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Jul 12, 2022

Rogers pledges five-day credits as Bay Street weighs outage impact

Rogers now pledges five-day credit

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Rogers Communications Inc. customers can now expect to be credited for the equivalent of five-days service, instead of the initial two-day credit announced by the company, as it tries to regain trust following a massive network outage last Friday.

“We know that we need to earn back their trust, and as a first step, we will be crediting our customers with the equivalent of five days service. We will continue to work around the clock to restore Canadians’ confidence in us,” a company spokesperson said in an emailed statement Wednesday afternoon.

Customer credits are just one part of the fallout Rogers is facing after millions of Canadians were left without internet, television or wireless services over a 19-hour period late last week. The company is also now staring down the possibility of a class-action lawsuit, though it has not yet been authorized by a judge.

One Bay Street analyst estimated the Canadian economy took a $142 million hit because of the outage, as some businesses nationwide weren’t able to process debit or credit transactions.

“While Rogers subscribers - consumers, small businesses and larger organizations - bore the brunt of the outage, it had a ripple effect across the Canadian economy,” said Adam Shine, an analyst at National Bank, in a report to clients on Tuesday.

Shine came up with the $142 million figure through data provided by Statistics Canada and cybersecurity watchdog Netblocks, the latter of which modelled the economic impact of what would happen if Canada’s entire telecom infrastructure failed. Rogers outage alone accounted for 25 per cent of Canada’s entire network connectivity, according to Netblocks.

“Netblocks runs another simulation where a 19-hour shutdown equates to nearly $570 million or $142 million at 25 per cent,” Shine said.

Shine believes that Rogers itself will have to pay roughly $150 million because of the outage half of which will go to settling several lawsuits and other billing concessions, while the other half will compensate the company’s wireless subscribers. However, his estimation was released before Rogers decided to increase its customer credits to five days of service from two days.

Shine said these various expenses will likely “elevate and extend beyond” the company’s third-quarter financial results. Rogers will report its second-quarter results on July 27.

The outage comes amid ongoing regulatory scrutiny regarding Rogers’s $20-billion takeover of Shaw Communications Inc.

Innovation, Science and Industry Minister François-Philippe Champagne, who alongside the Competition Bureau of Canada is one of the two remaining regulators that need to approve the Shaw takeover, said he would like to see more competition in Canada’s telecom sector.

“I have been very clear from the get-go that I will not allow the wholesale transfer of licenses from Shaw to Rogers. The country needs more competition and more affordability,” he said in an interview Tuesday.

The impact of the Rogers outage will now be another consideration for the Innovation, Science and Industry Ministry when deciding whether to approve of the Rogers-Shaw deal, Champagne added.

“The events of the last few days will certainly be in my mind, and in the mind of others, when looking at any possible transaction," he said.