GATINEAU – Canada’s three largest wireless carriers aren’t going to meekly back away from the CRTC on this issue.
While they often grit their teeth and accept the cards the Commission deals, it seems Rogers, Telus and Bell are going to double down when it comes to 36-month device financing plans.
Friday, the Regulator told the carriers to pull those offers from the market and Rogers and Telus have told us they will comply for now (and also that it’s going to take a couple of days at least to do so). However, they are spoiling for a fight on this particular issue.
Telus CEO Darren Entwistle, while presenting the company’s second quarter results, spoke to financial analysts about two hours before the CRTC announced its decision today – and seemed to set his company’s ante on this game, when asked by an analyst.
“One of the things that's been most punitive to Telus in the industry hasn't been robust competition, it's been regulatory intervention.” Darren Entwistle, Telus
“One of the things that's been most punitive to Telus in the industry hasn't been robust competition, it's been regulatory intervention, and I think with the launch of the Peace of Mind plans with device financing, we present a very interesting trifecta in Canada… As it relates to price, value, and affordability, we stand tall within the global context in that regard,” said the CEO.
“I think we have significantly reduced the reasons for the government to intervene in our industry when you're delivering excellence on value and affordability, excellence on service, and excellence in terms of the performance and pervasiveness of your technology across the landscape. The necessity to intervene is significantly mitigated, and I think that bodes well for Telus and the industry.”
(Ed note: That said, Telus’ mobility chief Jim Senko told Cartt.ca just last month he believed anything over a 24-month device plan was out of bounds.)
We also took a look at the submissions made to the CRTC this week when it asked two weeks ago for answers to certain questions on device financing. While Rogers started this by being the first to offer $0 phones for 36-months – saying their deal is onside with the Wireles Code because the contract is for the device, not the service – both Telus and Bell also believe offering a $0 phone at no interest for three years is consumer friendly. Not everyone is on board with that idea. Telus had also begun offering 36-month plans while Bell was just about to start.
Regional competitor Eastlink “submits that the device financing plans recently introduced by some WSPs, separate the cost of the device from the wireless service plan, but they do not separate the device from the provision of wireless services. Customers are still required to subscribe to a monthly service plan in order to be eligible for the device financing,” reads its submission, later adding: “we take issue with Rogers blatant disregard for the Wireless Code. Eastlink urges the Commission to take immediate action to correct this competitive inequity.”
Should customers wish to leave Rogers before their 36-month payment term is complete, they have to pay the balance of the device first.
Another regional provider, SaskTel, filed in confidence its answers to the questions the Commission had on whether it will or wants to offer 36-month device financing plans. However, it did confirm it currently allows customers to pay off devices over 24 months, but at a 20% annual interest rate.
Vidéotron said in its submission it does not oppose Rogers’ move to the longer term plans. “We believe they are a useful complement to the wireless offerings already available to Canadian consumers,” reads its submission, in French. “We are of the opinion, however, the current regulatory uncertainty over the status of such offers is detrimental to competition. We therefore urge the Commission to clarify as soon as possible whether the 36-month payment options may or may not be commercialized in the Canadian wireless market.”
We don’t yet know how soon the CRTC will deal with this issue as the Friday announcement only said a new notice of consultation on this issue will be coming soon.
“(Rogers) has demonstrated a cavalier attitude towards regulatory compliance by locking customers into 36-month financing plans in a flagrant and calculated breach of the Wireless Code.” – Shaw Communications
Shaw, whose Freedom Mobile has responded competitively in the market to Rogers with an even cheaper one of its own, stands starkly against Rogers’ move, noting the 36-month plans “are clearly offside the letter and intent of the Wireless Code,” adding unequivocally it does not even plan to consider offering 36-month financing plans.
Rogers, continued the Shaw submission, “has demonstrated a cavalier attitude towards regulatory compliance by locking customers into 36-month financing plans in a flagrant and calculated breach of the Wireless Code. Rogers is, in both substance and effect, creating one connected wireless agreement for consumers via cross-default provisions and applying a substantial cancellation fee payment to consumers beyond the 24-month contract term allowed under the Wireless Code.”
The Public Interest Advocacy Centre, when contacted Friday by Cartt.ca, agreed with Shaw. “We are pleased the CRTC has asked the WSPs to stop selling these longer term ‘device financing’ plans to ensure the Wireless Code is respected,” wrote executive director John Lawford in an email. “PIAC looks forward to representing consumers’ interests in the upcoming consultation on device financing and the Wireless Code.”
The carriers, however, seem they’re not bluffing on their bets. “Consumer response to our 36-month financing has been very positive,” said Rogers’ statement. “It offers consumers more choice and affordability with zero dollars down and zero interest. While we believe this is the right thing to do for our customers and it is compliant with the code, we respect the directive of the Commission and will remove this option from the market during the review.”
“Our Telus team was very diligent in ensuring that our 36-month device financing plan would satisfy the CRTC’s Wireless Code requirements, while also providing our customers with more choice, transparency and affordable ways to manage their device costs,” wrote a Telus spokesperson in an email. “We continue to believe that we are compliant with the Code’s requirements, but will be suspending these offers until the CRTC completes its review. These offers required significant changes to our systems that took several weeks to implement, and will take time to reverse course.”
As for Bell, which was about to be the last of the Big Three to start some limited 36-month financing offers this summer but was one of the first out of the gate in the CRTC’s overall wireless review to say the 24-month limitation in the Code is wrong, it too says the CRTC must accept these new plans.
“Considering the increasing prices smartphone manufactures are charging, we’re looking at new ways to make premium phones more accessible to consumers,” wrote its spokesperson in an email. “The CRTC shouldn’t be looking at restricting options that make high-end phones more affordable for more people.”
