Canada seeks answers after Rogers outage

It's not been the best couple of weeks for Rogers Communications. Last week, mediation efforts by the Canadian operator to overcome regulatory concerns about its proposed merger with rival Shaw Communications came to nothing. The week then ended with a huge network outage that affected millions of users and paralyzed banking and emergency services.

Rogers' leadership is now presumably putting the Shaw transaction on the back burner as it grapples with the fallout of the major network snafu. Indeed, the outage has prompted even more calls than before for the proposed merger to be permanently kicked into touch.

For now, the operator has enough to deal with as it seeks to appease customers and address questions at government and regulatory level. Indications are that this outage is going to prove very expensive in a number of ways, not least because of the damage to Rogers' brand and reputation.

So far, the operator has announced it will credit customers with the equivalent of five days' service. According to Reuters, Scotiabank has provided a helpful estimate of how much this is likely to cost the operator. In a research note, the bank suggested Rogers would have to credit between C$65 million ($50 million) and C$75 million ($58 million) to customers in the third quarter.

Such a payment is going to make a dent in the operator's finances. Rogers reported net income of C$1.56 billion ($1.21 billion) in 2021. In the first quarter of 2022, net income was C$392 million ($303 million).

Under pressure

Meanwhile, Canada's government is demanding answers from Rogers about what went wrong. Canadian Industry Minister François-Philippe Champagne has been busily tweeting about this "unacceptable situation" and has already announced a probe into the matter.

The minister also ordered leading telcos Rogers, BCE and Telus to reach agreements on emergency roaming, mutual assistance during outages and a communication protocol "to better inform the public and authorities during telecommunications emergencies."

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Meanwhile, Rogers has only until July 22 to respond to urgent questions from the Canadian Radio-television and Telecommunications Commission (CRTC).

The CRTC is requesting a detailed account from Rogers as to "why" and "how" this happened, as well as what measures Rogers is putting in place to prevent future outages.

"Once we are satisfied with Rogers' response to our questions, we will determine what additional measures need to be taken," the commission said.

More trouble for Rogers could lie ahead. According to Reuters, the Retail Council of Canada, which counts close to 45,000 retailers as its members, is in the process of determining the financial impact of Friday's network outage. The Canadian Federation of Independent Business (CFIB) also said the impact of the outage on small businesses "has been huge" due to lost sales on ecommerce sites.

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— Anne Morris, contributing editor, special to Light Reading