Tough Lessons Learned About Canadian Cell Phone Industry

Owning cell phones and cell phone contracts in Canada makes suckers of us all. The industry “competition” set prices and low standards of service between each other, comfortable that there are enough suckers for everyone. At least that’s the lesson I received earlier this year: first from shopping around the major companies for a plan, and then from some disturbing reports from the CBC.

Moving to Vancouver in March, and looking for a new job, I needed a cell phone. I decided it would be smart to talk to customer representatives from Rogers, Bell, and Telus – whom I considered to main cell phone providers in the country. I was looking to but an iPhone via a new cell phone contract.

Being an early resistor to cell phone culture, I am still a cell novice at the age of twenty-five. I had pay-as-you-go once before, because I already had the impression that cell contracts are expensive, long, and particularly nasty when you break them.

However, the first thing that surprised me while looking at the package options were the absence of features that I considered standard in my experience with land-line phones. For example, call display is not a new service, nor requires manpower beyond the click of a mouse for someone in a call center. It’s something that I’d expect for free, especially from a phone that has a screen and can access the internet. To include it only in a package of $10-15 that is bundled with less standard options is a complete disgrace.

Furthermore, incoming calls have always been free on house phones. The only exception is collect calls, which are for emergency. Incoming calls also used to be free on cell phones, too. But recently the companies have started charging both the caller and the receiver at the same time -- effectively billing each call twice.

Unlike the lack of standard features, I had actually expected the phone and contract to be expensive. Yet I was still to be surprised by exactly how expensive. Agreeing finally to purchase my iPhone from Telus, which seemed the best of the triplet companies, I would have to pay $200 for the phone, $35 for activation, $80 per month, and agree to a 3-year contract. That $80 did, however, include a package with call-waiting that was only included at an extra $15/month. Also, for $80/month, there is no unlimited data plan and free “evening” calls start at 9pm instead of 6pm.

Still, I have finally caught the cell phone bug thanks to the sleek new iPhone. Many of you have already made purchases like the one I’m describing. Regardless of my concerns with the plan, it had always been the length of cell phone contracts, and the steep expense of buying them out, that scared me away in the past.

When bringing my concern up with a Bell salesperson, he explained that I could simply give away my contract to another person when wanted out. In fact, he told me, people search places like Criag’s List for older contracts all the time because cell phone contracts – as he explained to me – are getting more expensive each year.

The Bell representative’s comment gave me the sick impression that, despite these companies being in competition with each other, and despite improvements in infrastructure and technology, and despite a growing customer base, cell phone companies are offering worse and worse deals to Canadians.

Well, at least the growing popularity of Craig’s List has made it easier to ditch unwanted contracts to people as long as you’ll ditch your expensive new phone with it.

Plus, I still had iPhone fever! After carefully discussing the various plans with my girlfriend over coffee, I chose Telus. Once I filled out all the information, had a credit check run, and had my brand new iPhone placed in front of me, the salesperson finally revealed that I’d have to pay a $400 security deposit. Out of the blue. This deposit would be held until the coming December, by which time I would have paid them a total of $1040.

Next, she informed me that because she had just run a credit check, buying my iPhone with another company would now hurt my credit.

Her deceitful bait and switch routine still almost worked on me Luckily my girlfriend talked me out of it. I was left very angry when I realized I couldn’t afford my phone and now couldn’t shop around for a better price.

I couldn’t help but wonder how cell phone companies can get away with this. Then my girlfriend received a lesson from Bell.

She had been a Bell Mobile customer for over five years, previous to leaving the country. Upon her return, she had to open a new account and was helped by a sales-representative in training who set her up with a month-to-month plan for $40. Two months later she received a bill of over $200. I had been calling her from Newfoundland, which she assured me was free for her because it was an incoming call. However, those calls had totaled over $140, and left her being charged 35¢/min on every call for the rest of the month.

She called Bell, at 35¢/min, and they claimed that incoming calls had always been charged. A representative at a Bell store admitted to us that the company had only started charging for incoming calls about 6 months ago – while my girlfriend was out of the country.

No one had told her of this change in policy and no one at Bell felt that they were at fault.

The manager told her that sales-representatives can’t possibly explain every part of the contract and, besides, any customer should know to ask about incoming calls. They promised to “ask” a higher up about it, and they would call her back. They didn’t.

 If she had known that incoming calls were now being charged, she would have paid $5 extra to change her Fab 5 feature from province-wide to nation-wide. But she received no warning, no apology, and no mercy.

The problem is a lack of any real competition. The salesperson at Telus revealed to us that the companies agree to keep a standard rate between them. The companies obviously do so well that they have no need to challenge each other in terms of pricing and value.

Why don’t the government step in and protect consumers?

Ridiculously, the Canadian Radio-television and Telecommunications Commission (CRTC) refuses to do anything because they feel that “the market for wireless services is sufficiently competitive”. When the three major companies agree to pricing and raise prices in unison, there is no “sufficiently competitive” marketplace. A sufficiently competitive marketplace offers lower prices, especially as technology gets better and infrastructure expands. Instead, the actions of the cellular industry demonstrate a monopoly by committee. In response, the website www.dissolvethecrtc.ca offers Canadians a chance to sign a petition voicing their displeasure with the corporate-friendly CRTC. Canadians have a right to demand a regulatory body that protects the people from corporations, not the other way around.

Is it unfair of Canadians to expect better cell phone service and value? Surely it must be easy to improve service and quall growing complaints.

For example, a simple automated text to alert customers who have gone over their allotted minutes could prevent thousands of problems like my girlfriend’s problem. A halfway honest or competent representative could have prevented both our problems.

If the industry was struggling to remain profitable, I'd be more sympathetic. But considering their unwillingness to compete with each through new, more attractive offers, and through acknowledging how many people own and operate cell phones, the question of profits can hardly be in doubt.   

            
             A study reported by the CBC found that between the 30 nations in the OECD, Canada ranks the 3^rd most expensive nation in medium-usage cell-phone plans. In the same category, Canadians spent $500 US a year in cell phone rates, while the Dutch spend only $131 for the same plan. Also, according to a poll on that same CBC webpage, 96% of readers thought that Canadian cell phone rates were too high.

A recent episode of CBC Marketplace ran a tongue-in-cheek competition looking for the highest Canadian cell phone bills – many which reached into the $1000s. One bill ballooned because of international roaming charges. One Canadian was charged almost $900 for checking her email in Europe. According to an expert interviewed on the show, Professor Srinivasan Keshav of the University of Waterloo, the cost of roaming for the company is barely more than local service. In fact, Huge international roaming charges have been outlawed in Europe by the EU.

All three cell phone companies spawned strong candidates for Canada’s Worst Cell Phone Bill, as did Virgin Mobile. This isn’t the problem of one bad company. This is an industry-wide problem. People need to get angry about how bad the Canadian cell phone industry is compared to the rest of the world, and compared to how good it should and could be.

             To watch the Marketplace episode "Canada's Worst Cell Phone Bill", go to: http://www.cbc.ca/marketplace/2010/canadas_worst_cellphone_bill/main.html. 


               And to see the CBC report on Canada’s international ranking in cell phone costs, visit http://www.cbc.ca/technology/story/2009/08/11/canada-cellphone-rates-expensive-oecd.html.