It has been a long time coming. The inevitable Canadian cable consolidation between Rogers Communications and Shaw Communications is underway – two operators that have struggled to make hay in OTT video and have since found common ground on Comcast’s X1 video platform.
This mutual X1 love-in should make the merger between the respective video businesses a relatively smooth one, as Rogers and Shaw have each standardized on RDK-based technologies for their pay TV operations. For the sake of the merged Rogers-Shaw entity, should it make it past the preliminary stages, we hope the resultant video business is more successful than the disastrous shomi SVoD joint venture between the two operators that lasted a little over a year after it launched back in 2015.
Rogers is the driving force behind the deal with a proposal to acquire 100% of Shaw’s shares in a deal valued at $26 billion, a premium of approximately 69%. This is primarily about boosting the positioning of the two cablecos in the 5G market, pledging to invest $2.5 billion in 5G networks over the next five years across Western Canada to better compete against Telus and BCE.
But while talk about the TV business hardly got a look-in as the news broke, this is a much more interesting story. Embracing X1 technology years ago was effectively a masterstroke from both Rogers and Shaw, and we would not be surprised if a future merger was part of the rationale behind these major technical decisions at the time.
Merging any pay TV business with another is a gargantuan task, but the two operators are in an infinitely better position to execute it today with the support of the open source RDK architecture.
Diving deeper, similarities can be drawn from placing the pay TV technology stacks of Rogers’ Ignite TV and Shaw’s BlueCurve TV side by side, which also helps to highlight a handful areas with room for improvement.
As well as both Rogers and Shaw licensing the X1 technology, both are long-term users of AWS Elemental services. Both are long-term contractors of Cisco video products, which have since been inherited by Synamedia in the areas of security, delivery, and analytics. Both have had TV applications developed by You.i TV (now owned by WarnerMedia). Both have deployed set tops from Arris (CommScope). Both have deployed the Mpx Content Management System from Comcast subsidiary thePlatform. Even outside of video, both have deployed Plume WiFi technology, which has become synonymous with cable operator broadband strategies, particularly in North America (Shaw is an investor in Plume).
While there are some revered vendor names here, Rogers and Shaw are clearly in need of some streamlining. The merged beast will need to trim off some of the fat in order to coalesce around a common cloud-based back office infrastructure, embracing more of what RDK has to offer. That will almost certainly involve Comcast’s X1 platform and the Metrological Media application technology, and we can also envisage the new Rogers-Shaw taking on more Synamedia services as the vendor increasingly strikes all the right notes if you are a pay TV operator embarking on a crash diet.
That said, it is well known that Shaw was mid-way through re-architecting its TV Everywhere systems using Cisco when it abandoned this technology and went instead with Comcast’s X1 approach.
Like the existing Rogers and Shaw pay TV services, the Xfinity X1 video platform is hosted on AWS cloud infrastructure, which also supports the XFi personalized WiFi service and NBCUniversal workloads. It uses Tru2way middleware, which emerged as the successor to the original Open Cable Application Platform (OCAP) technology for TVs to connect to cable services without a set top. This presents a common platform for deployment of interactive TV applications, insulating the latter from the underlying device. RDK then sits as an abstract layer between that middleware and the SoC so that functions like tuning, decryption and de-multiplexing are handled via standard commands, rather than proprietary.
Comcast of course has Dutch app developer Metrological at its disposal these days, offering an open source browser in WPE (Web Platform for Embedded) WebKit which is all about being able to use the full features of HTML5 rendering, so a new UI can be delivered from the cloud – which means it can be changed at any time, but still rendered on the device. A growing demand from operators is the ability to roll out the same UI across a footprint of legacy set tops, which is possible using the Metrological Framework.
Anyone licensing X1 can also tap into the AdSmart addressable advertising technology system that Comcast inherited via Sky. Audience Studio, NBCU’s targeted ad technology, has been rolled into AdSmart, keeping the AdSmart name as an umbrella term for Comcast’s advertising technology.
After completing the expansion of Ignite TV to its entire cable footprint during 2019, Rogers then went ahead and adopted Comcast’s WiFi strategy too. Rogers runs Quantenna’s QSR10G WiFi chip, with Plume Pods which are powered by a Qualcomm 2×2 WiFi chip. Plume’s Adaptive WiFi is powered by OpenSync—the open source virtualized middle layer geared towards getting operators to ditch legacy management systems based on the Broadband Forum’s TR069 technical specification.
Rogers has a few concessions up its sleeve to appease operators. Namely, $1 billion will be dedicated to connecting Indigenous communities to close the connectivity gap in a country where some 10% of homes still have no internet access. Rogers pledges to communicate with these communities to create several Indigenous-owned ISPs using Rogers’ network infrastructure.
Another question is whether, if the merger between Rogers and Shaw clears regulatory hurdles, would it invite Altice USA to return to the table with a bid for Cogeco, after abandoning its proposed $8.4 billion offer to buy the US cable business from Rogers Communications in November 2020? The initial plan was a confusing one, with Altice USA proposing to sell Cogeco’s Canadian assets back to Rogers after the deal completed, retaining the US-based business for itself.
Altice USA’s revised bid, before the deal collapsed, increased the value of the Canadian side of the business to C$5.2 billion (US$3.94 billion).
Rogers had attempted to schmooze regulators by pledging to invest C$3 billion in network infrastructure upgrades in Quebec, so it will be interesting to see if Rogers has u-turned on this commitment.
In early 2020, when Rogers set out to become Canada’s first operator to launch commercial 5G, Rogers was at the time warning that regulatory uncertainty surrounding rules for 5G, and for shared access, could jeopardize plans to invest this C$3 billion in infrastructure build-out. At the time, CTRC, the Canadian regulator, was reviewing whether to mandate the main operators – BCE, Rogers, Telus and Shaw – to provide better access to MVNOs, which the agency claims are virtually shut out of the market.
The country’s largest operators have since contested the lowered wholesale rates that they are legally allowed to charge subscribers for high-speed broadband connectivity, claiming the move will stifle network investments.