Mobile carriers drop system access fee—for new subscribers only

Rogers, Telus and Bell may have withdrawn their system access fees but the change will only apply to new customers, Bianca Anghel, a senior research analyst at the Seaboard Group in Toronto, told The Wire Report. “Billings for existing customers on contracts are unchanged, so they’re still being charged for system access and other fees. They have to call and switch to the new plans to get the reduction,” Anghel said. Rogers Communications Inc., Telus Corp. and Bell Canada withdrew the system access fees last fall under pressure from riled customers and advocacy groups. To compensate for the loss of system access, 911, and other fees, which had totalled about $8, the incumbents jacked up their base rates by about $5, according to The Globe and Mail. But Rogers went further than the others, adding an additional $2.46 to $3.46 for a Government Regulatory Recovery Fee (GRFF), which Rogers says on its website “is not a tax or charge the government requires Rogers to collect.” The fee is designed to help Rogers cover charges telecommunications companies face related to government regulations. “It is applied to help fund fees, costs and other amounts related to federal, provincial and/or municipal mandates, programs and requirements such as provincial 911 fees, spectrum acquisition, licensing charges, and contribution charges to help subsidize telephone service in rural and remote areas,” Rogers says on its website. “The fee and the components used to calculate the fee are subject to change as the fees/costs of government mandates/programs change.” Michael Janigan, executive director of the Public Interest Advocacy Centre (PIAC) in Ottawa, says Rogers is charging fees similar to those implemented by Verizon Communications Inc. and other American carriers. But the Federal Communications Commission (FCC) is casting a baleful eye on the practice, Janigan said. “Rogers is in the business of operating a wireless company, and dealing with regulators is the cost of doing business. It’s disingenuous to hive it off as a separate fee,” he said. “It’s like a dry cleaner charging an additional amount because he’s going through a divorce. The fee has no relationship to the product.” Although Rogers informs consumers that the GRRF isn’t a government charge, Janigan pointed out that the disclaimer is a CRTC requirement. “I suppose it’s transparent in a legal sense, but if you grab 10 consumers and ask them if something called Government Regulatory Recovery Fee is associated with government, they’ll probably say yes,” Wind Mobile CEO Ken Campbell said in an interview. “Why not just call it ‘non-hidden extra fee.’” Janigan, who on behalf of PIAC has lobbied the government for greater transparency in the billing practices in telecommunications, said adding extra fees to the base rate, as Telus and Bell do, is an acceptable practice because it allows consumers to make true price comparisons. Although all three carriers increased their base rates by $5, Telus and Bell took a revenue hit for the lost system access fee, Anghel said. “Telus changed its plans quite a bit and renamed them, but Rogers didn’t want to impact revenue and shareholder value, so it just shuffled things around,” she said. Campbell said other charges are also creeping upwards. “Rogers increased its fees for long-distance calls on mobile recently. This too is a somewhat hidden fee. There’s no incremental cost to offering long-distance on mobile versus landlines, so there’s no reason why those fees should be different.” But Rogers says it has also added, for free, call forwarding, “Who Called” and “Call Manager,” features that help customers manage their calls and let them know about incoming calls when their phones are powered down. Rogers spokeswoman Liz Hamilton recently told CBC that the new charges do not apply to existing plans unless customers choose to make the switch. "If the plan you have works for you, that's fine. If you want to switch to the new plan, that's fine too,” Hamilton said. The new fee structure does not apply to customers with Fido, a Rogers brand. "They're different value propositions and they have different marketing strategies behind them," she told the CBC. Carmi Levy, an independent technology analyst based in London, Ont., said the incumbents may be hiding their fees in an attempt to keep customers and shareholders happy. “The question is how much annoyance will consumers put up with before they bolt to the competition,” he said. “Rogers is towing that fine line between keeping shareholders happy and not upsetting customers.” Dvai Ghose, at Genuity Capital Markets, has noted that Rogers’ wireless market share has dropped to 31 per cent. While the company boasts more smart phone customers than its rivals, that may change now that Wind Mobile, Public Mobile and Mobilicity have entered the wireless market, Anghel said. “A year ago, the big three were pretty much offering the same plan for the same price. But now they’re no longer competing among themselves and slicing the market three ways. The new entrants will push the incumbents to offer more competitive plans,” she said. New entrant Public Mobile has released a $40 per month unlimited talk-and-text mobile plan and a $24 unlimited local talk plan (not including voicemail). Public Mobile CEO Alex Krstajic told reporters in Toronto on Tuesday that the company wants to “consolidate the low end of the market.” Levy agreed that more competition will add value for wireless consumers, and said removing the system access fee was largely a public relations maneuver. “The big three made a big deal about removing extra fees, but really all they did was transfer the costs to base rates or other places. It’s a shell game,” he said. Janigan said consumers need to be vigilant about extra charges creeping onto their bills. “Businesses want to look like they offer the lowest price choice, so they invent these imaginary extra charges. Telecommunications used to be the leader in these kinds of practices, but we’re seeing them in many other industries—things like ‘energy charges,’ which have no meaning, are being billed by airlines,” he said. Rogers did not respond to a request for an interview. news@thewirereport.ca

Mobile carriers drop system access fee—for new subscribers only

News | May 25, 2010

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