Wednesday, July 09, 2008

 

Paying for incoming text messages

The news broke yesterday that Bell and TELUS were starting to tell their mobile customers that they plan to start charging for incoming text messages. No news releases were issued, leading to some mis-information. Customers were being notified by billing inserts providing them with 30 days notice of the rate increase, as provided for in their contracts.

Bell's contract reads:
We will not increase your basic monthly voice plan charge or out-of-bundle airtime charge during any Committed Service Period, as long as you remain qualified to receive your chosen plan and Services throughout the Committed Service Period. If you no longer qualify to receive a plan or the Services at the fees offered to you (for example, a corporate plan or employee plan, due for instance to termination of employment or termination of a corporate agreement) then Bell may transfer you to a comparable Service and plan, at the appropriate fees and charges for which you then qualify, and you accept same. During the Term we may increase other fees (including the System Access Fee), and charge additional fees, after giving you 30 days advance notice. Any promotional and upgrade offers are offered at our discretion for limited periods of time [emphasis added]
I generally don't have a problem with services providers charging what they want and what they believe the market will allow. Consumers have choices and can shop around to select the package that best meets their needs. Besides the big 3 (Bell, TELUS and Rogers), there are lots of alternatives out there, many of which have very attractive text messaging plans. In some cases, the 'off brands' like Fido, Solo and Koodo may save consumers lots of money. You even get to take your phone number with you.

One of my contacts tells me the charges won't apply to incoming spam, but I have no idea how service providers will define spam. For example, a new form of school yard bullying could be for kids with text messaging plans to start sending messages to one of their schoolmates without a plan. Do the carriers really want customers calling into the call centres each month looking for text messaging credits?

Will the Canadian service providers provide the same tools as in the US for end-users to manage their incoming messages? If customers are going to have to pay for incoming messages, then they should get to control those charges.

The main issue I have with this new text message plan is changing the rates in the middle of contract periods. People shopped around last Christmas and selected devices and packages based on the pricing that was in effect. They signed 2 and 3 year contracts based on the analysis they did at that time. Now, the rules are getting changed part way through.

It is another example of a one way contract I wrote about in May. At that time, I wrote:
How can it be reasonable for the service provider - a major Canadian telco - to lock up a customer for 2 years, but be free to change the price substantially in the middle of the contract period? What exactly is the meaning of a contract if one side gets to change a key term, price.
Just as I have written about changes to System Access Fees, if service providers want to change the rates, go ahead. But if consumers are tied up under a contract, the service providers should be held to honour their commitment as well, or release them from their contract to go shopping again.

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Comments:
One argument I heard the CWTA make yesterday regarding this change was that the carriers did not anticipate the overwhelming demand for texting and are now trying to recover the costs for building out their capacity. They only had to look at Europe as but one example of a region where texting is a bona fide way of life. Shame on the carriers for using such a lame excuse.
 
That excuse is even more lame when you consider that telcos already charge extortionate fees for outgoing SMS.

Ordinarily sellers are more than happy to invest in infrastructure to meet increases in demand that they couldn't anticipate. That's a very "nice" problem to have, especially when there's no evidence that texting is only a temporary fad.

But only Canadian telcos are so venal and disingenuous in the face of such success that they'd double what they charge their existing customers. And only Canadian telco customers are so docile as to take that sort of crap without a whimper.
 
And why don't you have a problem with the remarkable coincidence of timing of these announcements by our two of our supposedly competitive wireless companies?

That's the real problem. Virtually no real competition in cell phone service in Canada.

Do we still have Competition Bureau in Ottawa? I've seen much evidence of it lately.
 
Sorry - I meant to say I HAVEN'T seen much evidence lately of any signs of life at the Competition Bureau.

Anon @ 8:55 PM
 
The NDP has launched a petition about this:
http://www.ndp.ca/page/6577
 
The NDP has launched a petition about this:
http://www.ndp.ca/page/6577
 
The NDP launches petitions about everything.
 
Mark, I'd like your thoughts on why this event has not raised the eyes of the Competition Bureau. Not for the fact that two carriers are raising fees but for the fact that two supposedly competitive companies in the same market are raising fees in exactly the same way on exactly the same day. How do they do that without colluding in advance of the announcement?

I discuss this a bit further in my blog: http://cellcanada.wordpress.com
 
Gary - I don't think the two announced this on the same day. It was noticed by the media on the same day. I understand that the information was released to customers through billing inserts, providing customers with 30 days notice of a change to their plans.

The two carriers announced different dates for starting to charge. I think that Bell plans to start charging on August 8; TELUS on August 24.
 
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