While much of the focus of yesterday’s Rogers quarterly call was on the
wireless sector (see part one on roaming rates), it should be noted that
company executives indicated that consumer broadband Internet prices –
which the OECD recently reported
were among the ten most expensive in the developed economy world – will
continue to increase. Moreover, the company called unlimited bandwidth
offers “short-sighted” and recent price increases just one step in the
efforts to monetize broadband services.
In response to a question from an analyst who noted that Internet
pricing keeps going up every year, Robert Bruce, President of the
Communications Division, stated:
The other important thing that I think we should say about
Internet is, it is the key to the future of our business, hence,
monetizing the increased bandwidth usage will rapidly become the
future across all our businesses, whether it’s wireless or
wireline. So there is — there are clearly some unlimited offers
out there. We think they’re fairly short-sighted as Internet is
the future of the business. And the reason that we think over time
there is more pricing upside in Internet are all the things that
we’re doing to build the superiority of the Internet. And you will
have seen many of these things. Virtually, all our customers in
the past 6 months, we’ve up-speeded them significantly. We’ve
invested in verifying speed consistency with the first Canadian
ISP to use SamKnows, which is an internationally recognized
methodology, to ensure that we’re actually delivering the speed
that we commit to deliver at peak times and at all hours
throughout the day. And we believe that customers are looking for
this kind of transparency. We’ve launched things like TechXpert so
that we can give premium technical support to our customers. We’ve
removed all our traffic management processes. We have
significantly enhanced the value of this product, and overtime, it
is our plan to monetize it accordingly and the price increase that
you would receive in the mail would’ve just been 1 step in that
monetization that we think will continue as Internet becomes the
backbone product in the home.
The description of unlimited Internet plans as short-sighted are
telling, since Rogers currently offers
such a plan. Why is Rogers engaged in pricing its own executives
describe as short-sighted? The Rogers offers was merely a response
to a Bell offer. If the Bell offer disappears, so will the
Rogers plan. With limited competition, favourable pricing plans will
come and go, with executives anxious to increase prices and
implement usage caps. The only solution is sufficiently robust
competition that all players are continually forced improve service
and keep pricing in check in order to retain and attract customers.
Rogers recognizes how dependent the public has become on the
Internet. While the company points to improvements in its services,
the OECD
data shows that most countries are continually improving their
services, yet stronger competition dictates that prices do not
necessarily follow. Canada already has some of the highest broadband
prices in the world and, given the lack of competition, Rogers is
telling the investor community it sees the potential for even higher
prices and usage caps.
Thursday July 25, 2013
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