Use your future Rogers Card to pay your Rogers bill.

The Canadian Minister of Finance has given permission for Rogers Communications to open its own bank, primarily to let the cable operator get into the credit card business.

Rogers wants into the lucrative card services business to build customer loyalty and retention through a future rewards program that awards customers credits towards Rogers’ services.

But more importantly, the incorporation of Rogers Bank will let the cable company master its entry into the emerging digital mobile wallet business.

“Today’s announcement is a significant milestone in our plan to issue a credit card,” said David Robinson, vice president of emerging business at Rogers. “The Rogers credit card program represents a new growth opportunity while giving customers an opportunity to accumulate value in a future Rogers loyalty program.”

Rogers has 12 months to complete the application process towards accreditation of its financial institution, after which it can introduce its credit card.

In the past, Rogers has maintained a working relationship with CIBC, Canada’s fifth largest bank.

Rogers Communications, Canada’s largest cable operator, told investors at an investment bank conference it intends to accelerate plans to monetize wireless and broadband data usage this year.

Anthony Staffieri, chief financial officer of Rogers Communications told attendees at Morgan Stanley’s Technology, Media & Telecom Conference that Rogers’ future revenue outlook was going to be data-centric.

“We think data, monetizing data, is going to be a key aspect of that, both on the wireless side, as well as on the cable side of things,” Staffieri said.

Staffieri

Key to Rogers is the development of data plans that maximize revenue potential by exploiting the customer’s discomfort with overlimit fees. Staffieri admits the company has plans that can cost the company revenue if customers downgrade to a usage bucket that brings them very close to their usage limit.

But most customers do not choose those “exact fit” data plans. They typically select more expensive, larger-bucket plans so they can rest easy knowing they will not get slapped with a overlimit fee.

“And so they’re coming into data plans that are probably more than they need,” Staffieri said. “But for most users, what they’re looking for is comfort in usage. And so what we found is there’s a preponderance to buy more than what you need. So there’s no surprise at the end of the month in terms of billing. And so it’s all about that comfort in usage that we’re focused on in the price plans.”

In wireless, Rogers is also counting on the explosive growth of usage that comes after introducing 4G LTE coverage.

“Simply on 3G to LTE, you see an immediate growth in data usage,” Staffieri said. “Same users, but if you were to look at the data set, it’s just within a defined period of time, they can just access more. And so for whatever reason, whatever they’re doing with it, it’s just driving more usage, more efficiency and they’re using it in the business context.”

Staffieri says Rogers is experiencing 30-50% increases in data usage year over year. Rogers introduced new wireless plans in the fall of 2012 that refocus customers on their anticipated data usage, with gradually more expensive wireless plans to match.

“That really gets the customer focused on choosing something that continues to drive data growth,” Staffieri noted.

Rogers Cable broadband customers have also faced data caps and consumption-oriented billing for years. Although Rogers competitively responded to a Bell offer introduced in January that includes unlimited use service for customers who want it, that option comes at an added cost — one that can be priced up or down according to marketplace conditions.

Rogers primary focus is on encouraging its cable broadband customers to move towards higher-speed, more expensive data plans.

MONETIZED: Rogers sells a 25/2Mbps broadband plan for $52 a month that includes only an 80GB monthly usage allowance. A $2/GB overlimit fee applies, up to a maximum of $100 per month. Taxes, a modem rental fee or purchase, a one-time activation fee of $14.95 and up to a $99.99 installation fee also apply.

“On the cable side, making sure we have the best Internet experience was the other piece of it,” Staffieri said. “We ended the year with 90% of our footprint able to get 150Mbps data speed ($122.99/mo with 250GB usage allowance). And so to the extent that we continue to lead on Internet, we think that’s going to be important ingredient for the top line [revenue] growth.”

On the wireless side, Rogers is following the lead of big providers in the United States and gradually shifting the cost of new smartphones away from itself and onto its customers by adjusting its subsidy program.

“As we see data [usage] pulling [revenue] growth, overall, that bodes well for a continuation of the subsidization,” Staffieri said. “For us, it’s really been about making sure that we give the customer choice. And so when we combine that with the introduction of the Flex Plan, which we did in 2012, what we’re seeing is more and more customers opting into new handsets. But more and more, it’s on the customer’s nickel as opposed to our nickel on the Flex Plan programs.”

Rogers Wireless’ Individual plans. Rogers’ customers have to pay extra for long distance calling — most plans only cover local calls. Data plans are stingier and more expensive than what most Americans pay, and steep overlimit fees up to $0.02 per megabyte ($20/GB) apply. Like in the United States, Rogers is moving to bundle unlimited calling and texting into more of their plans. What differentiates more plans today is how much data usage is included.

Staffieri admitted Bell is giving Rogers the most competitive headaches in Ontario because of their aggressively priced promotions.

“Certainly, [Bell’s Fibe IPTV] has been competitive for us. In the short-term, we continue to deal with what I would consider to be aggressive pricing in terms of acquisition and retention offers by our IPTV competitor,” said Staffieri. “We’ve always been competing with their satellite product and so that competition has always been there. But I would describe it as certainly having picked up and continuing to pick up. And it’s largely been through pricing offers as opposed to product.”

Staffieri says Rogers is competing with improved set-top equipment like the NextBox 2.0 — a whole-home DVR with an improved user interface. It also offers customers Anyplace TV, a TV Everywhere service that allows customers to watch the Rogers’ TV lineup on tablets inside the home.

The Toronto Maple Leafs, the National Hockey League’s most valuable sports franchise, is today 75% co-owned by Bell Canada Enterprises (BCE) and Rogers Communications.

As is the case in the United States, Canadian cable companies are also facing dramatically increasing programming costs, particularly for sports programming.

But to a greater degree than in the U.S., Canadian media conglomerates own and control a larger share of cable and broadcast networks, programming producers, would-be competitors like satellite television, and even sports teams and the networks that show their games.

That positions them to negotiate with themselves over content costs, because they own or control the sports franchise, the cable or broadcast network that televises their games, and the cable, satellite, or telephone provider through which most Canadians watch.

“We’ve tried to be disciplined on the extent that content price increases are there because consumers want it, then we want to make sure we’re disciplined in passing on that cost to the customer,” Staffieri said. “And so we strive to make sure that in the TV and video business our gross margins are consistent.”

“So if you were to look at how that’s played out over the last several quarters and several years, it’s been fairly consistent. And so that’s what we strive to do is to make sure that those programming costs ultimately are passed on to the consumer, which is ultimately driving up the cost through their demand.”

The union representing at least 200 service technicians working on behalf of Rogers Communications, Inc., in Ontario are planning to strike this Friday at 8am.

The contract employees, represented by the Communications, Energy, and Paperworkers Union of Canada, are employed by Intek Communications and Dependable Home Tech — outsource firms that contract with the cable giant for technicians who handle routine service calls including installations and certain repair work.

The union claims that employees are paid on a “piece-work” system, which typically means on a “per-call” or “per-function” basis. That can create financial difficulty for contractors who cannot depend on a paycheck that remains steady from week to week.

It is not the first strike action against Rogers. Other Rogers’ contractors voted to strike the company last month, leading to tentative settlements.

Rogers employs thousands of technicians in the province, so the strike is not expected to have a major impact on the company’s ability to handle service requests.

Ever wonder why cell phone companies are upset about new regulations that would warn customers when they are about to face mobile usage overlimit or roaming fees?  Rogers Communications explains why in their latest quarterly results:

Nadir Mohamed, CEO:

There was, however, a sequential slowing in the wireless data revenue growth rate, and that’s primarily attributable to new outbound data roaming plans that we put in place. With these new plans, we put in place automated customer notification mechanisms that had a net effect of slowing usage versus stimulating it to the degree that we expected it to. We’re in the process of modifying how these plans and notifications work, which I expect will have a more stimulative effect and help restore the trajectory we had for wireless data growth.

In simpler terms, Rogers began notifying their customers through text messaging when they were about to start data roaming — the most expensive data usage around, incurred when you leave Rogers’ service area and roam on another provider’s network.  With Canadians visiting the United States and elsewhere, using a cell phone while traveling can get expensive fast.  Rogers created new roaming data plans for customers likely to need the service while abroad.  But their roaming data plans come at steep prices:

Unintended consequences: When subscribers know they are about to pay more, they stop using.

U.S. Data Passes

Day Pass: $5 for 2MB
Day Pass: $10 for 10MB
Day Pass: $20 for 40MB
Week Pass: $25 for 15MB
Week Pass: $50 for 60MB
Week Pass: $100 for 250MB

The warnings that customers were about to incur even higher a-la-carte roaming fees or start to consume their day or weekly data pass had the unintended, but highly predictable effect of getting people to think carefully about using data while roaming.

Bruce

While good for consumers, that is bad for Rogers’ bottom line, so the company’s formerly frank warnings to customers are “being modified” to help the company “stimulate” revenue and restore the predicted revenue growth from the high-priced roaming plans.

“We tried to create real transparency about when people and how people could get on data packages as they went overseas,” admits Robert Bruce, president of Rogers Communications Division. “We put in a fair number of reminders to let people know that they were on à la carte pricing, and we think that these dissuaded significantly customers from using it and possibly created some confusion along the way.”

Rogers Cable customers are also finding some of the company’s newest innovations a challenge to their monthly broadband usage allowances, among the lowest in Canada:

• Rogers Remote TV Manager: Enables cable subscribers to search programming and manage PVR recordings anytime on any device;
• Rogers Live TV. This service lets cable customers stream live TV channels on their tablets and watch shows anywhere they are in the home;
• Rogers On Demand TV app on Microsoft’s Xbox 360 LIVE platform, bringing Rogers On Demand TV to the gaming console;
• A refresh of the digital cable user interface, improving ease of use for the Whole Home PVR and a better program guide and search function.

In the long term, Rogers is moving towards an IP-based delivery system for its video programming, allowing the company to deliver video across different platforms more efficiently.  As Rogers converts the rest of its cable systems to digital cable, it is opening up new broadband capacity — a critical part of the company’s revenues.

Rogers admits it uses data caps to drive revenue.  By moving customers into higher usage, more expensive tiers, Rogers is able to drive revenue upwards as well.

“As customers continue every quarter, in and out, to consume more and more and spend more and more time on the Internet, we think it’s both a great opportunity for us and a welcome addition to the product offering from a customer perspective,” Bruce said.

Citing “the many enhancements they have launched” in the past year, Rogers Cable has announced an across-the-board broadband rate increase that will cost subscribers an additional $2 a month for Internet service effective March 1, 2012.

Rogers claims the rate increases come as a result of investments in their broadband network and the introduction of SpeedBoost, which delivers a temporary speed increase during the first few seconds of file transfers.

Rogers also claims they have increased monthly usage allowances and download speeds on many of the company’s broadband packages.

The rate increase is not going over well with subscribers, however.

Stop the Cap! reader Nick in Markham, Ontario is one of them.

"No additional charge," except for the $2 rate increase Rogers suggests comes after the addition of "service enhancements" like SpeedBoost.

“Rogers introduced ‘SpeedBoost’ as a ‘free’ feature which we are now apparently/effectively going to pay more for,” Nick writes. “I am really unimpressed with Rogers’ ‘generosity,’ especially respecting bitcaps, considering they are totally arbitrary.”

Nick notes customers in Quebec and western Canada have more generous usage allowances, and often lower bills.

“Shaw customers are getting a much better deal than Rogers’ customers these days,” Nick says. “If Rogers increased prices by $2 and took the caps completely off, I’d gladly pay a little more just to end years of headaches over watching my Internet usage.”

“I am so tired of feeling like my Internet connection is being rationed, and considering my choices have been Bell or Rogers, I think I’ll sacrifice some of the higher speeds and just consider switching to TekSavvy DSL, because it costs less and doesn’t come with Rogers’ stingy caps.”

A Montreal Gazette piece on the Canadian telecommunications industry says stockholders and company executives are doing much better, enjoying major boosts in telecom industry dividends.  The industry enjoyed a 25% boost in stock price + dividend yield over other Canadian stocks over the past 12 months.  The industry also enjoys the benefits a barely-competitive marketplace that offers opportunities for unfettered rate increases:

Canada remains a heavily protected market in telecommunications, which is one reason why consumers don’t get the kind of deals available in other countries.

But in the absence of such [competitive] changes, there’s a strong case to be made that telecom and cable companies will post solid profit growth this year and next.