Wireless device installment plans could come to Canada: analyst

A telecom analyst with BMO Capital Markets says Canadian wireless carriers will “very likely” start offering installment plans to cover the cost of mobile devices as an alternative to the upfront subsidies carriers typically use to lower or eliminate the purchase price of phones. Tim Casey, in a research note issued Monday, said these so-called equipment-installment plans (EIPs) have already gained traction in the United States, and have potential benefits for carriers and consumers. For the carriers, he said, such plans can have an immediately positive effect on profitability as subsidy costs decline, though he noted that “the economics of the plan equalize over time.” He said such plans also align with pro-consumer agendas of governments and regulators, and can help expand the potential customer base of the carriers. Casey said consumers can enjoy more flexible payment options, see better transparency in billing and noted that such plans commonly include the option to upgrade to newer phones. Risks for carriers, Casey said, include lower monthly payments from customers as discounts are usually given on the cost of monthly services as an incentive, and there will be added inventory created from phone trade-ins. “We think the Big Three will concertedly but cautiously launch U.S.-style EIP offerings in order to stimulate greater demand for wireless services and adoption of smartphones,” Casey said in the note. He said in an email to The Wire Report that Canadian carriers would likely launch such plans later this year, but he does not expect any “meaningful” shifts in market share as a result. Casey said in the research note that it is unclear how the new wireless code in Canada would apply to early-termination fees for equipment-installation plans. He noted that the amounts that can be charged to consumers for early termination differ based on whether they are using subsidized devices or not, and it’s unclear how devices under an installment plan would be viewed. Rogers Communications Inc., Telus Corp. and BCE Inc. all declined to comment on whether they would soon offer equipment installment plans. — With reporting by Derek Abma at dabma@thewirereport.ca and editing by Peter Henderson at phenderson@thewirereport.ca

Wireless device installment plans could come to Canada: analyst

News | May 20, 2014

Unlock all the Canadian telecom, broadcasting and digital media news you need.

FREE TRIAL

SUBSCRIBE

Inside The Wire Report

Information

Hill Times Publishing

Get in Touch With Us

Wireless device installment plans could come to Canada: analyst

News | May 20, 2014

Unlock all the Canadian telecom, broadcasting and digital media news you need.

FREE TRIAL

SUBSCRIBE

Related Stories

Funding gaps, policy shortfalls keeping rural Canada offline, experts say

Rogers announces $7B sale of minority stake in regional backhaul infrastructure

Rogers spends $8 million upping capacity at Toronto stadium; TTC work remains underway

CRTC looking at ‘inflexible’ international roaming fees, rates in Canada

Reuse & Permissions

Inside The Wire Report

Information

Hill Times Publishing

Get in Touch With Us