Paper billing issue small potatoes for telecom sector: analysts

Much has been made this week about the practice of levying extra fees for the privilege of getting a physical bill for telecommunications services, and some industry watchers are downplaying the issue's importance. The CRTC held closed-door meetings with industry representatives on Thursday to discuss the matter. At day's end, the commission said companies had agreed, by the new year, to stop making those without broadband Internet, seniors, the disabled and military veterans pay extra for paper bills. However, the CRTC said the concessions by the companies didn't go far enough and that some of its officials want to reopen a review of the matter. Late Thursday night, Industry Minister James Moore said on Twitter that the government would legislate a ban on so-called pay-to-pay practices in the telecom industry, and he echoed that in a press release on Friday. "More and more Canadians are finding a new charge appearing on their monthly bills, including their wireless bill," Moore said in the release. "This fee is charged to those who receive their bill in the mail. "Increasingly, many Canadians are being charged this new fee by companies from whom they have been receiving service for decades. We do not believe that Canadians should pay more to receive a paper copy of their telephone or wireless bill." Telecom analysts said Friday that legislating away telecom companies' rights to charge extra for paper billing would not have a significant financial impact on the industry. Macquarie Capital's Greg MacDonald said in an email that an estimate this week from the Public Interest Advocacy Centre (PIAC) that Canadians might be paying almost $750 million a year in fees to receive paper bills is "not material to the $40 in industry revenues." Analyst Troy Crandall of 3Macs said in email: "There is a cost to sending out paper bills and the telcos will recoup those costs one way or another. ... Costs that can’t be offset through changing customer behaviour will most likely become embedded in the base fee of customers’ Internet, TV, home-phone or mobile services." Crandall added that it's "unlikely this will have a material impact on the telcos" and "the biggest loser" in a scenario where paper-billing charges are banned would likely be Canada Post, as telecommunications companies would create even more incentives for people to get away from paper bills that need to be mailed. Canaccord Genuity analyst Dvai Ghose said that he does not expect a major effect on the industry if companies are not allowed to charge for paper billing. He said such a decision would have the biggest impact on companies such as Wind Mobile and Quebecor Inc.'s Videotron, which charge the most for paper billing and are among those the government would seemingly want to help in attempts to establish a fourth national wireless carrier. "I think it's a relatively minor issue," Ghose said in a phone interview. "I think that, ironically, if it is instigated that you cannot charge ... on the surface, Wind has the most to lose, followed by Videotron. So how does that fit into new-entrant strategy?" PIAC's report, released this week, shows that Wind charges customers $4 a month for paper bills and Quebecor charges $3. The incumbents, BCE Inc., Rogers Communications Inc. and Telus Corp., all charge $2, according to the report. John Lawford, executive director of PIAC, which helped initiate a CRTC review of paper-billing charges last fall, commended the government for coming through with plans to direct legislation on this issue at the telecom industry. "It was a throne speech promise, so they're just following through," Lawford said in a phone interview. Lawford said he does not have a problem with the government's sole focus on telecommunications in banning pay-to-pay practices while ignoring the banking industry, which his group's report said is responsible for about one-third of the fees paid for paper billing. " would have to get Joe Oliver to stand up side-by-side with him if he wanted to say that we're going to legislate banks too, because can't amend the Bank Act," Lawford said. Lawford also welcomed the CRTC's move toward a possible re-launch of the review that had been in progress, saying it should not have been cancelled in the first place to hold private meetings with companies. "The CRTC debacle was totally foreseeable," Lawford said. "We let them know, I think as you saw in no uncertain fashion, that it was a bad idea to have a private meeting and to think that they could twist the arms of a bunch of senior executives at the phone companies without a formal process going on." He added: "There's too much money involved for to voluntarily do anything. And the concessions that they made to seniors and to veterans and to folks with disabilities doesn't even start right now, and it's not very much money." Lawford said most of the money telecom companies make from paper-billing charges is from people outside the groups singled out, and he wants to see relief from such charges for everybody. Rogers spokeswoman Patricia Trott said the compromises made as a result of Thursday's meeting were "reasonable." "Over time, more and more customers are choosing to receive their bills electronically and fewer are paying a fee," she said in an email. "In the meantime, we agree that consumers who may not have access to an online bill shouldn’t pay a fee, including seniors and those who don’t have Internet service. We think that’s a reasonable approach." Bell spokesman Jason Laszlo said in an email his company will "continue to work with the CRTC on a solution that recognizes the positive environmental benefits of paperless e-billing and the fact that Canadians have embraced online transactions of all kinds. The move to no-charge online billing has already reduced Bell’s paper consumption by the equivalent of at least 41,000 trees per year." Laszlo said the "vast majority" of Bell's customers do not pay an extra fee for their bills. Telecom analyst Mark Goldberg said in a television interview with BNN Friday that this latest move to legislate against paper-billing charges has the government going against its own directive to the CRTC, issued in 2006, that it rely on market forces as much as possible to achieve policy objectives. "The chairman of the CRTC's own statement said that there were a number of the companies that aren't charging for bills," Goldberg said. "The marketplace seems to be working. This is a competitive business, and some companies charge, rates are different, so the marketplace is working. What are we really trying to fix?" Goldberg added that the proposed legislation seems at odds with "a government that says it wants to increase the adoption of digital technology, the use of e-commerce tools by Canadians. And yet, it seems to be intent on introducing legislation that prohibits companies from having incentives for Canadians to pick up those technologies." — With reporting by Derek Abma at dabma@thewirereport.ca and editing by Peter Henderson at phenderson@thewirereport.ca

Paper billing issue small potatoes for telecom sector: analysts

News | August 29, 2014

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Paper billing issue small potatoes for telecom sector: analysts

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