Despite a crippling days-long outage to its network that had many Canadians swearing they’d never trust the company again, Rogers actually managed to add 221,000 new cellphone customers since then.
The telecommunications giant reported financial results on Wednesday for the three-month period up until the end of September. They showed total services revenues at the internet, cable, telephone and cellular conglomerate come in at $3.2 billion, enough for a profit of $371 million.
Both figures were lower than analysts anticipated, but they would have been higher were it not for the financial and reputational hit the company took from a massive outage to its network this summer.
On Friday, July 8, an early-morning software update on Rogers core IP network went catastrophically wrong, causing the company’s entire internal network to become overloaded and shut down, taking down all of the company’s wireless and wired internet services with it.
Because of the company’s ubiquitous role in Canada’s IT infrastructure system, Rogers customers weren’t the only ones impacted.
Payment systems, government services and even 911 access were unavailable across the country for much of the day, with many customers still experiencing problems through the weekend.
The company says it has learned from the incident and fixed the mistakes that caused it, and CEO Tony Staffieri has vowed to do better.
“In wireless, Rogers continues to be strong,” he told analysts on a conference call to discuss the company’s financial results on Wednesday. “While very disappointed in the outage, the impact was isolated.”
The impact was fairly isolated in large part because telecom customers in Canada are notoriously loyal, says Reza Rajabiun, a lecturer on competition policy and a telecom strategy expert.
“People have a lot of brand loyalty in these markets,” he said in an interview Wednesday. “So what they call the churn is very low between carriers.”
He says the incident is “a very interesting reflection of the lack of competitive options in the market from the perspective of the consumers because despite their big reputational damage that they incurred due to the blackout, they still added customers.”
Company provided rebates
Staffieri noted the company doled out $150 million in rebates during the quarter, adding that without that, the company’s wireless service revenue would have been up by nine per cent compared to last year.
Of the 221,000 net new wireless customers, 164,000 were postpaid. The rest were pre-paid, which are typically low-cost plans with little or no data.
All in all, Rogers has added 448,000 new wireless customers so far this year, a pace that’s up by 137 per cent from last year. “Rogers is achieving strong share gains in a growing and competitive wireless market,” he said.
A rebate that works out to about five days’ worth of service on the average bill may not sound like much, given the inconvenience of the company’s second major service outage in as many years. But it was seemingly enough to keep a good chunk of the company’s customers onside — and even add new ones, at least on the wireless side.
Last straw for some
Robert Vincent was one customer for whom the outage was the last straw. The Montrealer had been a Rogers customer for 20 years, and while he had minor complaints over the years, “the outage was a powerful motivator,” he said in an interview. “That was the moment I said ‘OK, I’m definitely looking for alternatives.’ “
He has since moved his cellphone plan, along with his wife’s, to Telus, and no longer has any relationship with Rogers. “I’m probably guilty of sticking with one for too long,” he said.
In the days that followed the outage, many more Canadians said they would leave the company and go to a rival, but Wednesday’s numbers show very few followed through on the threat.
Gary Lyon of Toronto didn’t. He has cable, internet and wireless service with Rogers, paying about $180 a month for all three. On the day of the outage, he said he was most put off by the lack of communication from the company.
“If you have a major outage, the first thing is you acknowledge yes, you are having problems,” he said in an interview this week. ” ‘We don’t have a clear timeline of when it will be fixed, but we are working on it.’ Even three sentences from someone taking responsibility.”
Like many Canadians, Rogers itself was incommunicado for the most part on July 8, as its internal telecommunications services were offline, but for Lyon, that’s no excuse.
He was one of many for whom the outage seemed to be the last straw. But when he looked into going elsewhere, he discovered he didn’t really have any better alternatives.
“I wanted to seriously jettison Rogers and was looking at options,” he said, but he lives in an apartment building in Toronto where other providers say their hands are tied. “The only way it makes sense for me to exit Rogers would be fibre internet, and we can’t get fibre. According to Bell, they can’t connect our building.”
Lyon could get a cellphone plan from another company, but he says prices wouldn’t result in any real savings for him.
It’s a similar tale from Carol Kozopas, who lives in the Blue Mountains cottage country area north of Toronto. Like many, she has multiple services with Rogers, including two cellphones, cable and home internet. She was surprised and disappointed that even her home phone was knocked offline that day.
“Everything was gone and you can be assured that it’s not going to stay this way,” Kozopas told CBC News at the time. “Due to cell contracts, we can’t change them, but home phone and modem can change.”
When contacted this week, Kozopas says she has managed to bring her family’s Rogers bill down by about $100 a month, to under $500 — but she is still a customer.
“I did not drop Rogers due to the work involved with making any changes,” she said.
Another Rogers customer, Ted Engels, says that while it was “completely and wholly irresponsible” for a company as important as Rogers to centralize its entire system the way it did, he had no plans to cut his service precisely because he uses it as a backup system for when his other network fails.
He lives on Toronto Island and runs a business out of his home that requires 24/7 connectivity.
“We have both service providers in case one goes down. We can hot spot the clinic’s systems to either of our phones,” he told CBC News in an interview.
“They both don’t go down at the same time.”
That’s why he says he has no intention of ever leaving the company entirely, but that doesn’t mean he’s a satisfied customer.
“There wouldn’t have been anywhere else to go,” he said. “It’s just a joke.”