[Stewartj1]

CRTC gets earful on 3-year cellphone contracts - Canada - CBC News

CRTC gets earful on 3-year cellphone contracts
Complaints of being 'held hostage'
The Canadian Press Posted: Dec 8, 2012 12:18 PM ET Last Updated: Dec 8, 2012 12:17 PM ET Read 371 comments371
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Three-year contracts from cellphone companies should be banned, Canada's telecom regulator has been told in submissions to an online consultation.

Hundreds of people submitted their opinions to the Canadian Radio-television and Telecommunications Commission about a proposed code of conduct for the country's wireless industry.

The CRTC will be seeking more public consultation in the new year about cellphone contracts. (Andy Clark/Reuters)
The overwhelming majority who wrote to the CRTC over the two-week online consultation period passionately voiced concerns about being "held hostage" by 36-month contracts.

"Get rid of the 36 months contract!!!," said one person on the CRTC's online forum. "It first started with 12 months, then 24 months, now the standard is 36 months, which is ridiculous!"

Another person wrote: "CRTC, please get rid of the 3 year contract. Canada will love you for this."

Those submitting opinions and suggestions to the forum were not required to post their names.

The first round of consultations, which closed this week, also heard several complaints about a lack of competition in the industry.

The regulator launched the online discussion to get the views of Canadians on what should be in a new code for wireless services, including cellphones and other personal mobile devices.

The CRTC said in October it would develop a national code so Canadians could have a better understanding of their rights as consumers, and so wireless companies would clearly know their responsibilities.

The commission is expected to issue a draft code by the end of next month, after which a second round of online consultations will be launched. Public hearings are also set to begin in February.

More than 500 people made submissions to the online forum, a small fraction of the 27.4 million wireless subscribers in Canada, which account for 78.2 per cent of households � an increase of six per cent from 2011.

'These plans are all the same'
The vast majority of wireless users have contracts with the big three carriers � Bell, Rogers and Telus. Those three were at the centre of the most submissions about a lack of competition in Canada's wireless industry.

"Where is the competition? These plans are all the same," read one submission below a chart showing wireless plans being offered by the big three.

Consumers can opt for a smaller carrier but have so far appeared reluctant to move.

New entrants, such as WIND, Mobilicity, Public Mobile and Videotron, captured just four per cent of wireless subscribers and two per cent of overall revenues in 2011, according to the CRTC's latest communications monitoring report, issued in early September.

All of the major telecom companies and consumer advocacy groups have voiced support for the idea of national standards for wireless devices, but they have not agreed on how those rules should work.

Critics have argued that Canadian subscribers are simply paying too much for wireless services compared with other countries.

"Canadian consumers continue to be saddled with higher than average costs for wireless services as compared to other OECD countries," NDP consumer critic Glenn Thibeault wrote in his own submission to the CRTC.

Thibeault noted that the three-year terms offered in Canada lock consumers into contracts that often go far beyond the typical lifespan of a heavily used wireless device.

Consumers then end up paying up front for new cellphones, or being forced into extending their contracts by accepting subsidized "upgrades" to newer devices, rather than shelling out sometimes hundreds of dollars in cancellation fees.

The New Democrats are also calling for escalating fines for wireless companies that breach the new code of conduct.

"Under such an enforcement regime, the commission would be entitled to assess monetary penalties for non-compliance with the wireless code and any resulting regulations," said Thibeault.

Some provinces including Quebec have laws in place that limit cancellation fees and stop companies from automatically renewing cellphone contracts.

� The Canadian Press, 2012z

[notfanboy]

This is why I support the Winds, Mobilicitys and Public Mobiles.
The big three have gotten too powerful.

[Bold_until_Hybrid_Comes]

They make the subsidized price of phones so much cheaper on a three year then a two year. This is how they lure us into them. On the other hand unless you dont plan on having a device in three years why not sign one. You still get device upgades while in the initial contract (they told me i was eligible for new customer pricing just 14 months into my three year). You can still make changes to your plan while in a contract. Whats the big fear?

[OniBerry]

They make the subsidized price of phones so much cheaper on a three year then a two year. This is how they lure us into them. On the other hand unless you dont plan on having a device in three years why not sign one. You still get device upgades while in the initial contract (they told me i was eligible for new customer pricing just 14 months into my three year). You can still make changes to your plan while in a contract. Whats the big fear?

Lack of competition and almost forcing people to lock themselves in to a multi-year contract? You're right, that sounds legit...smh

They make the cost of subsidized devices cheaper. That's wrong. You are actually paying almost triple the amount for your device.

So, you think it's ok to spend almost 3200 to save 350-500? If so, then carry on.

[berklon]

If everyone hates a 3-year contract, why do people sign up then?

They'll make changes if there's a lack of demand. You're voting with your wallet.

[Bold_until_Hybrid_Comes]

Lack of competition and almost forcing people to lock themselves in to a multi-year contract? You're right, that sounds legit...smh

They make the cost of subsidized devices cheaper. That's wrong. You are actually paying almost triple the amount for your device.


So, you think it's ok to spend almost 3200 to save 350-500? If so, then carry on.

You are going to pay a monthly amount for the rest of your life whether if you are in one year contracts on three year contracts. Price per month for each length does not vary. Why not atleast save a few hundred on the phone? You make it sound like you only pay monthly fees if you are in a longer contract. I totally understand your perspective though. For me personally though its working out good how it is.

[Rickroller]

With Telus now they have anytime upgrades which allow you to upgrade anytime (although you still need to renew on a 3 year contract) and just pay the difference in the balance of your old phone your upgrading from. So if you want a new phone that's $200 on a 3 year contract, and have only had your old phone for a year that you got on discount.. You would pay the remaining (say $200) balance plus the new upgrade fee of $200..so about $400 for the new phone.

It's a good way to keep customers happy imo.. Because even if I bought a new phone second hand.. I'd be generally paying about $400-$500 used and would still have to be paying for my monthly plan anyways.

Sent from my Galaxy Nexus using Tapatalk 2

[BlackBerry Guy]

I just wish they would discount the 1 and 2 yr contracts proportionately, like they did back in the day before smartphones became popular. Makes no sense at all when you have $50 savings increments per year for 1 or 2 year contracts, but $400 if it's a 3 year term.

Part of the challenge is educating the consumer - most have no concept of the true cost to buy a phone. I like what Telus has done now, essentially if you pay off the prorated balance of the subsidized amount you're free to get another subsidized device.

[Bold_until_Hybrid_Comes]

I just wish they would discount the 1 and 2 yr contracts proportionately, like they did back in the day before smartphones became popular. Makes no sense at all when you have $50 savings increments per year for 1 or 2 year contracts, but $400 if it's a 3 year term.

Part of the challenge is educating the consumer - most have no concept of the true cost to buy a phone. I like what Telus has done now, essentially if you pay off the prorated balance of the subsidized amount you're free to get another subsidized device.

I do agree with this though. The difference from two to three years is too big.

[03_CTD]

Some interesting thoughts here. I too support the wind/public/moblicity small companies but, simply can't with my wallet because their networks are not big enough. My business relies on rural coverage and these new entrants may never have that.

With that in mind I try to remember that the "big 3" while perhaps being as evil as everyone wants to believe, have gone a very long way to cover the vast majority of barely populated areas. This IMO is one of the big reasons we sign longer term contracts and pay more for them.

I recently switched away from Rogers as they had poor coverage at my house in the middle of the tri city area (kw). Oddly enough I could get better reception in the middle of a lake in cottage country. This is the rural coverage we have come to expect in Southern Ontario/Canada in general but, we need to remember that it will not come free.

My biggest issue is that I recently had to sign a 3 year term to get a plan that I wanted and reluctantly received new hardware as well. I wanted to bring my unlocked hardware with me but, would have received no discount and still no new hardware upgrade options for 30 months. WTF?

It used to be that Canadian carriers justified the 3 year terms with hardware subsidy costs. Now I need to be locked in for years just to get a decent plan so I might as well take some brand new hardware at no extra cost or commitment?? In an era of factory unlocked handsets becoming commonplace this is the attitude from our Canadian carriers that MUST change!

[NFLPLAYBOOK]

The only way it's going to change is to let foreign companies come in. Watch how fast they would change if that was on the table.

[Bold_until_Hybrid_Comes]

The only way it's going to change is to let foreign companies come in. Watch how fast they would change if that was on the table.

Last year they tried to portray that this was happening when wind and those companies popped up. Really they are just owned by the big boys though. Its not true competition really

[deezy87]

The only way it's going to change is to let foreign companies come in. Watch how fast they would change if that was on the table.

I recall Rogers had some issues with Wind coming into the market in Canada..eff em! I am on Wind and have been since they were introduced in and around Toronto, I have nothing negative to say about that company. $34plus taxes per month unlimited talk,text and data Canada wide NO CONTRACT

[Bold_until_Hybrid_Comes]

I recall Rogers had some issues with Wind coming into the market in Canada..eff em! I am on Wind and have been since they were introduced in and around Toronto, I have nothing negative to say about that company. $34plus taxes per month unlimited talk,text and data Canada wide NO CONTRACT

I guess if you live in gta wind is fine. Other than that your service will be spotty at best. Would rather pay rogers premium and have reliable service everywhere

[SuperionMaximus]

With Telus now they have anytime upgrades which allow you to upgrade anytime (although you still need to renew on a 3 year contract) and just pay the difference in the balance of your old phone your upgrading from. So if you want a new phone that's $200 on a 3 year contract, and have only had your old phone for a year that you got on discount.. You would pay the remaining (say $200) balance plus the new upgrade fee of $200..so about $400 for the new phone.

It's a good way to keep customers happy imo.. Because even if I bought a new phone second hand.. I'd be generally paying about $400-$500 used and would still have to be paying for my monthly plan anyways.

Sent from my Galaxy Nexus using Tapatalk 2

Your phone is amortized over 3 years, you've paid off 33% of your loan in one year of your 3 year contract. Plus you probably paid something up front when you got the phone.

Lets say you paid $100 up front and the phone was valued at Telus' inflated retail price of $500 (meaning that MSRP on that phone is almost certainly $400 and you could buy it unlocked easily for that). So you paid 20% up front and financed the remaining $400 (the full MSRP) at 0% for 36 months on equal payments. After one year you've paid off $132 and have a remaining balance of $268.

So when you do your anytime upgrade you have to pay that $268 and keep in mind you paid $100 up front. So you paid $368 for a $400 phone. Was the $840 in monthly fees you paid Telus over that year really worth your whopping 8% discount keeping in mind that roughly $768 of that $840 you paid them was PROFIT. Yeah they sure give us Canadian consumers a deal don't they?

So really your fair and friendly anytime upgrade saved you $32 or 8% off the retail price.

Don't believe Telus jacks up no commitment pricing? Compare virtually ANY phone that is sold by Telus that is also on another carrier in Canada and get back to me with who has the highest Month to Month price. Then compare that Month to Month price with the Month to month price of the same phone on US carriers. So you still think Telus is being kind and generous to you?

Oh, and if you really think phones cost $500 I've got a bridge to sell you. They cost that because they are subsidized. Or do you really think that cellular radio in your phone costs an extra $200 versus the WiFi tablet you bought last week at Future Shop for $300 that has the same components in it aside from the cellular radio and a ~10" screen vs a ~4" screen on your phone? Sorry, all in the difference is about $25 to the end cost and the chip cost $8 - $10 and the R&D difference is non-existent as the device was designed with cellular in mind from the start and often the WiFi version still has the cellular radio on the board just disabled in the software and no $10 cellular antenna.

Small screens cost more you say? Oh? Well then volume should more then make up for it considering there are hundreds of millions more phone screens produced annually then tablet screens.

The only reason for the high prices is that you can't just go to future shop and buy a phone independent of a carrier like a tablet or a camera

Bottom line is that it is the carrier control of devices that does make them unaffordable. If there was competition between manufacturers for consumer dollars high end smart phones would not even cost as much as the Nexus 4. High end smart phones would be $200 - $300 tops if they were sold independent of carriers direct to consumers like other electronic goods. Of course there would be a few notable exceptions like the iPhone that have a brand prestige that would allow for a higher then average retail, but generally speaking you'd pay maybe $100 more then you pay for a phone today on a 3 year contract if they were sold direct to consumers independent of carriers and unlocked.

[sk8er_tor]

It's true that people have a choice: one, two, or three year contracts. The handset discount on a one or two year contract is usually insignificant and consumers are lured into a three year contract by it being the only choice for a reasonable discount. That said, all the major carriers allow you to renew and upgrade your handset at the two year mark.

I personally hate three year contracts. It's as bad as 9pm evening calling.

[OniBerry]

You are going to pay a monthly amount for the rest of your life whether if you are in one year contracts on three year contracts. Price per month for each length does not vary. Why not atleast save a few hundred on the phone? You make it sound like you only pay monthly fees if you are in a longer contract. I totally understand your perspective though. For me personally though its working out good how it is.

That's not the case. Who is going to sign for another 3 year contract with less than a year left? Most of the plans per month are the same (not really), but when you buy your phone and your contract is up for renewal, there are things you can do when you bring your own device, that you can't when you sign up for a 1,2, or 3 year contract (as a new contract) It only hurts the first time (like a band-aid), once you bend over and take it for however long your contract is, then you can bypass the crap and go for the same plan with added features or a discount (that can rise the longer you are with a company)

Businesses are not generally in the game to give away money. A customer who signs up for a contract renewal everytime and gets a subsidized device, will be losing money to those who purchase their devices outright and shop around after their initial contract is up. Everyone pays the monthly whatever, Ten years ago....maybe, it was worth it to keep signing your life away. It's not anymore.

I don't care really either way, if I am given the chance to save 22-31 bucks a month, then I will, while those who are too lazy to care or simply can't be bothered thinking about it, continue to pay sticker price. If the status quo was so great, then why do we have more and more budget carriers appearing?

[SuperionMaximus]

I just wish they would discount the 1 and 2 yr contracts proportionately, like they did back in the day before smartphones became popular. Makes no sense at all when you have $50 savings increments per year for 1 or 2 year contracts, but $400 if it's a 3 year term.

Part of the challenge is educating the consumer - most have no concept of the true cost to buy a phone. I like what Telus has done now, essentially if you pay off the prorated balance of the subsidized amount you're free to get another subsidized device.

They are just being somewhat honest lol

If you're on one of those "Tab" deals and you upgrade one or two years in that's really the most you're saving anyway. Telus being the worst offender of the bunch because they inflate their MTM price so that your rolling a much higher amount into your tab then you should be so they are squeezing you for maximum profit.

If you wanted Telus to play fair you should advocate a $300 discount off their retail price, or $200 if they started charging other Canadian carriers retail price just for signing up on a Month to Month basis. That would be entirely fair and reasonable. The subsidy should be the lure to get you in the door to try the service, not the tactic that gets you to keep the service no matter how bad and over priced it is.

If the service is good you're not likely to only stay one month and they will make the same profit they are today. All phones should be free if you sign for two years and the max ETF if you leave should be 50% of the retail cost of the phone divided by 24 X the number of months remaining not 100% of the cost of the phone. Why? Because you were the one who paid for the service, they didn't pay you anything to sign up. You made the carrier profit right from the first month you paid them and if you've paid them 12 months and want leave you should not forced to pay the full inflated retail cost of the device. They didn't pay $500 for it and they made money off you so why should they be allowed to squeeze further profits from you when you leave because they lost your business? Even the current system and the Quebec system are designed for the benefit of the carriers not the consumers.

They sort of already do this anyway. But wouldn't it be more honest if instead of throwing in an xbox or a Samsung galaxy tab or a $150 store gift card with a new 3 year activation the carriers just knocked a couple hundred off the phone no commitment needed for signing up for new service? I mean if they can afford all these extra gifts with new service they must expect to make a **** of a pile of money off you right? So why not just force them to make an effort to keep you instead of luring you in deceptively with "free" gifts? That's what the CRTC should be putting in its Canadian Code of conduct for Telecommunications Companies operating in this country. That would be a truly bold move to benefit all Canadians.

If carriers actually had to provide good customer service and fair pricing to keep CHURN in check then we would all come out ahead. The current system keeps CHURN in check through insane penalties for the consumer of they want to leave.

[Masahiro]

It's true that people have a choice: one, two, or three year contracts. The handset discount on a one or two year contract is usually insignificant and consumers are lured into a three year contract by it being the only choice for a reasonable discount. That said, all the major carriers allow you to renew and upgrade your handset at the two year mark.

I personally hate three year contracts. It's as bad as 9pm evening calling.

That's hardly a choice. I don't think I've heard of anyone signing up for a one-year or two-year contract, as they might as well be paying full price for the phone. Also, Rogers no longer allows you to upgrade at the two year mark, and instead have switched over to the "tab" system that would allow me to upgrade my handset at no cost at around the 30 month mark. So much for thinking I'd have an upgrade available by now... I cancelled and switched over to Fido (I know it's the same company) and haven't signed a contract since. I don't want to get stuck in that loop again.

[NFLPLAYBOOK]

Here's the biggest kick in the yeah. Why don't they offer the plans on a prepaid basis? Because they want to be able to nickle and dime you death with fees and services you never heard of. They don't want you to be able to pay a flat amount and not worry. I know I have unlimited everything. I"m not on contract and if my bill is off by one cent I would be gone so fast. I know I pay a little more but I don't have to worry about one of those shock bills. The ones they negotiate customers into signing into a longer contract again.

[GTiLeo]

Lack of competition and almost forcing people to lock themselves in to a multi-year contract? You're right, that sounds legit...smh

They make the cost of subsidized devices cheaper. That's wrong. You are actually paying almost triple the amount for your device.

So, you think it's ok to spend almost 3200 to save 350-500? If so, then carry on.

how are you paying trippel the price, you have to pay your monthly fees anyway, unless you opt out and go to a different carrier beign locked in a 3 year term is no big deal, the only big deal is when people want hardware upgrades and they aren't eligible for one and they claim customer service is garbage

[Bold_until_Hybrid_Comes]

That's not the case. Who is going to sign for another 3 year contract with less than a year left? Most of the plans per month are the same (not really), but when you buy your phone and your contract is up for renewal, there are things you can do when you bring your own device, that you can't when you sign up for a 1,2, or 3 year contract (as a new contract) It only hurts the first time (like a band-aid), once you bend over and take it for however long your contract is, then you can bypass the crap and go for the same plan with added features or a discount (that can rise the longer you are with a company)

Businesses are not generally in the game to give away money. A customer who signs up for a contract renewal everytime and gets a subsidized device, will be losing money to those who purchase their devices outright and shop around after their initial contract is up. Everyone pays the monthly whatever, Ten years ago....maybe, it was worth it to keep signing your life away. It's not anymore.

I don't care really either way, if I am given the chance to save 22-31 bucks a month, then I will, while those who are too lazy to care or simply can't be bothered thinking about it, continue to pay sticker price. If the status quo was so great, then why do we have more and more budget carriers appearing?

If i would have signed a one year contract instead of a three year contract my payments would still be 50$ a month for services. There is no phone payment section allocated in monthly installments of longer plans to pay back the cost of subsidized phones. I always work out better terms when renewing my contract and often call in every few months and get added bonuses. Budget carriers are cheaper because their service areas are not as vast...

[Neely2005]

One thing that Canadians need to remember is that Canada is bigger (Geographically) than the USA but we only have a population of about 30 million compared to their population of about 300 million. The costs of building, maintaining & upgrading these cell networks is immense. In fact it's so immense that Bell & Telus built their network together and share it. Rogers built a huge GSM network and then upgraded it to LTE. The cost of these networks Starts in the Hundreds of Millions of dollars and then there are maintenance costs on top of that. With such a small population spread out over such a vast area the only way to recoup the costs is through the Price/Term. The USA has the benefit of population. Smaller countries (like Japan) have the benefit of requiring a much smaller network. Canada has neither.

Sent from my BlackBerry 9700 using Tapatalk

[GTiLeo]

If i would have signed a one year contract instead of a three year contract my payments would still be 50$ a month for services. There is no phone payment section allocated in monthly installments of longer plans to pay back the cost of subsidized phones. I always work out better terms when renewing my contract and often call in every few months and get added bonuses. Budget carriers are cheaper because their service areas are not as vast...

this, i've been travellign all over ontario this summer for work and i'm glad i have rogers as i have been able to get signal every where i go not just the GTA

[notfanboy]

One thing that Canadians need to remember is that Canada is bigger (Geographically) than the USA but we only have a population of about 30 million compared to their population of about 300 million. The costs of building, maintaining & upgrading these cell networks is immense. In fact it's so immense that Bell & Telus built their network together and share it. Rogers built a huge GSM network and then upgraded it to LTE. The cost of these networks Starts in the Hundreds of Millions of dollars and then there are maintenance costs on top of that. With such a small population spread out over such a vast area the only way to recoup the costs is through the Price/Term. The USA has the benefit of population. Smaller countries (like Japan) have the benefit of requiring a much smaller network. Canada has neither.

Sent from my BlackBerry 9700 using Tapatalk

That's a really good point. Thanks for pointing out the other side of the equation.