Will T-Mobile’s Forward Thinking Influence Canadian Carriers?

by Istvan Fekete on April 4, 2013

How would you react if you had to keep making mortgage payments each month even though you have already repaid your loan in full? How about an overcharged meal? Would you take the bit between your teeth and speak up?

In fact, you are facing a similar situation right now: Just take your shiny iPhone 5 or Samsung Galaxy S III (or any other smartphone you haven’t bought unlocked at full price, but instead with a contract) in your hands and you’ll realize that you are the subject of a similar rip-off. It’s known as cellphone subsidy.

When you purchase a smartphone (it doesn’t matter if it’s an iPhone, Android phone, or BlackBerry 10 device); you usually pay between $179 and $200. The device’s real price isn’t $200, but much higher, at around $600–$650.

But your carriers are very thoughtful: they subsidize the smartphone and attract you by asking just $200 for the gadget. The rest of the $450 ($400) you’ll pay over the course of your two-(Canada: three)-year contract.

This sounds familiar up to a point: When you buy a car or a house, you put some money down and the rest is paid in installments. But this scenario isn’t respected in the wireless industry: when you have paid for your device in full (the two or three-year contract has ended) you are still billed the exact same monthly amount.

And if you are trying to switch carriers because you aren’t satisfied with the quality of service, you get slapped with early termination fees and the fact that your phone is locked to that specific carrier.

This, however, is about to change, thanks to the new wireless code the CRTC plans to introduce. But last week T-Mobile showed there is another way to be remain connected and be free at the same time: to be fully aware of how much you will pay for your gadget and realize that Canadian data fees are much higher than in Europe, although the incumbents’ want to convince you of the opposite.

Freedom comes at a price, though, and the incumbents’ study shows that Canadians tend to opt for subsidized prices. But isn’t this just one side of the story? What are you choosing? Freedom of movement; or the latest gadget and being handcuffed for two or three years?

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Written by: Istvan Fekete. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

{ 3 comments }

RogersSarah April 4, 2013 at 12:41 pm

We understand that customers want flexibility. That’s why Rogers introduced FlexTab last year, which means that customers who sign up for a term commitment can leave anytime they choose, simply by paying back the amount remaining on the subsidy they received on their device. The amount goes down every month.

For example, if a customer gets a device that is worth $550 on a three year term, but they wanted to upgrade or change their device after 12 months, they would have to pay $366, plus taxes.

We outline the FlexTab program on our website at http://www.rogers.com/flextab. Customers can also reach out to @RogersHelps on Twitter to find out their FlexTab balance. They can also see their monthly FlexTab balance by visiting MyRogers.

shawn April 5, 2013 at 4:21 pm

While you introduced the flex tab you failed to mention that rogers doesn’t lower your monthly payments now that you are no longer paying for a subsidized phone (that’s separately allocated to the tab).

In theory shouldn’t my $60 plan come down now that the cost of the phone (which used to be included in as one of your own reps told me) is no longer part of the monthly pmts.

Gordon July 15, 2013 at 11:39 am

Good points, shawn. Rogers is particularly bad at trying to couch their billing innovations in a positive light for the customer.

If my $60 plan was originally paying down the subsidy of the phone, why would I add MORE payments (the ‘FlexTab’) on top of this plan, just to see decrements in that subsidy? Why doesnt my regular plan (which was supposed to be doing the same thing that FlexTab claims to do) go down in similar decrements instead?

Check out how other Rogers customers trashed FlexTab when it was announced:

http://redboard.rogers.com/2012/are-you-a-commitment-phobe-weve-got-just-the-thing-for-you/

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