How a new level of service will help Rogers customers navigate our technological revolution
HE’S BEEN ON THE JOB for a year now and when it comes to the financial performance of Rogers Communications over those 12 months, things have gone rather well for CEO Joe Natale.
The company is adding wireless customers at a very healthy clip, it’s poised to launch a brand new voice-activated video platform this year and the Media side, led by its sports properties, has been performing very well. Friday’s annual general meeting of shareholders was a happy one. It’s been a good year.
However, as big as Rogers is in Canada on the world stage, it’s small. Challenges, very expensive ones, abound if you look beyond our borders and dig into customer expectations and rapidly evolving technology. So in that context, after a year at the helm, what does Natale see from the 10th floor of 333 Bloor St. E.? Cartt.ca editor and publisher Greg O’Brien sat down for a quick interview with him after the company’s AGM on Friday. What follows is an edited transcript.
Greg O’Brien: So when you look at the world at large, beyond our borders, you see Netflix, you see whatever Disney's going to launch, Hulu, whatever else comes here – the size of Vodaphone and Verizon and whomever else, and you talked about (in your speech) the next 60 years. What's Rogers' place in this world?
Joe Natale: Well, I think at the heart of it, is we are a service provider, and if you look forward and look to all the exciting things that are happening around technology, we can only imagine what it might bring down the road. It wasn't long ago we'd have been sitting in this room, wondering where data might take us. I was saying to my team just the other day, “remember those first meetings about data, when all you had to offer was a two-line display on a data device, our early Blackberry?”
Then, we all sat there and said, “I wonder where this will take us?” Some people said it'd be huge. Some people said it won't be very much, maybe 10% of revenue. So, it's hard sometimes from the present to really envision the future. I do think some of the things we are just only starting to imagine will become commonplace but the fundamental things that matter to human beings won't change. They haven't changed from 100 years ago, they haven't changed from 10 years ago: Connections matter. Entertainment and fun matters. Finding technologies and ideas to help support our lives, to make our lives easier and more comfortable, matter.
I think we'll have a new round of those ideas with 5G and what's beyond it, and our goal will be to curate those ideas, bring them together, and on behalf of the customer, present them in a way that's easy to understand and to make happen.
That's kind of what we've always done along the way. Even if you look at Ignite TV right now. Ignite TV in some ways is going back to our roots around television. We started in television by collecting signals from all kinds of sources and presenting them to customers, so they'd have one, easy place to get the entertainment they wanted most. In the world of all these OTT services out there, our job is to actually collect all these, curate and present them, and be the fair arbiter of that information, of that content, really providing a service to customers. So we're looking for technologies that can help do all those things.
If I look way out in the future, I think things that right now are kind of hobbies, like virtual reality and things of that nature, will become the main sources of entertainment. There will be things where we get to create all kinds of new ways of having fun, together with our friends and our family, that have even more life-like texture around it.
GOB: That's all great, and we can definitely see all that coming down the line, and it all sounds super, it really does… I've been covering this industry since the late 90s and I remember analyst calls where they asked, "So Ted, you've done the (cable) rebuild to 850 MHz, are we done rebuilding now, is that it? Is there going to be no more money spent?"
So that's how far we've come just in my career, covering this, but when you look down the road – and we've got a story on the site now, where Duncan Stewart at Deloitte is speculating that Netflix's content budget in 10 years, might be $30 billion dollars. As Rogers, on the media side, how do you compete with that?
JN: You find areas of content that matter a lot to Canadians, that we can uniquely deliver. The places where we're doubling down on now are around live sports, and around what we're calling fiercely local content. Live sports are still great gathering events for friends and family. They have to do with finding different ways of presenting the thrill of being in the stadium, without being in the stadium – from your living room, from wherever you might be. And I think we'll always play a role in that arena.
If you look at fiercely local content, I think no matter who you are as a media company, you have to have local connectivity understanding in order to really present things in an on-point matter, in Huntsville or Flesherton, or Prince Rupert, places like that. I think given our roots in radio, and given our understanding of local communities, we'll always have a role to play in that sort of content.
“Our role there is largely to go find the best content that matters to Canadians, and present it, and deliver it to them, versus creating it.” – Joe Natale
In terms of large studios, we've seen many different large studios come and go over the years, from large mega studios to independents. Netflix going from distributing content to creating content and Amazon studios now – that role will always continue to evolve. In terms of actually creating original content of that ilk or that nature, I think our role there is largely to go find the best content that matters to Canadians, and present it, and deliver it to them, versus creating it.
GOB: You mentioned also in your speech a couple of times remote surgery and that sort of thing (being delivered by 5G). Then I noticed, Comcast this morning said they're launching a health services unit. Do you envision health being a potential growth area for Rogers, because in your former job, at Telus, that there's a huge health care aspect. Or do you see other areas for growth to come from, for Rogers?
JN: If I look at 5G, and all the exciting things it promises, an important part of 5G is how we will play in various industry verticals or sectors because the play there is largely coming at it from the B2B, or the enterprise space. Now, some of those ideas will become B2B to C (consumer), but the partnerships we'll create, the applications we'll bring to life, will all be B2B oriented.
You look at Canada and say, “well, what industries matter?” In Canada, the ones that really matter include natural resources, include mining, include healthcare, include transportation, include a whole bunch of areas that have a critical mass in Canada, where some of the leading ideas might come out of those industries for the applications of 5G ideas and technologies.
What we're going to do is bring together the right partnerships, develop the right skills and talent inside, to have very focused industry verticals in some of those key areas, to go after the opportunity, whether it's healthcare, or transportation, or natural resources. Those are all important industries to Canada, and all places that we're looking.
GOB: One of those important partnerships is Comcast with X1, what you're calling Ignite TV. That's obviously on track… but is there any reticence or fear to cast your lot with one company? What was being built before was a multitude of vendors. But this is one company where you're reliant upon them to give you what you need.
JN: I think whenever you go out and get a new platform, you have the choice as to whether you build or buy that platform. I think it's very difficult as a Canadian player, any one of us in Canada, to go build our own platform from scratch, because that's a software business, and a software business, as you know, is all about scale, on a global basis. So you've got to throw your lot in with somebody, and typically, in the video entertainment business, it's been one of the large systems integrators or hardware OEM's out there that's developed a platform for that. There's a number of them there out in the marketplace.
What I like about Comcast, is we get scale – and it's not just a company with great software engineering and hardware capability, but they're also an operator. Some of the challenges with all new platforms is that, it looks good on paper, it works well in theory, and then some operator has to harden it and make sure it's going to work in practice.
When the hardware and software provider is also the operator, I think it creates a bit of a different understanding, and a different degree of diligence, and frankly, a much easier translation between us and them. We work very well together, with very similar roots in terms of the Roberts family and the Rogers family, and giving birth to these enterprises. So, I think it's a great partnership.
The thing about Ignite is that, it's not just about TV. In fact, TV is only one piece of the puzzle. To me, Ignite is about the smart home of the future. The first installment just happens to be video entertainment. Behind that will be all their other installments of capability around the connected home and it's that roadmap that's got us the most excited. That roadmap doesn't exist in an integrated, thoughtful fashion almost anywhere else. If you wanted to build that roadmap from scratch, you'd have to take a video platform from one person, take a security platform from someone else, take a home automation platform from someone else, take a WiFi control platform from someone else, stitch it all together, and hopefully it works when you bring it to life.
In our partnership with Comcast, we're getting all of that in the roadmap. We keep talking about the first step out of the gate, but what's behind it is very exciting. When we have the opportunity, love to share with you what's behind it, because you'll see through phases two, three, four, five and beyond, the full robustness of a smart home and how it actually all interconnects. It all relates back to the same voice command capability, all interacts with your preferences for your family, all works seamlessly with any screen, whether it's in the living room, or your smart phone. That's what we're really excited about.
GOB: That's the opportunity to be that premium product, to take people's homes, which have all these devices connected this way and that, to bring it all under one roof, under the Rogers roof. But, that would take a more complicated and complex level of customer service as well.
JN: Absolutely – and that's why we have to keep stepping up the game in customer service. It's no different in the wireless business. When we started in wireless, you had a choice between a bar phone from Nokia, or a flip phone from Motorola, and customer service calls were, I listened to them back in those days, pretty straightforward.
“The key is to build technology that integrates seamlessly, and provides degrees of support and care that can be delivered more on the customer's terms.” – Natale
Today, when you listen to the customer service call, it's about the application, it's about data mirroring on the TV, it's about the printer's not working… you really become a help desk for that entire ecosystem, and that's where we're going in this company.
GOB: That impacts your… costs as well. You mentioned last September you get 47 million calls a year?
JN: Right.
GOB: And it’s 10 dollars a call, I think was the average cost you said then. So this (new level of customer care) increases all of your costs as well if you're going to take on that much more for customers.
JN: I think what'll happen is that there will be fewer calls, but the calls will be more meaningful in terms of providing support. The key is to build technology that integrates seamlessly, and provides degrees of support and care that can be delivered more on the customer's terms.
Not everybody wants to call us. Some people would rather look online for the answer. Some of them would rather troubleshoot on their own. Some of them would rather have the device itself tell them what's going wrong. I think we can build more of those fail safe ideas into the device and have the processes around it, be less reliant on other modes of support overall.
But no question, as a service provider, that is the major thing that we actually offer. We integrate technologies and bring them together on behalf of our customers, and then, our value proposition is keeping you ahead of the game with respect to what the future will bring, and supporting you day-to-day in the enjoyment of that technology.
GOB: DOCSIS 3.1. Great that it gives you the speed lead across your entire footprint. How long though before you have to go fibre deep, to the home? As an HFC (hybrid fibre-coax) operator now, how long before the C part has to be taken out?
JN: I think it's got a lot of life in it still. If you look at the next evolution of DOCSIS, which is not that far away, 2019, CableLabs has put forward a standard that will deliver 10 Gbps in full duplex mode, with coax still being the main connection point. We'll have to go to a passive network, which is fine. We'll take out a lot of the amplifiers and other devices that sit in the nodes, and we'll get to open up the spectrum to create more capacity… but we'll get still get to use that last mile being coax.
So there is a lot of physical capacity still left in that last mile. Where it goes beyond 10 gig, I mean, there's talk of 40 gig or more – what that topology looks like, we'll see. The beauty of our capability is we can make those investments on a success basis, on an evolutionary basis.
As it relates to new subdivisions and condo buildings, we've been running fiber to the home for years already, so anything that's newer in nature already has fibre in the home. So we're talking about then existing operations and in those cases, as a neighborhood reaches a point where we have to segment the node further, or make additional investment, we might just take that neighbourhood and go right to the home. We don't have to do that for every neighbourhood. That's the difference between copper and coax.
