Rogers 2010 Annual Report Download - page 26

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
30 ROGERS COMMUNICATIONS INC. 2010 ANNUAL REPORT
CABLE
CABLE’S BUSINESS
Cable is one of Canada’s largest providers of cable television, high-
speed Internet access and cable telephony services, 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,2010,representingapproximately29%ofalltelevision
subscribers in Canada. At December 31, 2010, it provided digital cable
services to approximately 1.7 million of its television subscribers and
high-speed Internet service to approximately 1.7 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 over a
million subscriber lines at December31,2010.
The Rogers Business Solutions (“RBS”) segment of Cable offers local and
long-distance telephone, enhanced voice and data networking
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 and within RCI.
At December31,2010, there were 146,000 local line equivalents and
42,000 broadband data circuits in service. Cable and RBS are 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
approximately 400 stores at December 31, 2010, many of which provide
customers with the ability to purchase all of Rogers’ primary services
(cable television, Internet, cable telephony and wireless), pay their
Rogers bills, and pick up or return Rogers digital and Internet
equipment. The segment also offers digital video disc (“DVD”) and
video game sales and rentals.
Years ended December 31,
(In millions of dollars) 2010 2009 %Chg
Additions to PP&E
Capacity $ 446 $ 498 (10)
Quality 284 199 43
Network – other 61 39 56
Information technology and other 146 129 13
Total additions to PP&E $ 937 $ 865 8
Network – Other 6%
Capacity 48%
Quality 30%
IT & Other 16%
WIRELESS ADDITIONS TO PP&E
WIRELESS ACQUISITION
Acquisition of Cityfone Telecommunications Inc.
On July 9, 2010, we acquired the assets of Cityfone for cash
consideration of $26 million. Cityfone is a Canadian Mobile Virtual
Network Operator and offers postpaid wireless voice and data services
to approximately 44,000 subscribers through private label programs
with major Canadian brands. The acquisition was accounted for using
the acquisition method with the results of operations consolidated
with those of ours effective July9,2010.
Wireless Additions to Property, Plant and Equipment
Wireless additions to PP&E are classified into the following categories:
Wireless PP&E additions for 2010 reflect spending on network capacity,
such as radio channel additions, network core improvements and
network enhancing features, including the continued deployment of
our HSPA+ network. Quality-related additions to PP&E are associated
with upgrades to the network to enable higher throughput speeds, in
addition to improved network access associated activities such as site
build programs and network sectorization work. Moreover, Quality
includes test and monitoring equipment and operating support system
activities. Investments in Network – other are associated with network
reliability and renewal initiatives, infrastructure upgrades and new
product platforms. Information technology and other wireless specific
system initiatives include billing and back-office system upgrades, and
other facilities and equipment spending.
The increase in Wireless PP&E additions for 2010 is largely due to
Quality-related deployment of additional cell sites into the network,
while the increase in Network – other spending reflects deployment of
cross-platform feature enablement. The increase in information
technology and other was driven primarily by an enterprise data
warehouse project and start up of the chatr brand during the year.
These increases were partially offset by the decrease in capacity related
to completion of the HSPA 21Mbps roll-out program in 2010.
During 2010, we announced the start of technical trials of next
generation 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 of
LTE with our existing HSPA+ network.