By Greg O’Brien
THE CANADIAN CABLE Systems Alliance annual general meeting is always a great time. Compared to some of the other events I attend through the year, it’s tiny. But it’s very useful and always well organized. I always come away from it having learned a lot – and finally having had some face-to-face time with people I normally only chat with via e-mail.
The “learnings” (not really a word, but it’s one everyone uses) this year were plentiful. From new technologies and services to future-gazing and concrete advice on how to approach video on demand.
But there was a bit of an uncomfortable undercurrent to this year’s event that may mark a stark change in the Canadian cable industry and how it has traditionally worked.
The undercurrent of course, was because of the Rogers Cable application to extend its cable territory into both Cogeco Cable’s regions of Halton, Oakville and Burlington, and into Aurora Cable Internet’s region north of Toronto, a story which Cartt.ca broke on the Friday before the event.
The cable industry – here and in the U.S. – has always been a rather collegial industry. Run by families in separate territories who aren’t competing with each other, cable companies have shared information, technology, even resources and people at times.
Aggressive operators who wanted to grow would generally make an offer to neighbouring systems who would eventually sell to the bigger, or more ambitious guy. It’s how Rogers Cable came to be, gradually buying up Toronto and most of Ontario, Vancouver, and later New Brunswick and St John’s, NF. But it was never able to get its hands on Aurora Cable, which is surrounded by Rogers.
Aurora’s owner, (78-looking-like-he’s-going-on-58-year-old) Jim Irvine, just doesn’t want to sell. For most observers, it defies logic a little since the price the 16,000-sub independent system could command is in the tens of millions. While Rogers made an offer to buy the system as recently as a couple of months ago, Irvine stood fast, preferring to hang on to his legacy (he’s fond of pointing out he got into this cable thing before Ted Rogers).
Irvine was the toast of this year’s CCSA AGM because of the story from Friday. Everyone loves a David v. Goliath battle. He even effectively melted away the tension during the VOD session on Monday by walking up and shaking hands with David Purdy, Rogers Cable’s VP and GM Television to much laughter and shouts of “saying ‘hi’ to your new boss?”
Rogers and other large telecom companies are on a mission to provide everything to everyone (that is, phone, wireless, Internet and TV) – and even having little pockets in their areas where they can’t do that severely hinders the company’s branding and message to consumers. (And the fact that Aurora is one of the wealthiest communities in Canada also plays into this.)
From here, it seems as though Rogers has gotten tired of offering to buy Aurora Cable and is determined to force action by overbuilding (and taking its chances on looking like a big bully in that community) or just threatening to overbuild so that Irvine will sell.
As for the part of the application that deals with Cogeco’s territories, when Rogers gets the regional license extension (and I see little standing in the way of regulatory approval) look for it only to fill in pieces of regions Rogers already serves along the Mississauga border and along the way to Guelph, for example.
It sure wouldn’t make much sense for Rogers to launch a multi-million dollar overbuild program in such a large urban area smack in the middle of Cogeco’s prime real estate when Rogers already is about an 18% owner of the company with 6.6 million shares of Cogeco Cable and 3.4 million shares of Cogeco Inc.
But it will mean Rogers can siphon off some key customers in wealthy regions west of the Greater Toronto Area away from a cable cousin.
The advantage for Rogers is that it offers the full package of services where Cogeco and Aurora don’t, as neither sell wireless. The big red machine is in a battle with Bell and figures it can’t afford to have holes in its network where Bell doesn’t – and it appears it’s willing to do whatever it takes to patch those holes.
And if this is the new reality, it’s simply the next step in wide open competition. Does Aurora have to sell? Of course not. Maybe they will ask for a cable license expansion into the rest of the GTA. Does Cogeco? Nope. Nobody has to sell.
But they may have to keep their elbows higher as the competitive fire from the big guys burns away that old-style collegiality.
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