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24 Νοε 2013 (πριν από 3 χρόνια και 11 μήνες)

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Rogers Communication Inc. is one of Canada’s best know corporation and also
one of the largest. One of the relatively new divisions of Rogers is
Rogers Wireless.
This division that was originally called Rogers Cantel Inc., launched its first cellular
se
rvice on July 1, 1985, in Toronto and Montreal. The founder of this company was non
-
other than Mr. Ted Rogers. In only two years Rogers Cantel Inc. had become the first
wireless phone company
to
offer a continuous coverage corridor from Windsor to Quebec

City, an area of aproximatly1,200 kilometers. Currently Rogers Wireless has the largest
cellular corridor in North America, an area of nearly 2,000 kilometers. Rogers
Communication has been able to successfully expand its operation and offer wireless
se
rvices to most cities and travel corridors in all ten provinces of Canada. The current
coverage of Rogers Wireless is 85% for digital services and 93% for analog
(“
Investor
Relations

)
.


The wireless communication industry has a monopolistic
competition

w
ith
product differentiation. There are a few big
firms

in this industry that produce similar
products;

however they try their best to differentiate their products from the others
offered to the consumers.
Rogers Wireless enjoys
one of highest revenues re
ceived

by
wireless carriers in Canada. They receive $12
-
per
-
subscriber per month
(
Okalow
)
.
During the year 2003 the operating income produced by Rogers Wireless accounted for
49% of the $1,449,000,000 total revenue produces by Rogers Communication Inc
.
(“
Investor Relations”
)
. Rogers Cable on the other hand only contributed 44% of this
operating income. It is clear to see that Rogers Wireless is a very important par
t

of
Rogers Communication Inc. and as such is vital par of the whole organization.


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Rog
ers Wireless is Canada's biggest wireless carrier with 5.5 million customers
and controlling 32% of the youth market in Canada
(
Daniels)
.
The reason behind
Roger
s
Wireless’s success

has been in part due to its many

technological advances in the recent
dec
ade. For example in February 1992, Rogers became the first Canadian wireless
carrier to add digital transmission technology to its wireless network from coast to coast.
Thanks to this digital wireless technology, static was no longer hear
d

over the phone
since the voice signal is converted into data and then sent over the air. Also in


November 8, 1996, after being awarded a Personal Communications Services (PCS)
license (in the 2 GHz band) Rogers Wireless became the first wireless company in
Canada to of
fer Digital PCS to its costumers in Montreal. This service was offered to all
of Canada on May 15, 1997.

Currently Rogers is primarily using their GSM/GPRS
(
Global System for Mobile Communications

/ General Packet Radio Service )
. The GSM
network is the

standard for most of the world except for North America where the market
is shared between GSM and CDMA (Code Division Multiple Access)
. In Canada only
Rogers Wireless and Microcell
Telecommunication
(Fido) use the GSM network
s
,

while
Bell Canada and Tel
us Mobility use CDMA network
s
.


One of the most important changes in Rogers Wireless took place
on
November

9
,
2004
. On this date Rogers Wireless successfully implemented its $1.4 billion takeover of
Microcell Telecommunications
or
Fido. Due to this ta
keover Rogers became Canada's
biggest wireless carrier with 5.5 million customers. This
change is positive one for all

of
the

F
ido users for two main reasons. First of all, even though this change is very recent
and not much is known of the financial imp
lications of it, it is safe to say “that the Fido
brand will remain and be used to target younger buyers. According to Ted Rogers,
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president of Rogers Communications, "the Fido brand is well known and adds clout to
Rogers Wireless's position in the importa
nt youth and young
-
adult market."”
(" Rogers
Outbids Telus For Fido!")
. Secondly, it was a well
-
known fact that a
lthough Fido offers
it costumer
s very inn
ovative and valuable plans,
Fido’s network was very small and only
covered the major urban centers.
As a result of this take over however, since both Fido
and Rogers use GSM technology for their networks, Fido users now can user the Rogers
Wireless Network whenever Fido is not available. It is important to mention
also that the
reverse is true f
o
r

Roger
s Wireless as well

and in areas where the Rogers signal is weak
they can use the Fido network instead
.
It is also possible to view this takeover from
another view as well by using game theory.
It is safe to assume that if Rogers Wireless

had not taken ov
er Fido, Telus would have done so in their place. Telus is already a
formidable competitor in the wireless carrie
rs industry
, and it is logical to assume that
they would have become even stronger after the takeover.
I
f Telus had been successful in
taking

over Fido, Rogers Wireless would have lost its
network
advantage since Telus
would now have access to
a GSM network
.

Using the basic concepts of game theory it is
easy to see that given the fact mention previously the only course of action open to
Rogers

Wireless was to takeover Fido in order stop Telus from reaching a position where
they could offer Rogers

a
very serious competition.


Rogers Wireless has used many strategies over last few years in order to maintain
its majority market share and to es
tablish it self as the dominate firm in the industry. One
of strategies used is Price Discriminations. Rogers Wireless offe
rs many different
wireless
packages to its costumes such as Family, Couple, Pay As You Go, Value Pack,
and many more
(" Plans & Ess
entials")
. Each of these different packages are designed to
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fit the needs and lifestyles of many different groups. For example the family plan is ideal
for a family of four where everyone would like to have their own phone and the majority
of calls are m
ade between family members (free Rogers to Rogers phone calls).
However these packages are not the end of this

strategy
. The Rogers Wireless costumers
who are also costumers of Rogers Cable and Internet Service can take advantage of the
discounts offered

to them if they bundle up all of their services in one bill. In such cases
costumers can save $5 to $10 on each service and will no longer need to pay two or three
different bills each time. This is a huge incentive for each Rogers
costumer

who uses one

the services to acquire
their
other communication need
s

from Rogers instead of their
competitors.
These different packages and bundles offered by Rogers will allow the
costumers to self
-
select and only choose the products they need and want
.

Another st
rategy used by Rogers Wireless

is
to use
lock
-
in

switching costs in
order to keep the costumers that they have
. Many wireless carriers have decide
d

to cut
the profit
s

that they receive by selling

cellular phones
. Cellular phones that normally
would cost
in excess of a hundred dollars are sold for quarter of thei
r price if the
costumer agrees

to sing a contract with the wireless carriers. The dur
ation of these
contracts change

depend on how much the price of the cellular phone, the longer the term
the low
er the price. This way the costumer will need to stay with the wireless carriers for
the duration of the contract a
nd would have to pay a heavy

fine if they decide to get of
the contract before the end

and
as a result they are

locked in with

carriers for
a period of
time.
Another way by which Rogers Wireless and Fido lock in their costumers is by the
use of their GSM network. It is not possible to use a GSM phone in a CDMA network
and as such the individual will require purchasing a new handset designed
to operate
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under a CDMA network. This will increase the switching costs for costumers and will in
turn deter them from changing their networks.

Network Effect
s have always been a major issue in the wireless communication
industry. Today
it is common pr
actice that each wireless carrier will provide free calls
between all of

it subscribers
.
This effect is magnified due to the fact that Rogers
Wireless uses a GSM network unlike its competitors. This makes their network even
more exclusive and t
herefore t
he more people they have the more people will wish to join
them

to take advantage their network and free calls between the member
. Rogers
Wireless has played its hand very well in regards to the issues of lock in and network
effects. They have for a numb
er of years offered contracts to their costumers and

have
kept their prices as
low

or at time even lower than competitors. The recent addition of
Fido to Rogers Wireless has successfully increased the number of people who in essence
use Rogers Wireless an
d has in effect i
ncreased their network effect.

It is possible to
argue that the types of networks discussed are both Real and Virtual. These networks are
real in the sense that Rogers Wireless has a real network of towers and transmitter that
connects p
hones together.
This network is also virtual since each user does not really see
the real network, however they are connected by it to different users.
Consequently
Rogers Wireless’s network has both virtual and real network characteristics.

It is very

important that Rogers Wireless attracts as m
any costumers as it can
since it

exists in an environment with Economies of Scale.
It has been very expensive for
Rogers Wireless to setup its network in the first place. However now that the network is
operat
ional it will cost them a very small amount of money to add a new member to their
network. Therefore the more people they can persuade to join their network the lower the
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average cost will get and they will be better off.
Rogers Wireless has been able to

respond very well to the very competitive nature of the wireless carriers industry. It has
been able to acquire the majority of the market share and keep that position thanks

to its
successful strategies and as a result decrease its average costs substan
tially.
It is
important for Rogers Wireless to continue with such trends and to improve on them since
they face strong
completion

from Telus Communication and it is possible for new
companies to join the industry at any time.