MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Saskatchewan Telecommunications Holding Corporation, acquired Cable’s Internet access services compete generally with a number spectrum only in Manitoba and Saskatchewan, respectively. of other Internet Service Providers (“ISPs”) offering competing residential and commercial dial-up and high-speed Internet access Through the auction, six new entrants acquired substantial services. Hi-Speed Internet services, where available, regional holdings of AWS spectrum, and several much smaller compete directly with Bell’s DSL Internet service in the Internet companies acquired small amounts of spectrum in generally rural market in Ontario, with the DSL Internet services of Bell Aliant in locations. As per the “Advanced Wireless Services (“AWS”) Auction, New Brunswick and Newfoundland and Labrador, and various DSL Roaming and Tower/Site Policy” (described above), Rogers has resellers in local markets. entered into roaming agreements with a number of new entrants at commercially negotiated rates. Consistent with the Policy, Cable’s Home Phone services compete with Bell’s wireline phone Rogers has also reached commercial agreements for antenna tower service in Ontario and with Bell Aliant’s wireline phone service and site sharing with several new entrants. Roaming and tower in New Brunswick and Newfoundland and Labrador. In addition, antenna and site sharing will enable new entrants to expand their Rogers Home Phone service competes with ILEC local loop resellers service coverage quickly. Currently, no single potential new entrant (such as Primus) as well as VoIP service providers (such as Vonage has acquired spectrum sufficient to become a national licencee as and Primus) riding over the services of ISPs. defined by Industry to qualify for mandated roaming on a national basis for 10 years. See above under “Wireless Regulation Rogers Retail competes with other wireless dealers and DVD and and Regulatory Developments” regarding Advanced Wireless video game sales and rental store chains, as well as individually Services (“AWS”) Auction, Roaming and Tower/Site Policy. owned and operated outlets and, more recently, online-based subscription rental services and illegally downloaded content Wireless Management Corp. under the brand name, as well as distributors of copied DVDs. Competition is principally WIND, launched service in December 2009 in Toronto and Calgary based on location, price and availability of titles. with announced expansion to Vancouver, Ottawa and Edmonton in early 2010. Quebecor Media Inc. has announced its intentions One of the biggest forces of change in the telecommunications to launch service in Quebec by the summer of 2010. industry is substitution of the traditional wireline video, voice and Canada Inc. has indicated that it expects to launch service in data services by new technologies. Internet delivery is increasingly mid-2010 in Ontario and Quebec. DAVE Wireless Inc., under the becoming a direct threat to voice and video service delivery. brand name , has announced plans to launch in Toronto Younger generations increasingly use the Internet as a substitute in Spring 2010 and to launch in Vancouver, Ottawa, Calgary and for traditional wireline telephone and television services. Edmonton later in 2010. In January 2010, Inc. The use of mobile phones among younger generations has announced that it was taking initial steps to commence wireless resulted in some abandonment of wireline telephone service. activities, with build-out planned over the next several years. Wireless-only households are increasing although the vast majority Bragg Communications Inc. has made no announcements. New of homes today continue to use standard home telephone service. entrants could also partner with one another or other competitors In addition, wireless Internet service is increasing in popularity. providing greater competition to Wireless in more than one region or on a national scale. Media Competition Rogers’ radio stations compete with the other stations in their In November 2009, Bell Canada and TELUS each launched service respective markets as well as with other media, such as newspapers, over their joint HSPA networks, overlaid on their code division magazines, television, outdoor advertising and the Internet. multiple access/evolution data optimized (“CDMA/EVDO”) based Competition within the radio broadcasting industry occurs wireless networks. Until this time, Rogers Wireless was the only primarily in individual market areas, amongst individual stations. carrier in Canada operating on the world standard GSM/GPRS/ On a national level, Media’s radio division competes generally EDGE/HSPA technology. The Bell and TELUS HSPA launches enable with other larger radio operators, which own and operate radio these companies to provide a wider selection of wireless devices, station clusters in markets across Canada. Additionally, over the and to compete for HSPA roaming revenues which are expected to past several years the CRTC has granted additional licences in grow over time as HSPA becomes more widely deployed around the various markets for the development of new radio stations, which world, both of which will increase competition at Wireless. in turn provide additional competition to the established stations in the respective markets. Two licenced satellite subscription-based Cable Competition radio services also provide competition to Media’s radio stations. Canadian cable television systems generally face competition New technologies, such as online web information services, music from several alternative Canadian multi-channel broadcasting downloading, MP3 players and online music streaming services, distribution undertakings (including Bell TV and Star Choice provide competition for radio stations’ audience share. satellite services and telephone company IP TV services), satellite master antenna television, and multi-channel, multi-point wireless The Shopping Channel competes with various retail stores, distribution systems, as well as from the direct reception by antenna catalogue retailers, Internet retailers and direct mail retailers for of over-the-air local and regional broadcast television signals. They sales of its products. On a broadcasting level, The Shopping Channel also face competition from illegal reception of U.S. direct broadcast competes with other television channels for channel placement, satellite services. In addition and importantly, the availability viewer attention and loyalty, and particularly with infomercials of television shows and movies streaming over the Internet has selling products on television. become a direct competitor to Canadian cable television systems.

58 INC. 2009 ANNUAL REPORT