Rogers 2009 Annual Report Download - page 27

ROGERS COMMUNICATIONS INC. 2009 ANNUAL REPORT 31
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CABLE
CABLE’S BUSINESS
Cable is one of Canada’s largest providers of cable television, cable
telephony and high-speed Internet access, and is also a facilities-
based telecommunications alternative to the traditional telephone
companies. Its business consists of the following three segments:
The Cable Operations segment has 2.3 million television subscribers
at December 31, 2009, representing approximately 30% of all
television subscribers in Canada. At December 31, 2009, it provided
digital cable services to approximately 1.7 million of its television
subscribers and high-speed Internet service to approximately
1.6 million residential subscribers. It provides local telephone
and long-distance services under the Rogers Home Phone brand
to residential customers with both voice -over-cable and
circuit-switched technologies with 1.1 million subscriber lines at
December 31, 2009.
The RBS segment of Cable offers local and long-distance telephone,
enhanced voice and data services, and IP access to medium and
large Canadian businesses and governments, as well as making
some of these offerings available on a wholesale basis to other
telecommunications providers. At December 31, 2009, there were
169,000 local line equivalents and 36,000 broadband data circuits
in service. Cable is increasingly focusing its business segment sales
efforts within its traditional cable television footprint, where it is
able to provide and serve customers with voice and data telephony
services provided over its own infrastructure.
The Rogers Retail segment operates a retail distribution chain with
448 stores at December 31, 2009, many of which provide customers
with the ability to purchase any of Rogers’ primary services (cable
television, Internet, cable telephony and wireless), to pay their
Rogers bills, and to pick up or return Rogers digital and Internet
equipment. The segment also offers digital video disc (“DVD”)
and video game sales and rentals through Canada’s second largest
chain of video rental stores.
Cable’s Products and Services
Cable has highly-clustered and technologically advanced broadband
networks in Ontario, New Brunswick and Newfoundland. Its
Ontario cable systems, which encompass approximately 90% of its
2.3 million television subscribers, are concentrated in and around
three principal clusters: (i) the Greater Toronto Area, Canada’s
largest metropolitan centre; (ii) Ottawa, the national capital city
of Canada; and (iii) the Guelph to London corridor in southwestern
Ontario. The New Brunswick and Newfoundland and Labrador
cable systems in Atlantic Canada comprise the balance of its cable
systems and subscribers.
Through its technologically advanced broadband networks,
Cable offers a diverse range of services, including analog
and digital cable, residential Internet services and voice-over-cable
telephony services.
As at December 31, 2009, more than 88% of Cable’s overall network
and 99% of its network in Ontario had been upgraded to transmit
860 MHz of bandwidth. With approximately 99% of Cable’s
network offering digital cable services, it has a richly featured and
highly-competitive video offering, which includes high-definition
television (“HDTV”), on-demand programming including movies,
television series and events available on a per purchase basis or
in some cases on a subscription basis, personal video recorders
(“PVR”), time-shifted programming, as well as a significant line-up
of digital specialty, multicultural and sports programming.
Cable’s Internet services are available to approximately 99% of
homes passed by its network. Cable’s high-speed Internet has been
found to have the fastest and most reliable speeds supported by
independent third-party research comparing average download
speeds to the equivalent speeds of the incumbent telephone
provider’s DSL internet access service. Cable offers multiple tiers of
Internet services, which are differentiated principally by bandwidth
capabilities and monthly usage allowances.
Cable’s voice-over-cable telephony services were introduced in
July 2005 and have grown both in the number of subscribers and
in the size of the geographic area where the service is available.
Cable offers packages that include from one to six calling features
and competitive unlimited or pay-by-the-minute long-distance
plans. Rogers Home Phone customers receive free long-distance
calling to other Rogers Wireless, Rogers Home Phone and Fido
customers. At December 31, 2009, Cable’s voice-over-cable
telephony services were available to approximately 99% of homes
passed by its network.
Cable offers multi-product bundles at discounted rates, which
allow customers to choose from among a range of Rogers’ cable,
Internet, voice-over-cable telephony and wireless products
and services, subject to, in most cases, minimum purchase and
term commitments.
Cable’s RBS segment offers local and long-distance services,
enhanced voice and data services, and IP application solutions to
businesses, government agencies and telecom wholesalers in many
markets across Canada on both an on-net and resold basis. Cable
has increasingly refocused its marketing and sales to concentrate
more on developing offerings that utilize its own facilities within
its traditional cable television serving areas.
Cable sells and services Rogers branded products and also offers
DVD and video game sales and rentals through Rogers Retail.
Cable’s Distribution
In addition to the Rogers Retail stores, Cable markets its services
through an extensive network of third party retail locations across
its network footprint. Rogers Retail provides customers with a
single direct retail channel featuring all of Rogers’ wireless and
cable products and services. In addition to its own and third party
Home Phone 13%
Internet 20%
Core Cable 45%
Business Solutions 12%
Retail 10%
CABLE REVENUE MIX
(%)