‘We’re at the brink of a technological revolution’: Joe Natale on the future of Rogers
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, which 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 changed the way we live and work,” Natale said at Rogers’ annual general meeting at its Toronto headquarters Friday.
That revolution will come as a result of 5G wireless technology, the low-latency networks needed to power such real-time applications as self-driving cars and smart cities, and that 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.
Earlier 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.
In an interview, Natale said 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.
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,” 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 working 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 reroute traffic based on accidents or monitor natural disasters.
While the traditional television business has faced difficulties, Rogers is nevertheless preparing to launch a major upgrade in that area.
When Natale joined the company, it had just taken a $484-million hit after abandoning internal development of an internet protocol TV product in favour of Comcast’s X1 platform instead.
The new product, Ignite TV, is being testing 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 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’ everyday 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.”
Since Natale started last spring after his predecessor Guy Laurence was fired over conflict with the Rogers family, the controlling shareholder, performance has been solid. Wireless churn rates are down, subscribers numbers are up and progress has been made on the Ignite launch.
There have also been shake-ups to the executive team and the media strategy. Rogers sold its stake in Texture, a digital magazine service, and terminated its $100-million partnership with Vice Media.
Natale said Rogers “doubled down” on sports — it owns the Toronto Blue Jays and Sportsnet — given live entertainment still draws a huge audience. It has also focused on local news, and its radio division is doing very well. But the future is less certain when it comes to the publishing of such national titles as Maclean’s and Chatelaine.
“We have to reinvent the publishing business for the digital age. We haven’t done enough to do that,” Natale said, adding there are great titles in the division.
“We’re going to take our best crack at it.”