly featured and highly-competitive video
offer which includes high-definition television (“HDTV”), video-on-
demand (“VOD”), subscription video-on-demand (“SVOD”), personal
video recorders (“PVR”), time-shifted programming, pay-per-view
(“PPV”) movies and events, as well as a significant line-up of digital
specialty, multicultural and sports programming.
Cable and Telecom’s Internet services are available to over 97% of
homes passed by its network. Cable and Telecom offers multiple
tiers of Internet services under the Rogers Yahoo! brand, differenti-
ated largely by modem bandwidth settings.
Cable and Telecom’s voice-over-cable telephony services were intro-
duced in July 2005 and have grown both in the number of subscribers
and in the size of the geographic area where the service is avail-
able. At December 31, 2006, Cable and Telecom’s voice-over-cable
telephony services were available to approximately 90% of homes
passed by its network.
Cable and Telecom offers multi-product bundles at discounted rates
to existing and new customers. These bundles allow customers to
choose from among a range of cable, Internet, home phone voice-
over-cable telephony and Wireless products and services, subject to,
in some cases, minimum purchase and term commitments.
Cable and Telecom’s solutions in the business market offer local
and long distance services, enhanced voice and data services, and
IP application solutions, and present several advantages to its busi-
ness customers: a single flexible network that encompasses a range
of access types from various digital subscriber technologies (“xDSL”)
to Ethernet allowing a customer to tailor a solution to precisely
match the requirements of each site; a migration path from legacy
frame relay services, which delivers more bandwidth, more flexibil-
ity and a platform for emerging converged IP applications; and an
opportunity to simplify customers’ data solutions, moving from dis-
parate services to a single IP platform.
Cable and Telecom also offers DVD and video game sales and rentals
through Rogers Retail, Canada’s second largest chain of video rental
stores. There were 297 stores at December 31, 2006. These stores also
provide customers with the additional ability to acquire Cable and
Telecom and Wireless products and services, to pay their cable televi-
sion, Internet or Wireless bills and to pick up or return Rogers digital
cable and Internet equipment.
2006 CABLE AND TELECOM REVENUE MIX
(%)
Core Cable 44%
Home Phone 11%
High-speed Internet 16%
Retail 10%
Business Solutions 19%