Natale enthuses about future tech ‘revolution’
Rogers CEO says internet business is ‘the core’ of company’s plans
It’s been exactly one year since he took on the role of chief executive of Rogers Communications Inc., and Joe Natale wants to talk about networks.
Not the television kind that helped build the company into one of Canada’s communications giants, but the wireless and internet ones that he sees as core to its future. “Now is a critical time to invest. We are at the brink of a technological revolution — a revolution that will fundamentally change the way we live and work,” Natale said at Rogers’ annual general meeting at its Toronto headquarters on Friday.
That revolution will come as a result of 5G wireless technology, the low-latency networks needed to power real-time applications like self-driving cars and smart cities, and will require investment to future-proof the internet for connected home systems that cover everything from home security to lighting control.
Last year when Natale addressed the annual meeting on his first day on the job, he focused on customer service. In an interview Friday, the day after Rogers reported strong first-quarter results, he said the new focus on networks is “one and the same.”
“I believe our responsibility to customers includes making available to them the latest and most important technologies that can help support their lives,” he said.
This week, Rogers announced it would test 5G technology with Ericsson as a partner. It won’t be commercially available for a couple of years, but in the meantime Rogers is upgrading its existing network to 4.5G speeds.
Rogers’ mobile speeds have recently fallen behind its top competitors, BCE Inc. and Telus Corp., according to independent speed tests. Bell and Telus announced 5G tests two years ago.
Natale said that Rogers waited to upgrade its network to 4.5G after lessons learned from 3G.
“Anybody who put in tech early in 3G wound up ripping it out a year or two later,” he said in the interview.
Waiting for a more stable technology means the equipment Rogers installs now can be upgraded to 5G using software, which wasn’t possible until recently.
“The cost of the technology is far less than it was a couple of years ago so we’re able to do more and invest more in the future as a result of that,” Natale said.
Long relegated to the realm of imagination, 5G is now becoming a reality.
“Finally the technology has caught up to the point where we can put our foot on the gas and make this stuff happen,” he said.
That means work closely with municipalities, as 5G networks require small cells on buildings and street furniture rather than one big cell tower, something that could pose challenges for all carriers if cities don’t play ball.
So Natale is selling mayors on the idea of partnering to build smart cities, where networks could re-route traffic based on accidents or monitor natural disasters.
Rogers is also preparing to make major upgrades to its TV product. When Natale joined Rogers, it had just taken a $484-million hit after abandoning internal development of an internet protocol TV product to use Comcast’s X1 platform instead. The new product, Ignite TV, is being tested with employees and slated to roll out next year. It will be a premium product that will eventually enable smart homes.
Shaw Communications Inc. launched a product on the same X1 platform last year — also pitched as a premium, smart-home solution — but said this month that it hasn’t reversed the fortunes of the TV business, which is stagnating in the Netflix era.
“The anchor and the foundation to the home is internet,” Natale
The anchor and the foundation to the home is internet. The TV business in and of itself is a difficult business because content costs are rising and consumers’ appetite to pay more for content is not rising.
said when asked whether Ignite will invigorate a flagging TV business. “The TV business in and of itself is a difficult business because content costs are rising and consumers’ appetite to pay more for content is not rising.”
Tighter margins don’t change the fact that TV is still the “stickiest, most exciting” part of home entertainment, Natale said. It may be all about the internet connection, he said, but Rogers plans to wrap lower margin services around it that add value to customers’ every day lives.
“We’ve architected it so that even if TV doesn’t make a lot of money, it’ll help support the future of the internet business, which is really the core of our future,” he said.
So far, the Rogers board seems pleased with Natale’s strategy. Chairman Edward Rogers praised him at the annual general meeting.
“He has already made a spectacular difference. Our company is stronger than it was, we are more competitive in every business that we’re in,” Rogers said. “Spring is in the air, the first quarter was good, our stock is up and the Blue Jays are winning.”
Financial Post