Rogers About to Get Something they Didn't Want: Competition

I got a news-flash email from the CBC today (I’m no one spe­cial; I’ve signed up for alerts like this):

The fed­er­al gov­ern­ment is $4.2 bil­lion rich­er with the con­clu­sion of the cell­phone spec­trum auc­tion on Mon­day, while cus­tomers stand to win as five new com­pa­nies are now well posi­tioned to launch ser­vices over the next few years. The wind­fall is con­sid­er­ably larg­er than the orig­i­nal $1.5 bil­lion many indus­try ana­lysts had pre­dict­ed before the auc­tion began on May 27.

I linked to the relat­ed sto­ry on the CBC web site, and 3 pas­sages caught my eye. (in all cas­es, bold and ital­ics are mine) First:

The big win­ner — and biggest spender — among poten­tial new entrants was Toron­to-based Glob­alive Com­mu­ni­ca­tions Inc., which cur­rent­ly sells home phone and inter­net ser­vice under the Yak brand. The com­pa­ny has emerged from the auc­tion posi­tioned to launch a nation­al cell­phone ser­vice with 30 licens­es broad­ly dis­trib­uted across the coun­try.


The new entrants are wide­ly expect­ed to build third-gen­er­a­tion net­works based on glob­al sys­tem for mobile com­mu­ni­ca­tions (GSM) tech­nol­o­gy, which is what Rogers and its Fido sub­sidiary use, or its new­er fourth-gen­er­a­tion off­shoot, long-term evo­lu­tion (LTE).

and Third:

Iain Grant, pres­i­dent of the Seaboard Group telecom­mu­ni­ca­tions con­sul­tan­cy, said a nation­al car­ri­er could be up and run­ning by East­er at a cost of $500 mil­lion, although oth­er esti­mates say a launch could take a year or two. The trick­i­est part of start­ing up will be nego­ti­at­ing rights for trans­mis­sion sites, many of which will either be on top of tall build­ings or on tow­ers owned by Rogers, Bell and Telus.

So here we are, look­ing at a Spring of 2009 roll-out for at least one com­peti­tor to Rogers/Fido Wire­less, and did Rogers posi­tion them­selves well for such a sit­u­a­tion? In my hum­ble opin­ion, absolute­ly not. Any­one in Cana­da has seen this com­ing (any­one who was not in Rogers man­age­ment, that is). In the past years, months and weeks, Rogers has made so many Cana­di­an con­sumers so angry that they can count on no cus­tomer loy­al­ty what­so­ev­er. Their brand may very well be dam­aged beyond repair. Any new cell­phone ven­dor who sup­ports a GSM 3G net­work will be able to grab a large pool of cus­tomers ready to switch imme­di­ate­ly, or when their con­tract with Rogers is up (and you can bet that they’ll put that date on their cal­en­dar!)

How did Rogers screw this up so bad­ly? The recent his­to­ry of Rogers, par­tic­u­lar­ly with respect to pric­ing and mar­ket­ing tells some of the sto­ry. If you live in Cana­da and have had any deal­ings with Rogers, you’ll know much of this, so feel free to skip to the end…

First, over the past 3 or 4 years, Rogers charged some of the high­est data and call rates in the world. Then, in 2007, con­sumers and tech watch­ers crit­i­cized them for being slow to bring the iPhone to Cana­da after it was avail­able in the U.S. for a year.  In April of 2008, Rogers chief exec­u­tive Ted Rogers told investors the iPhone would arrive in Cana­da some time lat­er in the year. In June, Rogers set the iPhone’s debut for July 11 (along with sev­er­al oth­er coun­tries through­out the world), but were quick­ly met with harsh crit­i­cism about the data pric­ing plan, which was per­haps the sec­ond high­est in the world (with Swe­den being the high­est) . Some high-pro­file tech per­son­al­i­ties in Cana­da went on tele­vi­sion to announce that they were going to jump ship (in some cas­es pay­ing a siz­able penal­ty). Only after thou­sands of cur­rent and prospec­tive cus­tomers signed online peti­tions protest­ing these rates,  encour­ag­ing Apple Inc. CEO Steve Jobs to put pres­sure on the com­pa­ny, did Rogers relent with a drop of the high­est rate to a rea­son­able lev­el ($30 per month with a usage lim­it of up to 6 GB per month), but this rate is avail­able only until the end of August. On the day of the roll-out, Rogers’ reg­istry net­works crashed simul­ta­ne­ous­ly with Apple’s iTunes reg­is­ter­ing sys­tem after the new iPhone was unveiled. The Out­age last­ed into the after­noon at some loca­tions and it wasn’t until the next week before some cus­tomers could acti­vate their phones. Rogers rep­re­sen­ta­tives said they expect­ed record first-day sales, but declined to dis­close how many phones were shipped to stores or how many they had expect­ed to sell. As I write this, Rogers (through­out Van­cou­ver, at least) is still sold out of the iPhone.

All in all it was a high­ly vis­i­ble fias­co. Rogers utter­ly botched the iPhone roll-out in just about every way it could be botched. They could have final­ly made many cur­rent cus­tomers hap­py with a new device and would be seen today as the sole provider of one of the most sought-after tech gad­gets. Instead, they gen­er­at­ed sev­er­al days of bad PR, dis­played poor plan­ning, and missed immea­sur­able mar­ket­ing and sales oppor­tu­ni­ties. There have been numer­ous spec­u­la­tions that the rea­son they ran out stock is that Apple was so peev­ed at the high data rates that they actu­al­ly divert­ed iPhone ship­ments from Cana­da to more rea­son­able Euro­pean car­ri­ers. Whether or not this was true, Rogers’ lack of can­dor regard­ing avail­abil­i­ty, lack of under­stand­ing of the prod­uct, and com­plete screw-up of logis­tics and net­work vol­ume on the day of the roll-out is some­thing that will not fade quick­ly from the mem­o­ry of most Cana­di­ans (and prob­a­bly not by this com­ing East­er).

It will be inter­est­ing to see if the mass exo­dus from Rogers to what­ev­er new car­ri­er Glob­alive will fund will be as swift and mas­sive as I expect it will be. Rogers has run their busi­ness ‘like there’s no tomor­row’, but in the Spring of 2009, ‘tomor­row’ will arrive.

5 Replies to “Rogers About to Get Something they Didn't Want: Competition”

  1. I think there’s some mythol­o­gy in your chronol­o­gy, notably the idea that Apple, much less Jobs, was putting any sort of direct pres­sure on Rogers at that point in the game.

    Also, iPhone 3Gs are com­plete­ly sold out across the US, too: in a note post­ed Sun­day night, John Gru­ber found four avail­able iPhones in any Apple Store in the coun­try.

    Final­ly, I’m hear­ing plau­si­ble rumors that Telus and Bell will migrate to GSM-based net­works by 2010.

    Rogers has always had com­pe­ti­tion, just not iPhone com­pe­ti­tion. CDMA is not the hot tech­nol­o­gy right now, but for all prac­ti­cal pur­pos­es (except SIM swap­ping) it’s equiv­a­lent to GSM.

  2. Yes, the spec­u­la­tion of Apple putting any pres­sure on Rogers (or divert­ing ship­ments) does smack of ‘Our mar­ket is so impor­tant that…’ syn­drome (The Cana­di­an mar­ket is pret­ty tiny com­pared to most oth­ers, and is prob­a­bly the over­whelm­ing rea­son why the ship­ments were small to begin with.)

    As for them being sold out in the US, that may be, but I also remem­ber hear­ing that there were prob­a­bly no more than 20 phones per store in sev­er­al areas. Don’t know the total num­ber that came into Cana­da, but I won­der what would have hap­pened if Rogers had said ‘We’ve only got 150 phones for Fri­day. You can sign up for one now, or get on the list for the next ship­ment.’ That would have made a lot of con­sumers a lot hap­pi­er on Fri­day (espe­cial­ly the ones who wait­ed for hours only to be turned away lat­er.)

    I should have made it clear that it’s GSM com­pe­ti­tion, but that doesn’t have quite the same ring to it (heh). GSM is the dom­i­nant tech­nol­o­gy near­ly every­where else in the world (except for the US, but it could be argued that they are a back­wa­ter when it comes to cell­phone usage and net­works com­pared to the rest of the world).

    I’ve heard the rumor of Telus migrat­ing to GSM (but not Bell). It will be inter­est­ing if the GSM net­work ven­dor choic­es go from 1 to say, 3 or 4 in the space of 2 years. Maybe the three year con­tract that Rogers requires will last just enough for them to change their busi­ness. Nah.

  3. I used to be a hap­py Rogers cus­tomer. We switched for rea­sons that had noth­ing to do with qual­i­ty or price or ser­vice.

    I under­stand that some peo­ple got their knick­ers in a bunch because they’re super inter­est­ed in this one par­tic­u­lar prod­uct. But if we look at the broad­er pic­ture of Rogers and mobile tele­pho­ny in Cana­da, I don’t see what all the fuss is about. After the hype and the wail­ing is over, this is what the whole thing boils down to (how it will read in the news sum­maries at the end of the year):

    Rogers brought the iPhone (a pre­mi­um cell phone) to mar­ket and sold out.

    Also: Cana­di­an phone plans are NOT the “most expen­sive in the world (woe is us)”.

  4. Mem­o­ries are short, but I’ll bet there will be a lot of rehash­ing how bad­ly the roll-out went, and some cus­tomers are so pissed off that they will be eas­i­ly tipped into anoth­er vendor’s lap. Also, cor­rob­o­rat­ing Ryan’s com­ment, Bell and Telus both “are poised to announce” (again CBC) that they are con­sid­er­ing mov­ing to GSM. More com­pe­ti­tion! Woo hoo!

    Re. how Cana­di­an iPhone plans are vs. the rest of the world, the CBC begs to dif­fer with you:

    Only Italy more expen­sive than Cana­da

    Of the 21 coun­tries where the iPhone is being launched on Fri­day, Italy comes in first with $2,554 for a two-year ser­vice agree­ment. The amounts are in U.S. dol­lars for the pur­pose of com­par­i­son in’s iPhone index.

    My apolo­gies to Swe­den. Woe is us indeed. (In Italy, I guess they’re say­ing “Oi mei!” or some­thing like that.)

    Check this out:

  5. Hey David,

    Thanks for the link-love! I’m delight­ed to see that Yak made it through. Com­bine that with Telus / Bell join­ing the GSM ranks final­ly, and we’ve got some decent com­pe­ti­tion com­ing up.

    ’bout time, too.

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