Beware the 3-year wireless contract talking points

04 Jan
How much would you "love" to be locked in a contract with the grocery store?

How much would you “love” to be locked into a contract with the grocery store?

If there’s one thing that unites Canadians, it’s their disdain for cellphone companies. Whether it’s unexpected charges, terrible customer service or that unauthorized contract renewal (surprise!), everybody’s got their own horror story to tell.

Things did get marginally better in 2012, with new competitors further forcing the hands of incumbents to lower or eliminate fees and behaviours not found in other parts of the world, but big problems still remain. To that end, a number of provinces either enacted or were in the process of working out rules that would rein in the worst abuses, including high early-termination charges and one-sided contract terms.

Into this breach stepped the Canadian Radio-television and Telecommunications Commission, which in October launched a public process that will ultimately result in a new code of conduct to govern wireless companies. The regulator opened the floor to Canadians and got an earful as a result, with hearings continuing on in the new year.

The industry has put on a brave face and suggests it supports the CRTC’s effort - it is, after all, preferable to 10 or 13 different sets of rules across the land - but at the same time, it’s also pushing a set of disingenuous talking points through its various levels of lobbyists.

Many can be found in CARTT’s recent interview with Bernard Lord, the head of the Canadian Wireless Telecommunications Association, the industry’s main lobby group (it is worth pointing out that the group doesn’t always speak for all of its members, with Telus and some of the new players being notably prickly with some of its positions). One of the best is the misrepresentation of Canadians’ need for wireless services as love for wireless services:

I find with the world of Twitter and Facebook and social media, it’s easy to get confused by what one individual says, against whether it really reflects everybody else? When you look at how people act and behave in Canada, Canadians are buying more cell phones than before… and cell phones and cell phone services is on top of the Christmas list for a lot of Canadians.

Yes indeed, Canadians do in fact love their phones, and the fact that they deliver the world to them, so they’re buying them in droves. It’s pretty evident that Canadians will pay anything for them, but that doesn’t mean they like it. In fact, it probably means the opposite; nobody likes to be held hostage over something they absolutely need.

That sort of need shouldn’t be mistaken for the sort of enthusiastic love one might have, for say, bunny rabbits or a warm, sunny day. Canadians love food too, but they can’t live without it and would be pretty upset if grocery stores locked them into contracts and consistently gave them poor customer service.

The main beef heard by the CRTC about wireless services so far relates to three-year contracts. Canadians were loud and clear in urging the regulator to ban them. Why, many wondered in their submissions, is Canada the only country in the world where such long deals are prevalent?

Lord, who spent seven years as premier of New Brunswick, counters this with the industry’s free-marketeer talking point, which has been parroted by other industry lobbyists:

I was in New Brunswick, so this gentleman recognized me, comes up to talk to me and he said, ‘Look, what’s the deal with three-year contracts? Why can’t I get a phone without a three-year contract?’ I said to him, ‘You can.’ To paraphrase the ad on TV, if you don’t want a three-year contract, don’t take a three-year contract. But there’s this perception with some that the only way to get cell phone service in Canada is through a three-year contract. It isn’t. It’s just the most popular choice.

Alas, that’s just a hair width away from being true. Since Lord is talking about “the most popular choice,” how would he answer that same man’s question if one letter - “i” - were put in front of the word “phone?” As in, “How can I get the most popular phone, the iPhone, without a three-year contract?”

The answer is simple: shell out at least $700 up front for the latest model. Other than that, tough noogies, because every Canadian carrier that sells the iPhone does so on a three-year contract, with no options in between.

Only the rich and the fanboys who line up on launch day buy their devices up front, which means the rest of the population is happy to sign onto a contract in exchange for a discount on the phone. What they want to know is, why are they being locked in for longer than anyone else in the world for the same exact thing?

That’s the fact that the industry is trying to steer around through its Obama-esque “yes you can” talking point. Previously, providers have tried the “we’re a small market with different market conditions” argument, but with even smaller countries making things work with two-year contracts, the jig is up on that one. “More customer choice” is the new slogan, designed to appeal to Canadians’ sense of populism and distract from the real issue - that other, freer markets aren’t doing this.

If the industry genuinely believed this rather ridiculous line of thinking, why not offer really cheap monthly plans in exchange for signing on to a five-year contract? Heck, why stop there - why not 10-year contracts? Under such a deal, your monthly cellphone bill would be only 50 cents.

Make no mistake: three-year contracts are not about different market conditions or giving customers more choices. They’re very clearly about locking people in for longer, thereby preventing them from getting a better deal elsewhere.

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Posted by on January 4, 2013 in mobile, telecommunications


73 Responses to Beware the 3-year wireless contract talking points

  1. Chris C.

    January 4, 2013 at 12:12 am

    I agree… especially since no phone even lasts that long… In other words… By the time you’re on your second year you’ll have no choice but to get a new contract to get a phone so you can keep using your present contract, which will lock you for another three years without a chance of parole!!!

  2. Justin Amirkhani

    January 4, 2013 at 9:06 am

    I know I’m probably in the painful minority here, but for most of 2012 my cell phone was either deactivated or just unusable and I still don’t truly miss it. I’ve held off getting a new phone or new contract since returning to the land of the living partially because I don’t want to get locked in for another three years, but also because I realized how unfair that exchange is.

    Pete’s absolutely right in that we live in a time when (for many) it’s impossible to purchase access to a cell phone without being bogged down with a contract. The unfortunate reality is that (for most) if you want one, you’ve got to deal with this contract nonsense and just be happy with it.

    So, my suggestion is stop playing their game. Once you’re out of your current contract, don’t go back. If that means giving up your phone, do so. If it’s truly uncomfortable to you to be tied down, don’t upgrade or get a new phone and don’t lock yourself into another contract. Easy peasy.

  3. Evolving Squid

    January 4, 2013 at 9:19 am

    Seems to me there are two issues about cell service in Canada, and only one is tangentially addressed in this article…

    Wireless service in Canada costs way too much compared to our peer nations. That is a valid complaint and one that doesn’t get enough column inches.

    But three-year contracts exist because Canadians are collectively cheap. People want an expensive, high-end phone but don’t want to pay the expensive, high-end price. To get around that, phone company marketers wisely figured out they could give people nearly free phones and ammortize the cost over multi-year contracts. I can see no ethical or moral problem with this.

    Because you don’t have to take a three year contract. I bought my iPhone 5 outright. Not because I’m a fanboi but because I didn’t want a a contract. Coincidentally, the cost of the phone ammortized over 3 years is about the difference between what my bill i snow, and what it was under my expired contract. In effect, you pay one way or the other.

    So, if you want the latest Apple or Samsung brain dropping, you can pay for it up front, or you can pay for it over the course of a contract.

    Perhaps an interesting article might be “Why do Canadians expect to be able to walk around with a $700 phone for free?”

    It’s easy to not have a contract. You just provide your own hardware. Sort of like how it works with a landline phone.

    • freestaterocker

      January 4, 2013 at 9:59 am

      Valid point. However, if I want a hot new phone, say th Nokia Lumia 920 in Canada, my options are: pay $99+tax and sign a 3 year term with Rogers, and pay a minimum of $50/month for an LTE capable device that will only get spotty 2G service in my home province or ; pay $600+tax to purchase and then unlock the phone so I can use it on a provider that offers better service and possibly more competitive pricing on the plan that best suits my usage. In the USA, where the same device is also locked to one carrier, (ATT) the contract option has me locked down for only 2 years with an upfront price of $50+tax, and the other option only costs me $500USD including unlock, with the option to save a LOT of money ($20/month or more) by going with an MVNO (mobile virtual network operator) and still access HSPA & LTE service. In Europe, where the same device IS LOCKED TO ONE CARRIER, it’s still a maximum 2 year contract, and the other option can save me £40/month ON THE SAME CARRIER or, with an unlock, can save me as much as £100/month on another carrier (depending on data usage) if I’m willing to settle for HSPA+ speeds. Try again, shill.

      • Evolving Squid

        January 4, 2013 at 11:21 am

        Two issues: cost of phone, cost of services.

        Service is stupidly expensive in Canada compared to the rest of the world.

        If you want an expensive phone with no tiedowns you have to pay the price. That’s not shilling, it’s a fact no matter where you are.

      • Maurice Hilarius

        January 4, 2013 at 10:46 pm

        Or: Go to the Google Play store and buy a Nexus 4 for $309
        Then get connected on WIND, with no contract.
        Problem solved.
        WHAT is the problem?
        ROBELUS is the problem.

    • El Presidente (@elquintron)

      January 4, 2013 at 10:23 am

      @Evolving Squid Canadians are not “collectively cheap” it’s just that incumbet carriers market 3 year contracts much more aggressively than any other option. Your attempt to deny voluntary corporate malfeasance and subsequently blame Canadians for rightfully looking better pricing somewhere is insulting to the Canadian wireless consumer.

      • Evolving Squid

        January 4, 2013 at 11:19 am

        Wow… because as a consumer I do my homework and don’t sign up for unacceptable deals I am denying voluntary corporate malfeasance?

        No, I am calling consumers lazy and cheap. They want expensive goods for free and can’t be bothered to do the necessary work to get a better deal. There may be an amount of “corporate malfeasance”, I won’t deny that, but the bulk of the problem is consumer greed combined with consumer laziness.

      • Chris C.

        January 6, 2013 at 11:30 pm

        The fact of the matter is phone prices are overinflated to make plans look attractive and cost of services is outrageously and sometimes even criminally excessive (charging $50 per MB when $30 will give you a gigabyte IS criminal, I challenge anyone to argue it isn’t)

    • petenowak2000

      January 4, 2013 at 11:09 am

      It seems like you’ve just repeated the talking point.

      • Evolving Squid

        January 4, 2013 at 11:16 am

        Not all talking points are necessarily wrong. Come up with a good rebuttal to it.

        I genuinely don’t understand why people think they should get a phone for free/nothing when that phone is clearly an expensive piece of equipment.

    • Chris C.

      January 6, 2013 at 11:23 pm

      The problem is not so much being on lengthy contracts, or being a cheapskate as far as purchasing outright is concerned, but the outrageously inflated up-front pricing policy (on average twice the price you can get them for offshore), which is deliberately designed to make their 3 year contracts look attractive.

      As for myself, because I live in the boonies, I don’t have much of a choice anyway, so being on contract makes the most sense since it gives me the perks I want (I get freebie options tacked on to my plan) AND makes me eligible for a high end phone for little or no money upfront.

      But for someone in a major city? There are definitely much cheaper options available if you own your phone outright, no doubt about it.

      Just take some time and do the math!

  4. Bill Tonge

    January 4, 2013 at 9:36 am

    I personally have no problem with the 3 year contract. It allows me to carry around $1400 worth of cell phones for $125/month. Besides which my girlfriends land line costs $48/month and there is no Facebooking or checking emails on it.

  5. Cement Brain

    January 4, 2013 at 9:36 am

    Why is it that if you buy the phone outright, it’s still locked to the carrier?
    If I buy something, it’s mine, not the carriers. Unlock the phones that are bought outright!!

    • Evolving Squid

      January 4, 2013 at 11:22 am

      Buy an unlocked phone. There is no need to buy one that is locked to a carrier.

  6. TM

    January 4, 2013 at 10:29 am

    The solution to this problem isn’t more regulation, it’s more competition. Canadian cellphone companies enjoy an relatively competition-free marketplace with only a handful of companies offering virtually the same products and services. Allowing new players into the cellphone game, especially some of the US telcos will help the Canadian companies to be more competitive,

    • Tom

      January 4, 2013 at 1:41 pm

      Agreed, sort of. A rule that e.g. banned 3 year contracts would be silly - the problem should be solved through competition.

      However, regulation can be used to enhance competition, e.g. the number portability regulation helped consumers play their role in a competitive market. In this case I think we need more regulations, but hopefully simply ones that enhance competition rather then interfere with it.

  7. Chris Brown

    January 4, 2013 at 10:55 am

    My question is why are the prices of these popular devices so high? The costs of high end phones are the same as high end ipads, with screens half the size or less. This is the method that these wireless companies use to lock us in to contracts: You want an expensive phone sign here. Is it a stretch to conclude that the telcos are happy to see high phone costs, and that there may be some collusion between companies to keep the cost artificially high? Hypothetically the telcos insist phone producers, if they want to sell their phones to the telcos, sell them at an inflated price. This is the way most phones are sold, so there is no worry from manufacturers that they are setting the price to high, because admission to the club insists that they do. The telcos lock us in, and the manufacturer sells at a high price. Everyone is happy… except you and I.

    • petenowak2000

      January 4, 2013 at 11:09 am

      You’ve got that bang on. If manufacturers had to sell straight to consumers, phones would be much cheaper. Google deserves kudos for trying to change this game.

      • russellmcormond

        January 4, 2013 at 11:37 am

        Funny — While I was OK buying a throw-away flip phone from a cell phone company, it never occurred to me to buy a mobile computer from the phone company. I wouldn’t buy my desktop computers from a grocery store, and consider that to be a silly idea, but in the case of mobile computers the phone companies have ulterior motives which make them the worst places to buy from.

        I bought my Nexus 1 (in 2010) and my Nexus 4 (last month) directly from Google’s online store, just as I bought my desktop, laptops, and other computers directly from a computer store and not an unrelated company.

        I understand the rent-to-own model quite well, and why people would want that payment option. I think what WIND is doing with WINDTab to be pretty close. But that doesn’t in my mind have anything to do with the multi-year contracts that Bellusogers offers which is a dishonest marketing ploy: dishonest about who owns the phone, what you are paying for, and so-on.

        I agree that that dishonesty should be clarified as illegal. They can’t claim it under a free market, given deliberately confusing or sometimes even lying to customers is harmful to a free market.

    • Chris C.

      January 6, 2013 at 11:34 pm

      Agreed 100%. Couldn’t have said it better.

  8. petenowak2000

    January 4, 2013 at 11:23 am

    Evolving Squid: there’s about 1,000 words of rebuttal up above, you may want to read it again. You’re veering away from the most pertinent question, which is why do Canadians get three-year contracts when everyone else gets two? The issue isn’t whether they want or should get phones for free, no one is suggesting that.

    • russellmcormond

      January 4, 2013 at 11:43 am

      I don’t understand where the “get phone for free” nonsense comes from that so-called “Evolving Squid” is coming up with. The payment options for a mobile computer (rent, rent-to-own, financing, paying outright, etc, etc) have nothing (or rather, should not have anything) to do with wireless service contracts. This is a product and a service in different markets.

      When one purchases a car, regardless of what financing options they choose, it doesn’t get tied to someone’s grocery bill — so why does the purchase of a mobile computer get tied to cell phone service? The fact you bought your car primarily to make grocery shopping easier doesn’t tie these two product types together.

      • Evolving Squid

        January 4, 2013 at 12:58 pm

        Russell, the price of the phone is tied on the contracts because the phone company is buying the device for the customer instead of the customer providing their own device. To extend your analogy, it would be like buying bulk gasoline but having the provider give you a Lamborghini to use with the gas.

        But it doesn’t have to be that way. Much like you could buy your own car with separate gasoline, you can buy your phone and service separately. Lots of people do, and that’s my point. Nobody is required to take these long contracts. They choose to do so. So is it really the phone company’s fault?

    • El Presidente (@elquintron)

      January 4, 2013 at 12:17 pm

      Peter, I’d like to extend my congratulations to you in joining the big leagues. With the sudden influx of trolls on your blog defending 3 year contracts it would appear as though your well reasoned arguments are more and more Canadians everyday.

      Good on you,

      • petenowak2000

        January 4, 2013 at 1:32 pm

        Tell me about it. It’s hard not to agree with proponents of using real names on the internet.

    • Evolving Squid

      January 4, 2013 at 12:53 pm

      No, there isn’t one word of rebuttal up there.

      Canadians get three year contracts because they can’t be arsed to ask for something else. It’s that simple, really. Because there are plenty of options available for those willing to do the consumer homework that don’t involve doing without a cell phone.

      The reason they don’t ask is good marketing combined with consumer laziness. They think they’re getting something for free or close to it, and they want the free thing so badly that they’re not interested in other options. It’s not like it’s a huge secret that 3 year contracts suck.

      All it takes to make 3 year contracts go away is for consumers to stop taking them. It is really, genuinely that simple.

      I have an iPhone and no contract at all, let alone a three year monstrosity. My wife is going no-contract soon.

      What you’re really on about is “why can’t I pay next to nothing for a phone, not have to have a contract, AND get a completely modern high-end device?” And you simply can’t.

      It’s also worth noting that when 24 month contracts were the norm here a few years back, people whined then too, but still took the deeply discounted phone and the contract. They didn’t have to, but they did.

      So please rebut the point: Consumers take three year contracts because they can’t be bothered to consider other options.

      Three years of phone service and a phone, no matter how you do it, is going to cost you ~$2500. I put thought into purchases that big. I have no sympathy for people who don’t.

      • petenowak2000

        January 4, 2013 at 1:27 pm

        Sorry, I’m not biting into your effort to derail this back to the “consumer choice” talking point because this has nothing to do with lazy consumers. The facts speak for themselves: the exact same phones that Canadian carriers sell on three-year contracts are being sold for the same price on two-year deals elsewhere. Very few people can afford to pay full freight up front. That’s not laziness or about wanting to get phones for free, it’s about being given fair and equitable options. This is just one of the pillars of Canadian carriers having the (documented) highest profitability in the developed world.

      • The Masked Bandito

        January 4, 2013 at 11:44 pm

        But what you seem to realize is that the network costs relating to maintaining and expanding the network in Canada are higher than everywhere else. Who cares if they can’t afford it? Take out a loan or do without. Buy a cheaper phone. Or get a contract and pay the piper.

        This is why I really can’t take anything said in this article seriously. I have no idea how you got an award from the Canadian Advanced Technology Alliance when you obviously know nothing about how wireless networks are run, administrated, maintained or even expanded. This is why I can’t take anyone seriously unless they’ve worked in the industry.

        Show us some hard numbers if you want to make a point. Stick to the facts. All I see here is a bunch of opinions.

      • freestaterocker

        January 5, 2013 at 1:04 am

        Hate to break it to you, bud, but the reason 3 year contracts no longer exist in the US & EU is because governing bodies in those regions have OUTLAWED them. The CRTC is the last governing body of this sector in a G7 or G8 country that has yet to get off its collective ass on this matter to protect consumers from the highway robbery of a contract that lasts longer than the phone is likely to. People in other countries that can’t afford the cost of a phone upfront can sign a contract that won’t outlast the phone and pay the same or better subsidized price, or can be rewarded for bringing their own phone with a lower monthly fee for the services rendered. And as far as WIND goes, talk to me again when they have any coverage to speak of in the prairies where I live.

  9. The Masked Bandito

    January 4, 2013 at 11:38 am

    As someone who actually works in the wireless industry I find these kinds of claims laughable. No one is forcing you in to a 3 year contract. You just don’t want to pay full price for your phone and then complain when you mistreat it and it breaks 1 or 2 years down the line.

    Stop comparing Canada to the rest of the world. We’re not like them at all. We have a huge land mass with a very small population density. Everyone expects coverage wherever they go and that’s not cheap. It’s expensive to put up cellular towers and maintain them and the network as a whole. And the fact that we have one of the highest LTE adoption rates on the planet means that these companies are investing the money in the network to make it better, faster and more reliable.

    I go to work every day and I deal with idiots who signed a 3 year contract without knowing what it entailed, without asking all the right questions, without knowing all about the device they purchased. Do your job as consumers and research. I make as much in commission having yousign up for a 30 day month to month contract as I do when you sign a 3 year term, so it doesn’t matter to me.

    • petenowak2000

      January 4, 2013 at 12:09 pm

      You’re right, Canada is not like the rest of the world at all. Despite having to cover all that landmass and the big expense that entails, our carriers still manage… to have the highest profit margins in the developed world: That’s profit, by the way, not just revenue.

      • The Masked Bandito

        January 4, 2013 at 12:56 pm

        And they spend all that money investing in the network, investing in phones, investing in better coverage and more. Why do you think Canada has one of the largest LTE networks in the world? Why do you think you can get reception in almost all of Alberta regardless of carrier? They don’t just sit on the profits. Many of them own TV and Internet options too that they’re heavily investing in.

        People come in every day and cry about the same things. The problem isn’t the carriers, it’s the ignorant service user. Buy your phone outright. I still make as much commission and then in a year I don’t have to worry about you crying about your contract.

  10. lcdocherty

    January 4, 2013 at 12:42 pm

    Also worth noting is the clear lying by the big telcos. When I got my phone I was told it was so good everyone in the office “bell phonecenter” had one. A month later I had trouble and went in to be told it was a crap phone they lend to people while theirs is out for repair.

    I am tired of all our retailers using excuses to rip us off. We are too small a market. Too vast a country. Taxes too high. What a load of crap. Open the doors to american competition and watch the prices fall, just like prices dropped as a result of walmart.

  11. Tom

    January 4, 2013 at 1:06 pm

    Even those of us who can and want to buy phones outright are forced into 3 year contracts (you must sign a contract to get reasonable plans).

    So, I don’t think you should split us (those who want to bring their own phone) out into a separate case.

    I think the best solution would force the carriers to provide competitive options for all of us.

    Consider, if we could buy our own phone elsewhere (apple, google, another carrier, kijiji) and have the carrier reduce our plan by the amount of the subsidy we no longer needed.

    Most consumers will still probably want a subsidy, but the carriers would be forced by this new competitive pressure to offer consumers options they really wanted.

    • The Masked Bandito

      January 4, 2013 at 1:13 pm

      Completely untrue. You can sign a month to month plan and get a discount with some carriers. The majority of plans are available on any term. Features that are promotions are the onlything you’ll be missing out on.

      • Tom

        January 4, 2013 at 1:35 pm

        “You can sign a month to month plan and get a discount with some carriers.”

        I said that the carrier would reduce “our plan by the amount of the subsidy”.

        I think you are saying that they will reduce the published prices by some amount determined by them. There is all the difference in the world between these.

        Their strategy of making concessions relative to the published prices is one of their favourite ways of making fake concessions.

        “The majority of plans are available on any term.”

        What’s going on here? Surely you’ve looked at the amount of the subsidy for 1 and 2 year contracts and know that they are not real options. Why are you saying this stuff?

        The point of my suggestion is to use competitive pressures to turn these existing ‘pseudo’ option into real options.

      • The Masked Bandito

        January 4, 2013 at 2:00 pm

        Sorry. I misread that part. I’m talking about carriers like Bell and Virgin who will give you 10% if I recall, off your monthly plan if you buy outright or go month to month with your own devices. And yes, I’ve seen the subsidies on a 2 and 1 year contract. And any Rogers plan with the exclusion of their retention deals are available on a month to month term. Even their 10 number ones. I don’t see what you’re going on about. You just want to sign a 2 year term and get the same deal you would on a 3 year right now? Because I can guarantee that it will never happen in Canada.

  12. petenowak2000

    January 4, 2013 at 1:29 pm

    Masked Bandito: you’re missing the point of PROFIT. It’s not what you do with that fat profit, it’s that you’re making it in the first place. But since you did mention it, what are the carriers doing with all that profit? How about paying nice dividends to shareholders or buying up every tangential business they see?

    • The Masked Bandito

      January 4, 2013 at 1:39 pm

      No, I understand profit. That’s money in the bank that they can spend if they so choose. But what you’re saying is you want these companies to make less money so they can have less coverage and fewer network upgrades? Your argument makes no sense and it’s the same argument I hear day in and day out from every customer that has zero insight and knowledge on how wireless carriers work. If you want a shitty network with no coverage and a terrible selection of phones go see WIND. I hear they have the smallest network in Canada and rock bottom plan prices.

      • petenowak2000

        January 4, 2013 at 2:01 pm

        I dunno, looks like LTE networks are pretty common, so carriers in the rest of the world are somehow making due with their lower profits:

        What they’re not doing is paying mountains of dividends and buying sports teams at the expense of consumers, businesses, entrepreneurs and innovators.

      • The Masked Bandito

        January 4, 2013 at 2:40 pm

        Sure they have them but how functional and how expansive is the coverage? Here in Canada we have most of the major cities and now even some of the minor ones getting LTE service. I can’t say the same for the USA. Even though one tower over there covers more than 10x the amount of people 1 tower would in Canada.

      • russellmcormond

        January 4, 2013 at 4:34 pm

        Don’t know where you work, but glad I’ve never tried to be a customer. Your biases for specific vendors is very visible, suggesting it is unlikely you would be capable of offering customers the right information to help them to make informed consumer choices.

        Lazy customers is clearly not the only problem given we have such Kuality salespersons.

      • Tom

        January 4, 2013 at 5:21 pm

        “Even though one tower over there covers more than 10x the amount of people 1 tower would in Canada.”

        That’s been debunked so many times now. They have 10x the population density, so you can occasionally trick people into believing what you said, but a moment’s reflection (or a look at the coverage maps) shows that coverage follows population not land-mass - the carriers don’t fill Canada’s large unpopulated spaces with cell towers.

        Given that you are supposed to be in the industry, I’m sure you know that.

      • The Masked Bandito

        January 5, 2013 at 12:47 am

        @russellmcormond I guarantee I know more about mobile devices and networks than you do. And I don’t like to deal with people that have no willingness to learn and make assumptions based on zero knowledge. I’m not biased at all. All 3 carriers in Canada are doing a great job at provided excellent service as far as I’m concerned.

        @Tom What about highways and cell towers up north? They’re getting usage maybe once every few hours, but God help us if there’s a patch of empty space. See what I mean?

        Look at all that coverage in AB, SK and BC that very rarely gets used but is there so people don’t lose service.

        Given that I’m supposed to be in the industry, I knew that though.

      • Tom

        January 5, 2013 at 11:01 am

        “Given that I’m supposed to be in the industry, I knew that though.”

        It’s getting a little weird how often you bring that up. Given the nature of your comments, I guess we are supposed to interpret that to mean that you work for one of these companies so you are hopelessly biased.

        Actually, I’m a wireless engineer, but I let my comments speak for themselves.

  13. Chris Brown

    January 4, 2013 at 4:05 pm

    I turned LTE off because of poor reception in a major city. The coverage is there, but the signal sucks.

  14. russellmcormond

    January 4, 2013 at 4:29 pm

    If we were talking consumer products or services that existed in a free market, I would be echoing the “lazy consumer” comments others have been making. Far too many people put far too little time into determining the consequences of their own purchasing decisions, and then wanting others to bail them out.

    Except, the cellular market, like the rest of the telecom sector, exists in a free market as much as the old Canadian Wheat Board did. These are pseudo-private sector businesses built upon heavy handed government manipulation of the market in the form of wireless spectrum and wired right of way monopolies. After paying the bribe (err — license fee :-) for the monopoly these pseudo-private sector businesses then complain about and lobby against any of the conditions for being granted that monopoly, and lobby against the very existence of truly independent competition. Given the cooperation between Bell, Telus and Rogers I just call them Bellusogers as they might as well be a single entity when it comes to core policies and business methods.

    In my case I am an activist consumer, and will hire/purchase services/products based on my values first, and other considerations second. I am a customer of WIND for cell, TekSavvy for cable Internet+DSL Internet and Home phone, and don’t have cable/satellite TV (no real competition there). For similar reasons on the software side I have never been a customer of either Apple or Microsoft, and I do IT for a living (so deal with these types of technology all day).

    It is wrong to expect all consumers to be activists. Most are somewhere between activist and lazy, and the dishonesty of the cellular providers claiming a full spectrum of desirable choices is unhelpful. I also find the anonymous cowards (the SlashDot term for people that don’t believe in their own words enough to use their real names) echoing the industry talking points to be unhelpful. I am pretty sure that actual strong supporters of free market capitalism wouldn’t fall so quickly for the trap of not recognizing the massive government manipulations of these marketplaces — largely in favor of incumbents.

    Consumer choice can’t solve problems created by failed government policy.

  15. andrewsveg

    January 4, 2013 at 5:07 pm

    We don’t know if he’s talking about operating profit or net profit. assuming it’s net profit the investments they make are tax deductible expenses as part of their normal business operations. So to your argument that you think if they had lower net profit margins they would have less to invest in infrastructure, not necessarily true. I think petnowak2000 is hinting that they could make even further investments in their networks (thus lowering net profit) and offer better services without increasing cost to consumer OR maintain the same level of infrastructure investment and lower cost to consumers (this would also lower net profit) and you would end up with our telco sector having a profitability profile more like that of similar countries.

  16. Jean-François Mezei

    January 4, 2013 at 5:24 pm

    3 year contracts are not the problem. They are the symptom of the real problem: lack of competition. Incumbents do compete, but only on who can raise ARPU the most.

    Incumbents claim they need to spread the subsidy over 3 years to make it affordable. Yet, after 2 years, they are ready to offer folks a new phone with new subsidy, indicating the subsidy of phones is actually repaid after 2 years.

    if big bad AT&T in the USA can offer the iPhone for same price as Ro-Bel-lus but on 2 year contracts, this shows that canadian incumbent’s claim of necessity of 3 year contracts is totally bogus.

    In CRTC filings, they go as far as claiming that locking of phone is required by handset manufacturers.

  17. petenowak2000

    January 5, 2013 at 2:08 am

    Masked Bandito: so classy! And also so anonymous!

  18. russellmcormond

    January 5, 2013 at 10:16 am

    @The Masked Bandito

    My experience in the IT sector, including as an ISP, is all available on my online resume. You are an anonymous coward who can’t be known to ave any experience on anything. I find it amusing that an anonymous coward would attempt to “guarantee” he knows anything more than a fully disclosed real person.

    The very fact you said “all 3 carriers in Canada” proves my point about your bias, given there are more than 3 carriers in Canada and that alternatives to Ro-Bel-lus/Belusogers will often better match a given customers needs. Your insistence that people must pay money to organizations that are often political opponents to the interests of Canadians is staggering: Belusogers may not be properly private sector given they are built on government market manipulations, but they don’t have the right to levy taxes against us.

    It is clear you can parrot the dogma from the incumbents better than I ever could, but that is not something anyone should be proud of.

  19. Ian Ishmael

    January 7, 2013 at 12:04 am

    Calling for a ban on 3-year contracts is ignorant, irrational, short-sighted and misguided. If you don’t want to sign a 3-year contract, then subscribe to a carrier that doesn’t offer them, such as the new entrants (the New 4). The New 4 don’t lock you into contracts and, at a quick glance, offer the top phones by the top manufacturers, with the exception of the iPhone.

    If the New 4 don’t offer enough phones for you, then it’s because they don’t have the money and allowing them to secure more foreign financing would fix that.

    If the New 4 don’t operate in your area, then you have a problem with lack of competition in your area and banning 3-year contracts isn’t going to fix that. Allowing the New 4 to secure more foreign financing and obtain more bandwidth will fix it.

    If the quality of the New 4 networks is poor in your area, then allowing the New 4 to secure more foreign financing and possibly allowing them to obtain more bandwidth will fix that too.

    The New 4′s lack of iPhone is a caused by Apple deciding to only support LTE in the AWS bands and the New 4′s lack of sufficient bandwidth to deploy LTE. Again, allowing the New 4 to secure more foreign financing and obtain more bandwidth will fix that.

    As Jean-François said, the 3-year-contract problem is a symptom of the problem of lack of competition. The government took steps to fix that, but it wasn’t enough. What they did was create a 2nd lower tier of carriers. The next step is to allow the New 4 to enter the 1st tier by allowing new entrants to secure more foreign financing and obtain more bandwidth.

    The government did finally increase the foreign financing options, though I’m not sure it will be enough.

    Where they really need to move on is bandwidth allocation. The government really screwed up when they agreed to allow the Big 3 to bid on 75% of the 700MHz spectrum to be auctioned off in the first half of this year. It’s unlikely that the New 4 will be able to outbid the Big 3 in that auction, which means that 75% of the 700MHz spectrum will be divided among the Big 3 and only 25% will be available for the rest of the carriers. That is bullshit and that is where Canadians should focus their complaints.

    Banning 3-year contracts will have no effect on consumer choice and by seeking such a ban, you’re just aiming your firehose at the flames, not the base/root of the fire. So everybody should just stop wasting their time seeking a ban on 3-year contracts and spend time trying to get the government to set aside more bandwidth for the carriers other than the Big 3.

    • Chris C.

      January 7, 2013 at 3:03 am

      Nice try, really, I mean it, even with all the ifs and buts you state, love your intentions, but frankly, your logic is flawed: Reality is, most users simply do not have a choice in selecting one of the new 4 entrants.

      Moreover, some of us don’t even have any choice at all when it comes to carriers.

      And without choice, what do you get? Captive users that can’t even go to the competition even if they wanted to.

      In other words… We still need to break the 3 year contract, 2 year phone durability vicious circle. THEN and only then will true competition start and get the ball rolling.

    • Tom

      January 7, 2013 at 1:07 pm

      So you are in favour of solving the problems through improved competition, rather then more regulation.

      I think we all want more competition, and I think few of want the sort of heavy handed regulation you are talking about (banning 3 year contracts).

      But some regulations are necessary to make competition work for consumers. We already have lots - they just need to be tweaked.

      A good example, is the new law that forces airlines to post the real prices of flights. This allows consumers to perform their market function better and helps facilitate competition.

  20. Ian Ishmael

    January 7, 2013 at 1:33 pm

    @Chris C. — why don’t most users have the choice of selecting one of the New 4 ? Where did you get the 2-year durability stat from ? I haven’t come across any such stat and I have yet to meet anyone who’s phone died in 2 years or less — that includes my teenaged nephews, nieces and cousins, who are pretty rough with their phones. If it is true that most phones die in less than 3 years, then you do have a point. Otherwise, I stand by my statements.

    @Tom — yes, I am in favour of solving such problems through improved competition, since in this case it is clear to me that the problem is caused by insufficient competition. Though, I see your point, and agree with your example. However, since we have already seen that increased competition in the cellphone provider market has led to increased value to the consumer ( and rather quickly too, IMO) I’ll still stand by the belief that increased competition will solve the 3-year-contract problem. If it doesn’t, then we should resort to regulation.

    • Chris C.

      January 7, 2013 at 2:04 pm

      @Ian: Ishmael: Phone durability? 19 years ownership of cell phones for myself, my wife and my kids. Combined experience with approximately 2 dozen phones. I think you will find that quite statistically representative.

      You can argue semantics over a couple months if you want, the fact is, from my experience, apart from the Motorola DPC550 (which failed within the first year and was repaired or replaced under warranty and would still work if the network was still active), no phones have lasted the duration of a three year contract. NONE.

      That includes phones from Apple, HTC, Kyocera, Motorola, Nokia, Samsung, Sanyo, Sony Ericsson, and a couple other off brands I don’t remember anymore, whether on Bell, Fido, Koodo, using hard or soft cases, fashion or ruggedized.

      • Tom

        January 7, 2013 at 2:17 pm

        “@Ian: Ishmael: Phone durability? 19 years ownership of cell phones for myself, my wife and my kids. Combined experience with approximately 2 dozen phones. I think you will find that quite statistically representative.”

        I’m not sure what “statistically representative” means, but that is absolutely not statistically significant or statistically meaningful in any way.

      • Ian Ishmael

        January 7, 2013 at 2:26 pm

        I’ve been using a cellphone for about 13 years now, and every phone I had lasted more than 3 years. The only one to die on me was my RAZR V3 and that was from corrosion caused by sweat (I used to keep it in my pocket all the time) and getting soaked when the waterproof case it was in leaked while I was SCUBA diving — and even then, it still lasted another 2 years. My Nokia 3595 still works perfectly after 10 years.

        I’ve either changed phones because I wanted to upgrade to a better phone with more features or because my phone didn’t work on the new carrier’s network. That’s it. And it’s the same with everybody I know, except a couple of them who had to change phones because they lost theirs.

      • Chris C.

        January 7, 2013 at 8:22 pm

        Well Ian if you’ll guarantee my current phone will in fact last three years I’ll gladly subscribe to your great warranty service. And Tom… Statistically significant is an assessment that observations reflect a pattern rather than just chance. Look it up.

  21. Ian Ishmael

    January 7, 2013 at 2:17 pm

    I just realized that I should clarify my stance on the airline-price-list example.

    The reason why I believe regulation was needed in that case is because all the airlines were doing it and if one airline were to switch to all-inclusive price listings, then their fares would appear to be much more expensive and thus they would probably lose some business. So all airlines had to make the switch at the same time. And the only way to do that is for all airlines to agree to do so at the same time, or for a governing body to make them switch. It’s a similar situation the grocery stores and supermarkets are in with respect to listing the prices of the produce they sell in metric or imperial. In that case, no governing body stepped in, and thus nothing changed.

    Such is not the case in the case of 3-year contracts for cellphones, since not all providers offer 3-year contracts. I didn’t want to sign a contract of any length and I didn’t like the service I had with Rogers, so I switched to Mobilicity. Problem solved.

    In speaking with people who signed with the Big 3 since the New 4 started up, I have found that they are with the Big 3 for ONLY the following reasons (if you know of other reasons, then do speak up):

    1. the other carriers don’t provide the coverage, network quality or speed they want
    2. their doesn’t work on the other carriers’ networks
    3. they don’t really know anything about the New 4 and haven’t bothered looking into them
    4. they’re happy with their service with the Big 3

    Banning 3-year contracts isn’t going to solve any of that. And #4 isn’t a problem.

    The proper solution really is to focus on increasing the financing options and bandwidth for new entrants. However, with the 700MHz auction going to take place within the next 6 months, I fear we may be too late. :-(

    • Tom

      January 7, 2013 at 4:24 pm

      “The proper solution really is to focus on increasing the financing options and bandwidth for new entrants.”

      Yes, I believe that is important.

      But if 3 competitors isn’t enough, then why will 4 or 5 change everything?

      If we maintain the regulatory environment that produced the big 3 and made them what they are, then we will just end up with more of the same.

      We need more competition and regulatory reform that makes competition work better.

      • Chris C.

        January 7, 2013 at 8:40 pm

        The problem is the 4 new entrants are constrained because of bandwidth allocation. And I maintain that Pete’s opinion is perfectly valid, that 3 year contracts are deliberately maintained to lock people in and that is gong to take time for the new entrants to make a dent into the market. And I am confident that by the time my present phone will be worn out, the contracts will have been reduced to two years, precisely as a result of what people here are doing: public pressure.

        Than you Pete!

    • Chris C.

      January 7, 2013 at 9:14 pm

      At the risk of repeating myself… Your logic is still flawed. You are assuming that 3 year contracts have no impact on the situation whereas the facts prove otherwise.

      Say you’re at the end of your second year. Even assuming your phone hasn’t given up the ghost yet, it’s probably quite long in the tooth. So in order to get a new one at a decent cost to you (we’ve already established that phone prices are maintained artificially high by the existing system), you’ve got to sign up for another 3 years.

      In other words, bye-bye competition.

      As long as this status quo exists, the new entrants will have a really hard time to actually replace established customers. How do you think they’re going to pay for new network installation if they can’t sign up new customers off of the big three?

      Now can you still tell us with a straight face that banning three year contracts will have no impact on the situation?

      As for increasing financing options… Agreed. But I disagree with your pessimism, you’re not giving yourself enough credit. It’s thanks to public pressure by people here and elsewhere that things actually do change.

      • Ian Ishmael

        January 7, 2013 at 11:16 pm

        The assumption I’m making is that people would not switch from one Big 3 carrier to another. I believe that’s a fair assumption given that the Big 3 carriers run very similar networks, and have pretty much the same offerings at pretty much the same prices.

        Therefore, in your example, I see 2 cases:

        Case 1: Only the Big 3 operate in your area. In that case, it doesn’t matter if you sign a contract or not, nor how long the contract is, because you’re going to stay with your provider anyways. Banning 3-year contracts will have no effect on you.

        Case 2: Other alternative carriers operate in you area. Your options are: 1) wait until your contract ends and switch to an alternative carrier 2) break out of your contract and subscribe to an alternative carrier. Again, banning 3-year contracts will have no effect on you, since you’re already into your contract with the Big 3 carrier and the alternative carriers don’t offer contracts.

        Where a ban will be effective, will be in the case where someone signs a new contract just before an alternative carrier starts offering service, or upgrades to LTE, in their area. That was a problem when the New 4 first started up, but not now, since they’re not expanding anymore. However, it is possible that the New 4 could offer LTE in 2 years, in which case the 3-year contract would be a problem for those who sign 3-year contracts now.

        If you can think of other cases, then do tell.

        Now that brings up an area where I do believe the government needs to intervene in: breaking out of mobile service contracts. The last I checked, people were being gouged heavily for breaking out of their contracts, far beyond paying remaining phone subsidy, admin fee and acceptable penalty.

        I agree 100% that alternative carriers can’t grow if customers are perpetually locked into contracts with the Big 3. But in that case, you need to ban all contracts. I see no difference between perpetually renewing 2-year contracts and perpetually renewing 3-year contracts.

        In theory, if all Big 3 subscribers who don’t want to be locked into contracts sign with alternative carriers when their contracts are over, then in 3 years, the only people who will be subscribed to the Big 3 are those who don’t mind being locked into a contract. Perhaps I’m being idealistic, but I believe this is possible to achieve in practice.

  22. Ian Ishmael

    January 7, 2013 at 8:27 pm

    I would agree with you Tom, if it weren’t for the fact that new entrants have changed things without regulation (aside from the set-aside for bandwidth). The New 4 could have offered similar pricing, value and contracts as the Big 3, but they didn’t. Since the entrance of the New 4, The Big 3 have lowered their prices and added more value to their offerings. Rogers even created a new “budget” brand (Chatr) — though, I remain convinced it was to run the New 4 out of business, after which Rogers would close Chatr.

    Once people have, and realize they have, a sufficient alternative to the Big 3, but without contracts, then I see no reason why the people who don’t want contracts would stay with the Big 3, thus leaving the Big 3 with only those who are happy with contracts. And in that case, regulation is useless.

    So as far as I’m concerned, the solution is either more and better competition, OR regulation. Since more and better competition is a far better and broader solution, I’m sticking with my call for such.

    The only problem I see, and perhaps this is what you’re getting at, is if the new entrants become as big as the Big 3 and then switch to long contracts as the Big 3 have. I do see that as being a legitimate concern, but it can’t possibly happen for a very long time. Just compare the subscriber bases of the New 4 and the Big 3. Enormous gap that will take a long time to close. So any regulation now would only affect the Big 3. And for the most part, there are alternatives, except in the cases I mentioned previously.

    I don’t see what you mean by “…maintain the regulatory environment that produced the big 3 and made them what they are”. There lots of things that made the Big 3 what they are. What regulations are you talking about specifically ? 3-year contracts didn’t make the Big 3 what they are. 3-year contracts are a result of what the Big 3 are, not the cause.

    • Tom

      January 7, 2013 at 8:45 pm

      Sorry, I guess this thread is really about 3 year contracts - I should have clarified that I’m talking about the big picture. I personally do not consider 3 year contracts to be a big problem.

      I think that the competition of the New 4 have produced some changes in the Big 3, but not nearly enough. And that is only because they are new and hungry and must take subscribers from the established companies. Once they become established themselves I think they become more like the Big 3.

      “So as far as I’m concerned, the solution is either more and better competition, OR regulation.”

      Why? Our telecom sector is already heavily regulated. Why not tune those regulations in an attempt to make things better for all telecom customers in Canada? One of the examples I use is number portability - that is a heavy handed gov’t regulation that improved competition.

      Another example… it appears that foreign companies (Skype, Google, etc) are not allowed to allocated Canadian numbers. Changing that regulation would also improve competition.

      • Chris C.

        January 7, 2013 at 9:31 pm

        Tom, I understand where you come from. Our telecom sector is heavily regulated and too much regulation is always counterproductive and paralyzing. But no regulation is not the answer. What we need is nothing less than a revamping of the good ole boy system that has been in place for ages, as public input in the last year has shown.

        I am personally optimistic that under Jean Paul Blais, we are seeing the beginning of a more citizen centric system where the industry is regulated for the benefit of all instead of just a few shareholders as it is now.

      • Ian Ishmael

        January 7, 2013 at 11:33 pm

        I said “more and better competition OR regulation” because I believe that if you allow the alternative carriers to compete at the same level as the Big 3, then either all those who don’t want contracts will migrate to alternative carriers or the Big 3 will drop their 3-year contracts or offer shorter term contracts, and thus regulation wouldn’t be needed. However, as you pointed out, I’m assuming that the alternative carriers would not start behaving as the Big 3, which I certainly agree could happen. But I’m the kind of person who starts with a positive opinion of others, until they give me a reason to change it. And the New 4 haven’t given me such a reason, so, I’m giving them the benefit of the doubt.

        I agree with you on the number portability. Very good application of government intervention.

        As for Skype, Google, etc., the reason they don’t get Canadian numbers is because they don’t offer e911 (Enhanced 911) services. I believe that was a CRTC decision. I don’t remember why the e911 services are necessary, though.

      • Tom

        January 8, 2013 at 10:47 am

        “As for Skype, Google, etc., the reason they don’t get Canadian numbers is because they don’t offer e911 (Enhanced 911) services. I believe that was a CRTC decision. I don’t remember why the e911 services are necessary, though.”

        Dell was able to offer Canadian phone numbers for their VoIP service - but they partnered with a Canadian company (Fongo) to do this. Their service had no special 911 features.

        I don’t know this for a fact, but I still think that it must be a regulation that prevents non-Canadian companies from allocating numbers. Would be interested if someone had a definitive answer.

  23. joety

    January 8, 2013 at 2:08 pm

    Wouldn’t the new ETF policies though take the sting out of 3 year contracts? Your penalty to cancel is essentially the remaining cost of the subsidized device. I think the main issue is the retail price of devices which are fairly arbitrary. Even between carriers and their flanker brands, the no-contract retail prices differ. It is incumbent on the CRTC to ensure that device prices are not inflated so that ETFs are inflated. Regulation would be difficult, but some sort of market price comparison should be in order. You have to pay for the device after-all.

    • Chris C.

      January 8, 2013 at 3:04 pm

      The problem is, joety, that the ETF is not even remotely comparable to the remaining cost of the subsidized device, firstly because the actual cost of the subsidized device is overly inflated and secondly because of the administration and other punitive measures that are tacked onto it, at least that’s how it was last time I checked with my provider (Bell).

      Great point, though, The ETF as it stands must go, as must other criminal gouging on text messages and data, which basically forces users to purchase a plan. Heck, not even the Mafia was that gouging.


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