Hanging Up on System Access Fees

The bogus, made-up System Access Fee that Canada's mobile phone providers use to intentionally and despicably dupe their customers may soon be history. With our telcos basking in some of the highest rates anywhere on the planet, don't go thinking it's out of the goodness of their hearts, though. It's because of new competition entering the marketplace. And a pending lawsuit.

For some indefensible reason, the telcos have been allowed to advertise a lower price than the customer actually has to pay. A monthly basic Bell plan can be advertised at $30, for example, but it would actually start at a $39.70 minimum, before taxes. Taking advantage of customer perceptions left over from the early days off cellular phones, the fee succeeded because people assumed it was a government-mandated levy. With mobile bills (and plans) split into a gazillion intentionally vague categories and line items, customers tend not to know what they're really paying for—and when it comes to the System Access Fee, that means more than a billion extra bucks in profit each year.

Telus was the first major carrier to drop the notorious SAF when launching their Koodo brand in the spring. Rogers just canned the loathsome fee on the occasion of their flashy Fido relaunch, and that left competitor Bell scrambling to wipe it from their Solo plans. Telus, Rogers, and Bell all still charge the fees on their flagship "premium" name brands, as if it isn't all the same thing.

The move comes in anticipation of a slew of new discount competitors slated to arrive next year, none of whom are likely to charge a System Access Fee. With the mobile phone industry unregulated by the CRTC and no significant competitors to the Big Three (who corral 95% of the market), Canadian wireless carriers have fallen into lockstep with each other, charging virtually identical prices for services, exorbitant prices for text messaging, and deciding that "evenings" begin at 9 p.m. The Canadian wireless industry is the most profitable in the developed world, according to a study by Merrill Lynch, with a combined profit margin of 45.9%, in contrast to the world's 33.1% average.

Another impetus to can the System Access Fee is a $20 billion class-action lawsuit for "unjust enrichment," as well as a newer one launched in protest of artificially inflated 911 fees. The lawsuit charges that the System Access Fee is misrepresented as a mandatory government charge for licensing the radio band—which it was, until the government discontinued it in 1986.

In the meantime, how will the carriers ever scrape by? It's in the fine print. Fido will start charging from the second you press SEND until the second you press END, which now includes the ring time. Even worse, incoming calls are also now billed from the moment the initiating party dials, so better answer quick or shorten that voicemail message. The More You Know.

Photo by dzgnboy from the Torontoist Flickr Pool.