Rogers 2010 Annual Report Download - page 20

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
24 ROGERS COMMUNICATIONS INC. 2010 ANNUAL REPORT
2. SEGMENT REVIEW
WIRELESS
WIRELESS BUSINESS
Wireless is the largest Canadian wireless communications service
provider, serving approximately 9.0 million retail voice and data
subscribersatDecember31,2010,representingapproximately36%of
Canadian wireless subscribers. Wireless operates on the global
standards Global System for Mobile communications/High-Speed
Packet Access (“GSM/HSPA”) wireless network technology platforms. Its
underlying GSM/General Packet Radio Service/Enhanced Data for GSM
Evolution (“GSM/GPRS/EDGE”) network provides coverage to
approximately 95% of Canada’s population. Overlaying the GSM
network is a next generation wireless data technology called Universal
Mobile Telephone System/ Evolved HSPA (“UMTS/HSPA+”) which covers
approximately88%ofthepopulationwithwirelessdataservicesat
speeds of up to 21 Mbps.
Wireless customers are able to access their services in most parts of the
world through roaming agreements with various other GSM and HSPA
wireless network operators. Rogers has one of the largest roaming
footprints and number of available destinations for its customers’
wireless usage in the world. With each roaming agreement, Rogers has
established a direct relationship with the operator rather than
implementing third party services.
Wireless has generally negotiated wireless roaming with multiple
operators within the majority of its roaming destinations in order
to eliminate the possibility of its customers travelling in an area
without coverage. This coverage depth also helps to ensure that
Wireless’ customers roam on the best possible network available in a
specific destination.
WIRELESS REVENUE MIX
Data 26% Postpaid Voice 65%
Prepaid Voice 3%
Equipment 6%
Wireless Products and Services
Wireless offers wireless voice, data and messaging services including
related handset devices and accessories, across Canada. Wireless’
services are generally all available under either postpaid or prepaid
payment options. Wireless’ network provides customers with advanced
high-speed wireless data services, including mobile access to the
Internet, wireless e-mail, digital picture and video transmission, mobile
video, music and application downloading, video calling and two-way
short messaging service (“SMS” or “text messaging”).
Wireless Distribution
Wireless’ nationwide distribution network includes: an independent
dealer network; Rogers Wireless, Fido and chatr stores, which are
managed by Rogers Retail; major retail chains; and convenience stores.
Wireless markets its products and services under the Rogers Wireless,
Fido and chatr brands through an extensive nationwide distribution
network across Canada of approximately 2,900 dealer and retail third
party locations and approximately 400 Rogers Retail locations (which is
a segment of Cable). The distribution network sells its service plans and
devices, and there are also thousands of additional locations selling its
prepaid services. Wireless also offers many of its products and services
through telemarketing and on the rogers.com, fido.ca and
chatrwireless.com e-business websites.
Wireless Networks and Spectrum
Wireless is a facilities-based carrier operating its wireless networks over
a broad, national coverage area, much of which is interconnected by its
own fibre-optic and broadband microwave transmission infrastructure.
The seamless, integrated nature of its networks enables subscribers to
make and receive calls and to activate network features anywhere in
Wireless’ coverage area and in the coverage area of roaming partners
as easily as if they were in their home area.
Wireless holds 25 MHz of contiguous spectrum across Canada in the 850
MHz frequency range and 60 MHz in the 1900 MHz frequency range
across the country, with the exception of southwestern Ontario,
northern Québec, and the Yukon, Northwest and Nunavut territories,
where Wireless holds 50 MHz in the 1900 MHz frequency range.
Wireless participated in the Advanced Wireless Services (“AWS”)
spectrum auction in Canada which concluded on July 21, 2008. Wireless
acquired 20 MHz of AWS spectrum, which operates in the 1700/2100 MHz
frequency range, across all 10 provinces and 3 territories with winning bids
that totalled approximately $1.0 billion, or approximately $1.67/MHz/pop.
Wireless also holds certain broadband fixed wireless spectrum in the
2300 MHz, 2500 MHz and 3500 MHz frequency ranges, together with
Bell Canada, through an equally-owned joint venture called Inukshuk.
Both companies have contributed fixed wireless spectrum holdings to
the joint venture, along with access to their respective cellular towers
and network backhaul facilities. The fixed wireless network acts as a
wholesale provider of capacity to each of the joint venture partners,
who in turn market, sell, support and bill for their respective fixed
wireless service offerings over the network. During 2010, Inukshuk
acquired approximately 61 MHz of additional 2500 MHz to 2690 MHz
spectrum in the provinces of British Columbia and Manitoba for $80
million from Craig Wireless and 61 MHz of the same spectrum in the
province of Saskatchewan for $14 million from YourLink Inc. As well,
Inukshuk converted its 2500 MHz to 2690 MHz spectrum to Broadband
Radio Service (“BRS”) mobile licences and, pursuant to government
policy, approximately one-third of this spectrum was returned to
Industry Canada. During 2009, Inukshuk also acquired 92  MHz of
additional 2500 MHz to 2690 MHz spectrum in the provinces of Ontario
and Quebec for $80 million from Look Communications Inc. and
converted the spectrum licences to BRS mobile licences. Pursuant
to government policy, one-third of this spectrum was returned to
Industry Canada.
In the third quarter of 2009, Rogers initiated a network sharing
arrangement with Manitoba Telecom Services (“MTS”) for the purpose
of building a joint HSPA+ 3.5G wireless network in the province of
Manitoba. This joint network was completed in 2010 and is being
launchedduringtherstquarterof2011coveringapproximately96%
of the Manitoba population. In addition, Rogers completed a business
network sharing arrangement with TBayTel in 2010 that enables our
combined base of customers in North Western Ontario to receive
HSPA+ 3.5G wireless services under a joint brand (TBayTel with the
power of Rogers) and Rogers customers in the rest of Canada to
receive such services within the Thunder Bay coverage area in
North Western Ontario.
During 2010, we announced the start of technical trials of next
generation Long Term Evolution (“LTE”) wireless network technology
in various frequency bands in the Ottawa area to better understand
and plan for LTE data throughput speeds, performance quality, and the
interoperability with our existing HSPA+ network.