Rogers Cable Inc. is joining forces with Yahoo Inc. to improve its high-speed Internet product, responding to a similar partnership between Bell Canada and Microsoft Corp.
They had to do something to fight Bell," said Brahm Eiley of Convergence Consulting Group. "If Bell hadn't made the deal with [Microsoft] I don't think Rogers would have made a deal with Yahoo."
Toronto-based Rogers, owned by Rogers Communications Inc., sells Internet service in Ontario, New Brunswick and Newfoundland and Labrador. Yahoo will bring a number of additions to Rogers' service, including personalized content and better spam control. Edward Rogers, head of Rogers Cable, said the partnership is a "winning combination."
"We're always looking to be competitive," Mr. Rogers said.
The push to partner comes as fewer new customers sign up for high-speed Internet. Rogers, which had 791,000 customers as of Dec. 31, reported 23.6-per-cent growth in 2003 compared with 33.5-per-cent growth in 2002. Bell, which had 1.39 million customers as of Sept. 30, reported 38.8-per-cent growth in the first nine months of 2003 compared with 60.3-per-cent growth in the same period in 2002.
Montreal-based Bell, owned by BCE Inc., plans to unveil the results of its partnership with Microsoft this spring, almost a year after announcing the deal. It offers Internet service in Ontario and Quebec. Rogers said the results of its work with Yahoo will appear at some point this year.
(BCE also controls Bell Globemedia, owner of The Globe and Mail and CTV television.)
Mr. Eiley said Rogers was vague about its launch and pricing because it is waiting to see what Bell does and whether Bell raises prices when it introduces the additional Microsoft services.
"It sets up a big game, in terms of who's going to do what," Mr. Eiley said.
In similar deals in the United States, phone companies like Verizon Communications Inc. of New York, working with Redmond, Wash.-based Microsoft, and SBC Communications Inc. of San Antonio, Texas, working with Sunnyvale, Calif.-based Yahoo, didn't raise prices. That's because the phone companies were far behind cable-TV companies in selling Internet service, which is not the case in Canada.
Bell is "feeling very good" about its offering, said Charlotte Burke, head of consumer Internet service. A trial with about 1,500 customers is presently under way, she said, and Bell is assessing its findings. Ms. Burke said it is "hard to say" about specifics right now, including pricing.
Mr. Rogers said he would not discuss pricing without communicating with the company's customers first.
Ford Cavallari of consultancy Adventis Corp. said Rogers made a smart move.
"This kind of deal is helpful because it gives you an additional brand name," he said.
Financial details were not disclosed, but the deal will involve a revenue-sharing agreement.