Business Solutions generates revenue from services and equipment sales. Next generation revenue is generated by the provision of high-speed, high-reliability data and voice communications, provided on Rogers advanced IP and Ethernet and Cloud platforms and mainly over the extensive Rogers fibre, cable and wireless networks. Next generation revenue also includes Data Centre services revenue from the 2013 dates of business acquisitions. Legacy revenue is generated mainly by long distance, switched voice services and lower speed data communications, provided over TDM and end of life data platforms with client access primarily delivered through the use of third-party networks and tariffed ILEC services. Business Solutions continues to focus mainly on next generation IP- based services, and on leveraging higher margin on-net and near-net service revenue opportunities, using existing network facilities to expand offerings to the medium and large sized enterprise, public sector and carrier markets. Next generation services now represent 59 % of total service revenue. Revenue from the lower margin off-net legacy business generally includes local and long-distance voice services and legacy data services which often use facilities that are leased rather than owned. Following our recent data centre business acquisitions, Business Solutions is now also focused on data centre colocation, hosting, cloud and disaster recovery services. We continue to work on data centre business integration and the optimization of Business Solutions’ overall cost structures. Excluding the impact of the Blackiron and Pivot Data Centres acquisitions: Adjusted operating profit was 19 % higher this year because of the contribution of new data centres, the ongoing growth in the higher margin on-net next generation business and cost efficiencies. Operating revenue was 7 % higher this year compared to last year, the net result of: Higher Operating Revenue Higher Adjusted Operating Profit Higher Operating Expenses GLYPH<129> the cost of operating and maintaining telecom and data networking equipment GLYPH<129> all other expenses involved in day-to-day operations, to service existing subscriber relationships and attract new subscribers. GLYPH<129> higher expenses related to our data centre acquisitions GLYPH<129> partially offset by expected lower legacy service-related costs related to lower volumes and customer levels and ongoing initiatives to improve costs and productivity. GLYPH<129> operating revenue would have been 3 % lower this year compared to last year, instead of 7 % higher as reported GLYPH<129> adjusted operating profit would have been 11 % higher this year compared to last year, instead of 19 % higher as reported GLYPH<129> higher revenue from next generation services, which grew by 31 % , reflecting the impact of our acquisitions of Blackiron and Pivot Data Centres GLYPH<129> continued execution of our plan to grow higher margin on-net and next generation IP-based services revenue GLYPH<129> partially offset by ongoing decline in the legacy voice and data business, a trend management expects to continue as customers move to faster and more reliable IP services. We assess Business Solutions operating expenses in two categories: Operating expenses were higher this year, the net result of: 2013 2012 2011 $106 $89 $86 (IN MILLIONS OF DOLLARS) BUSINESS SOLUTIONS ADJUSTED OPERATING PROFIT 46 ROGERS COMMUNICATIONS INC. 2013 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS