Telus to keep no-overage plans — and subsidies

Telus Corp. is making its once promotional “no overage” wireless data plan options a permanent fixture and is allowing customers to finance any device for no cost upfront, though the new financing models still appear to include device subsidies, conditional on the phone being returned. One of the benefits of device financing analysts pointed to after Rogers Communications Inc. announced its intention to move to that model is to save on subsidy costs. Desjardins telecom analyst Maher Yaghi said in a June note that the move off of subsidies could be seen as a “prime cost-cutting opportunity in the next few quarters.” But while some of the initial coverage of the new plans interpreted the new plans as Telus leaving subsidies behind entirely -- indeed, equipment financing plans are often presented as distinct from plans with device subsidies -- the prices unveiled by the company Wednesday are lower than retail. For instance, it charges $38.75 a month for Samsung Corp.’s Galaxy S10. Over two years -- the maximum amount of time a contract can last -- that adds up to $930. To buy the same phone outright from Samsung costs $1,259.99. Telus representatives said the price difference was due to the “bring it back” program, which according to its website allows customers to “save up to $320” on their phone as long as they bring it back in good condition. If they don’t, they have to pay back that amount. Telus’ move to make its “no overage” plans permanent follows an announcement by Rogers Communications Inc. last month, when that company became the first to announce that it would not charge customers for going over their monthly data allotments, instead opting to slow their speeds down after that threshold. Rogers’ and Telus' plans start at $75 for 10 GB. Telus, BCE Inc. and other carriers quickly followed suit with similar promos, but Telus is the first of Rogers’ competitors to make those plans permanent. Bell, which also responded to Rogers’ “unlimited” offers with a promotion with similar plans, extended its no overage plans last weekend and spokesman Marc Choma said in an email that “there is currently no end date for the offers.” In a research note Wednesday, Scotiabank analyst Jeff Fan said that in “the past 3 weeks, we have seen unprecedented changes to Canadian wireless pricing.” Telus is also the first to introduce the financing model, though Rogers announced its plans to do so earlier. In that same June announcement, Rogers said it would begin allowing customers to finance any of the company’s devices at $0 upfront, allowing the purchaser to pay monthly instalments until the full device cost is paid off. On Wednesday, the company said it would start providing those financing options to customers starting on July 10. The pricing of those plans wasn’t yet available on Wednesday, but Rogers said in a press release under the new plans “the retail price of the device paid through equal monthly payments.” Currently the telecoms employ a subsidy model where some portion of the smartphone is paid for by the telecom -- some analysts have estimated between $300 and $500 on high-end phones -- in exchange for a two-year contract. The model has less separation between device and service cost and normally requires the customer to pay some money for the device upfront. In its press release touting the new models, Telus said the new financing models separate “device costs from the rate plan, making monthly bills much clearer and device repayment much easier to track.” And as long as customers bring back the phone, Telus won’t charge customers the full price. For instance, Samsung’s S10+ costs $1,419.99 directly from the company. Telus is charging $44.75 a month, which adds up to $1,074 over 24 months. The effective subsidy appears to be similar for Apple Inc. devices: the iPhone Xs costs $1,379 directly from Apple, while a Telus customer would pay $46.46 a month, or $1,115.04 over two years. An iPhone Xs Max is $1,519 from Apple and $48.96 a month, or $1,175.04 over two years, from Telus. CORRECTION: A previous version of this story said Telus was currently offering 15 GB for $75 on its no overage plans. That was, in fact, only a promotional deal that lasted until July 2. It is currently offering 10 GB for $75 on one of its plans. — With reporting by Ahmad Hathout at ahathout@thewirereport.ca and Anja Karadeglija at akarad@thewirereport.ca and editing by Michael Lee-Murphy at mleemurphy@thewirereport.ca

Telus to keep no-overage plans — and subsidies

News | July 3, 2019

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Telus to keep no-overage plans — and subsidies

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