The CEO of Rogers Communications Inc. says his strategy in launching a streaming music partnership with Spotify was all about encouraging wireless customers to use more mobile data.
Guy Laurence said Monday that he didn't even consider offering unlimited data usage for Spotify Premium – which Rogers added as a bonus for customers of select high-end smartphone plans at the beginning of September – because the whole point was to encourage subscribers to get comfortable with using more mobile data. (Spotify's Premium ad-free, unlimited streaming service normally costs $10 per month.)
In contrast, Videotron Ltd. launched an "Unlimited Music" program in August, allowing users of various premium mobile plans to stream music from a select number of partner services without eating into their monthly data allowance. That program is now under scrutiny at the Canadian Radio-television and Telecommunications Commission, with public-interest groups alleging it raises net neutrality concerns by giving preference to some services over others.
Mr. Laurence speculated that Videotron came out with that offer as a bid to gain more market share in Quebec, where the Quebecor Inc.-owned wireless company is competing with Canada's Big Three carriers.
But he said Rogers' strategy with its streaming music offer is to provide interesting content that prompts its subscribers to spend more time using its networks.
"A lot of plans these days, voice is virtually free, texts are virtually free – you've got to pay the bills somehow, right? So we're paying for it through the monetization of data," Mr. Laurence told reporters during a conversation with Spotify CEO Daniel Ek at Rogers' Toronto headquarters. Rogers also began offering free premium Spotify subscriptions for two years to subscribers of its discount Fido brand in March.
"We see this as a cool way of monetizing our mobile business. At the end of the day, there's underlying demand for data because people want to watch video and listen to music on their phones," he said, later adding that Rogers is investing $49-million per week – $2.55-billion annually – to improve its wireline and wireless networks.
Since joining Rogers almost two years ago, Mr. Laurence has put a focus on leveraging content to the benefit of the company's cable, Internet and wireless operations, emphasizing NHL programming and the company's joint-venture video-streaming service, Shomi.
Faced with a serious customer service problem and declining cable and even wireless subscriber numbers, his efforts began to show some promise when Rogers reported better second-quarter numbers in July.
Mr. Laurence said Monday that it will take time before promotions such as the Spotify deal begin to show up in a meaningful way in the company's financial results.
"But at the end of the day, it's a business based on an underlying demand for data through content. And we believe that this will produce accretive value to the company – otherwise why would we do it?"
BMO Nesbitt Burns Inc. analyst Tim Casey wrote in a research report last week that the Rogers turnaround will take still more time and money.
"Recent quarterly results highlight that Rogers still significantly trails its two national competitors on key operating metrics. However, the gap is narrowing," Mr. Casey said, adding, "We're not prepared to call Q2 an inflection point until we see evidence of sustained operating improvement."