Rogers CEO: odds are against Canada sustaining 4th major wireless carrier

Rogers Communications in Ottawa. Martin Good / Shutterstock

TORONTO — The new chief executive of Rogers Communications Inc. says that few countries have been able to support four national wireless carriers in the long term and Canada likely won’t be one of them because of the enormous costs involved — but the federal government is entitled to have a different point of view.

“The principle of a fourth carrier is something that the government has been keen to pursue,” Rogers CEO Guy Laurence told reporters during a briefing about plans he has for revitalizing the Toronto-based company over the next few years.

He noted that the federal government has been “quite vocal” about its desire that there be at least four strong competitors in every region of the country.

“They’re still pursuing that policy and they’re entitled to that point of view,” Laurence said in one of his many unscripted responses to reporters during a 45-minute briefing on Friday at Rogers headquarters in downtown Toronto.

Laurence said some European countries have tried to follow a similar four-carrier policy but without much success because of the amount of money required to build, update and run a modern communications network.

“What you saw in Europe was a number of different countries who pursued the four-carrier option for a period of five to seven years. It was politically very popularist and they were happy to follow that,” said Laurence, who previously headed the U.K. arm of Vodafone, a multinational communications company.

“What you clearly see now, and I cite Germany and France, is that they’ve started to realize that given the capital complexity involved in these companies, it is very difficult to support a fourth carrier.”

Canada’s geographic size also weighs against having a fourth national carrier, he added.

“I’m not saying the government is wrong. I’m not saying that they should change their policy.

My personal view is that it is difficult to see a scenario where a fourth carrier will be successful.”

The Harper government has said for years that adding another strong competitor to the market — the only other Canadian company with a national wireless network, Wind Mobile, is far smaller than Rogers (TSX:RCI.B), Bell (TSX:BCE) Telus (TSX:T) — would instill more competition that would drive down prices for consumers and spur much-needed innovations for Canada.

Laurence says he has met with “all of the major political players” and had very candid discussions about his views.

He said that “the conversations I’ve had, thus far, have been very constructive” and there’s no point of “arm wrestling” over whether there should be three or four carriers, which is only one of the issues that he has discussed..

“There are many ways of coming up with solutions to different issues,” Laurence said, without elaborating.

His remarks were part of a wide-ranging question period with reporters, following the release of Rogers 3.0 — a vision for returning the company to growth mode after a period of relative stagnation or customer loss in its core wireless and cable businesses.

However, apart from releasing a new organizational structure and announcing some changes in the management team, Laurence provided few firm details about how, or when, the vision will become reality.

He said there’s no plan for large-scale reductions in the Rogers workforce of about 10,400 people but it’s inevitable there will be fewer management positions.

“When you remove overlap and reduce bureaucracy, and you create agility, then it takes less people in management. So there will be job losses at the management level. No doubt of this,” Laurence said.

“But because this is not a cost story, I don’t have a dollar value or a number of people. I don’t even have the vaguest idea in my head what that might be.”

Laurence said he doesn’t expect job losses among the company’s front-line employees and “in fact, I see investment in that area, although he couldn’t put a dollar value on it or say how many employees might be added.”

He said Rogers will be adopting a different marketing approach but said people will have to “stay tuned” to see what they will be, citing the need to keep competitors in the dark. However, he did say the company will be keeping its three wireless brands — Rogers, Fido and Chatr.