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29 Comments

news

Text Bomb

By Marc Lostracco

7May09_Rogers_text.jpg
Photo by Marc Lostracco/Torontoist.


When it comes to holding customers in seething contempt, few corporate entities do it with more blatancy than the Canadian telcos. And they know customers hate them—that’s why Koodo (a brand owned by Telus, though you’d never know it) mocks the industry’s despicable practices in their advertising. But when three biggies control an entire market, forcing users into long-term contracts and deliberately muddying their fee structures, the notion of customer service is merely an insignificant byproduct of offering a service to customers.
So, it was business as usual this week when Rogers announced that they’ll be joining Bell and Telus in charging 15¢ for every incoming text message for customers not paying for an inclusive plan. Here’s the thing: text messages cost the telcos nothing. Zero. They’re part of the signal that constantly pings wireless towers and require no additional bandwidth or equipment—not to mention that the received text has already technically been paid for on its way out. But “common industry practices” dictate that entirely made-up fees can be levied on “perceived value” services, like text messaging, data, call display, and 911 service, and, boy, do we get shafted because of it.


This is the same industry that bundles services together, so you can’t get call display without also paying for voicemail; the same industry that locks down SIM cards and intentionally hobbles built-in phone features such as ringtones unless you pay more; the same industry that uses roaming charges to virtually print money; the same industry that will lock you into a three-year contract that allows them to change the terms of that contract without notice at any time; the same industry that sells—er, “shares“—private customer data for profit.
Rogers says that the new fees won’t affect Fido customers (who also no longer pay the System Access Fee). What that means is that you can have identical service on an identical handset on the identical network owned by the identical company, but you pay more for one because it’s a perceived “premium” brand. Except that the discount brand owned by Rogers has quietly snuck in some sleazy changes to their contracts as well: they now start billing from the moment the incoming caller presses SEND, rather than the moment the phone is answered.

7May09_Rogers_banner.jpg
Look at how ecstatic we are being treated like shit!


“The change is to align our message to usage trends and common industry practices,” says Rogers’ boilerplate peddler Liz Hamilton, admitting in a roundabout way that the charges are bogus, but it’s just the way the industry works. This is the flack who, when Bell and Telus originally announced the new fee, said, “We just don’t charge for it and have no plans to. Now it’s a unique differentiator for Rogers.” Of course, waiting a little while after your oligopolistic competitors do it makes it not collusion, right? Because collusion would be illegal.
The Canadian wireless racket is unregulated, and no federal legislation is planned to protect consumers from this excessive nickel-and-diming. The telcos do have to comply with recent anti-spam measures, however, so if unsolicited spam is received via text, a customer will have the charge redacted. But the customer has to contact the company each time it happens.
Rogers also says that because 94% of their customers already pay extra for texting plans, consumer backlash won’t be significant. It’s your own fault if you fall outside their carefully constructed threshold of profit maximization, but they still win either way. The company also points to wireless carriers south of the border, who also charge for received texts, but conveniently neglect to mention that contract terms and service levels are way more draconian up here or how many countries overseas don’t even charge for texting at all.
In related news, profits for all three telcos continue to soar to dizzying heights, not because they innovate in the marketplace and enjoy a happy, loyal customer base, but because they’ve been allowed to behave like obstinate thugs at 15¢ a pop.

Comments

  • http://undefined xtremesniper

    I wonder what caused them (aside from greed) to do a full 180 and change their minds completely about this topic. It was just a few weeks ago where Rogers was bragging about how they were the only ones that don’t charge for incoming texts. What happened?
    Ted Rogers passes on and things go even more downhill than they already were.

  • http://undefined rek

    *pulls out all his hair*
    I don’t know what to say.

  • http://undefined yokes

    What do you mean, “aside from greed”?
    There are other reasons?

  • http://undefined Damon Kemp

    Now I remember why I dislike Canadian wireless service! I’ve never had this problem, back in the States, and I’m sure that if a phone company tried this they would be toast. The screw job is so blatant that it’s not even funny. Canadian consumers can only bend over and take it and smile and hope that someone in the government decides to take a stand!

  • Mark Ostler

    Is there any way to have and use a cellphone on the cheap? Or am I going to get screwed no matter what?
    I pay about $35 a month on my current plan, but I definitely don’t need that many minutes and I barely use the thing. Is it too much to ask for a simple pay-as-you-go phone that I’ve used in Europe? Anything similar here, because I’m definitely not using $35 worth of cellphone each month and I want to change it up.

  • http://undefined Damon Kemp

    The release of the Android phone wouldn’t have anything to do with the about face would it?
    Android Phone

  • http://www.bitpicture.com Marc Lostracco

    Mark, you can get pay-as-you-go handsets here to, including in places like 7-11. I’m kinda in the same boat as you—I barely make any phone calls. But they ding you on fees for texts, long distance, etc.
    But get this: when I went to see about getting a different phone with Rogers, I was told that I would have to pay a $50 fee to UPGRADE MY CONTRACT.
    Not only would the phone I wanted lock me into an automatic three-year contract (my contract ran its course and is finally now on month-to-month), but I don’t pay enough in my current monthly plan to be able to buy a new, expensive handset and enter into a three-year contract without an additional $50 penalty for not being on a more expensive plan all this time.
    See? Evil.

  • http://undefined Greg Smith

    Why would those two things be connected?

  • http://www.bitpicture.com Marc Lostracco

    Well, a few things:
    1) PR people lie, and I don’t believe for a second that there aren’t continuing boardroom discussions on how to confuse customers and increase fees, or that this wasn’t in their long-term plans.
    2) The short term gain of retaining/attracting customers by proclaiming that Rogers isn’t as evil as Bell and Telus is more useful than the risk of being called out on it later. Remember, these people sell contracts. Once they’ve gotcha, they’ve gotcha. It’s the same way that Rogers temporarily relaxed some conditions of the iPhone once it launched and attracted lot of customers who got in before the rates were going up—many of whom may have waited otherwise.
    3) Although the offerings from each Canadian carrier pretty much boil down to the same types of sleazy fees, by staggering the debut of new fees or by calling them by different names or bundling them in different packages, they sneakily avoid being nailed for collusion (price-fixing), which, as I mentioned in the article, is illegal. They play more of a tacit collusion game, which means pretty much doing exactly what the other companies are doing, but pretending they aren’t collaborating explicitly together, hiding under the guise of “common industry practices.”

  • http://www.dandickinson.com Dan Dickinson

    I fully agree that our telcos are dicks, but here’s the thing: we keep giving them our money, so we give them no incentive to stop being dicks. If we were really so outraged by their dickishness that we stopped giving them our money, they might see their business flow to competitors or substitute products and ease up on the dickish behaviour. But we don’t. We want what they have badly enough that we put up with their dickishness, pay their ridiculous fees, and replace our cell phones with the new hotness every year. So they price what the market will bear and do their best to make more money off of us because, um, they’re for-profit businesses. It’s what they do.
    Boo, capitalism.

  • http://undefined Mark Ostler

    I don’t really care about a phone upgrade (pretty much any phone is better than the beat up one I’ve got now). I just don’t want to pay as much as I am for what I use the phone for. I think pay as you go might work best for me. Plus I rarely, if ever, text and would call long-distance only in emergencies (in which case money would probably be the least of my worries).
    If I need to be fleeced by these scammers, I want them snagging as few of my $$$ as possible.

  • http://www.bitpicture.com Marc Lostracco

    It wasn’t the handset upgrade that bothered me; it’s what they termed a “contract upgrade,” which meant that I had to pay $50 extra to actually choose an even more expensive contract. It was a penalty for not being on a more expensive plan right now.
    That’s like drinking a can of pop and then going back to buy a 2-litre bottle, but not being able to buy the bottle unless you paid a retroactive penalty for buying the cheaper can of pop earlier.
    And I linked to it in the first paragraph, but I think Telus’/Koodo’s holiday ad campaign text should be reprinted, as it basically is an admission that they’re all a bunch of sleazy douchebags—and that’s their marketing plan!

    Jingle bells, contracts smell,
    Fees make you say yuck.
    Lift the hex, get non-stop text
    Or else your bill will suck.
    Big time.
    [All plans include text]
    Fixed-term contracts, excess fees
    Are so gross and sleazy
    Just say no and get Koodo
    And please don’t eat yellow snow.
    [No fixed-term contracts.]

  • http://undefined Damon Kemp

    Only saying cause the Android seems to be conducive for texting!

  • http://undefined torontothegreat

    Android is just an OpenSource Mobile Operating System. You’ll still need a telco plan for it.

  • http://undefined Mark Ostler

    Yeah, I don’t like to support such scammy behaviour.

  • http://www.guesswork.ca Patrick Metzger

    What Dan said. I don’t understand how we can judge a fee as immoral just because we don’t like paying it.
    Anyway, who determines what constitutes an excessive fee? While both charger and chargee have a bias in that regard, I don’t think we need the government shilling for votes by making arbitrary decisions about a company’s business model.
    Eventually the market will reach a saturation point due to new competition or new technologies or consumer ennui, and prices will drop. I doubt that at that point there’ll an outcry for the government to force higher prices on consumers to keep the poor telcos in the black.

  • http://www.bitpicture.com Marc Lostracco

    It’s not the fee itself or how much it is; it’s how it’s employed. Primarily:
    • Breaking out a single cost into a bunch of meaningless little costs (system access fee) that aren’t included in the listed “cost.”
    • Advertising a fee of $30, for example, when it actually starts at $39.70 (before taxes).
    • Bundling important services with less-important services, so customers have little choice but to spring for an additional package.
    • Disabling manufacturer-included handset features and unbundling accessories so customers have to pay to have them re-enabled or returned.
    • Intentionally confusing customers, so they either think they’re getting something they’re not; they think they’re getting a deal when they’re not; they think they’re paying less than they are; they think their contract terms are going to stick for the length of their contract; they think certain levies are government-mandated; they think they need add-ons that they don’t…
    Sure, we pay one of the highest rates in the world for mobile phone service—which is a byproduct of oligopolization and nothing else—and that sucks, but that’s secondary to the shifty way the telcos have managed to deliberately trick their customers into a windfall for Telus, Bell, and Rogers. They’re the used-car salemen of the technology world.
    As for Dan Dickinson’s suggestion to stop giving them our money—and then what? Not have a phone?

  • http://undefined Astin

    It seems everyone has missed the reason here: Yesterday Rogers (and Fido) announced that they’ve once again opened up SMS Twittering. That’s a lot of incoming texts for them to bilk the customers on if they turn on SMS following.

  • http://www.dandickinson.com Dan Dickinson

    Marc,
    Cell phones aren’t a necessity, they’re a convenience. The argument that ‘we can’t stop paying for our cell phones because they’re just so damn useful’ only proves my point that you’re willing to pay whatever Rogers charges, even if you don’t like it.
    There are certainly alternatives. If you have a landline and a cell phone, cancel one. Or keep your cell phone and only use Skype at home. Use payphones. Or yeah, go without. Of course none of these options are as convenient as a cell phone, and so we pay for that convenience. Cell phones aren’t milk or bread. We can’t legislate price caps for conveniences.

  • http://undefined Paul Kishimoto

    The telcos are fighting this battle on several fronts. If you have an ear open for news, you can catch some of the FUD they are spreading about Globalive (“Yak” operator), who won some spectrum in a recent auction and are planning to open a national network next year.
    From the hapless customer’s perspective, even if Rogers/Telus/Bell don’t spook the CRTC with misinformation and xenophobia about Globalive’s shareholders (a major one is Egyptian), there’s not even any reliable indication that the new carrier will abstain from this kind of extortionary charge for any longer than it takes to grab a profitable market share.
    The only positive outcome of these fee changes would be if higher phone bills persuade some free-market ideologues to keep their “invisible hand” BS to themselves.

  • http://undefined rek

    If your cell pings a tower, it can send/receive texts. Android doesn’t do anything about who owns that tower or its associated service network, though.

  • http://undefined x_the_x

    Take that, Adam Smith.
    You might find something in the economic literature about market structure affecting price signals.

  • http://undefined rek

    I currently pay about $15 a month pay-as-you-go with Virginmobile. I was on a $20/month plan for a while but I just wasn’t using that many minutes (I might use my phone 3 times a week on average, if you can believe it). So I dropped the plan. Now they text me every single morning to remind me I’m not on a plan and phrase it like I’ve somehow disappointed them. If they texted me my remaining balance I wouldn’t mind, but this is practically harassment.
    Virgin has the worst customer service I’ve ever experienced from a company, I’ve had nothing but problems with them since the year began, but for the time being they’re the affordable option.

  • http://undefined thewatchmaker

    “Eventually the market will reach a saturation point due to new competition…”
    Until Yak bought some newly-opened space last year, it wasn’t actually possible for ‘new competition’ to enter the market – the government has to free the space, and when it does it tends to be bought up by the big three anyway. So this free-market truism doesn’t hold water.

  • http://undefined dzastins

    OK, you guys need to do a fact check before you publish a story like this. There is lots of BS and general misinformation in this article:
    “text messages cost the telcos nothing. Zero.”
    That is simply not true. It costs billions of dollars to build out a modern digital wireless network. This investment needs to be recouped by charging fees for usage. Think about the geography and population density of Canada vs. countries in Europe or even the US. It simply costs more per subscriber to create an infrastructure here than many other countries. The machines that manage SMS aren’t free, neither are the engineers that run them, nor are the cell towers.
    “the same industry that sells—er, ‘shares’—private customer data for profit.”
    Citation please? Rogers Ts & Cs are hardly proof of this.
    “and intentionally hobbles built-in phone features such as ringtones unless you pay more”
    Get a Blackberry or Windows device if you want to set your (surely legitimately paid for) downloaded MP3′s as ringtones.
    “The Canadian wireless racket is unregulated”
    This is the biggest turd in the article. That is utter nonsense. The wireless industry is regulated by the CRTC with reams of legislation specific to wireless. Canadians are also protected by consumer protection laws that govern all industries.
    I don’t think the industry is perfect, but these are for-profit enterprises.
    You do not have to have a cell phone. Payphones are still cheap. Skype is free.

  • http://undefined Greg Smith

    To be fair, I’m 99.9% sure that “text messages cost the telcos nothing. Zero.” was a less-than-perfectly-precise way of asserting that “the marginal cost to the telcos of a text message is zero”. And that is indisputably true because, as has been explained above, SMS does not add any overhead but, rather, rides on the pings that were going to happen anyway. Any fees charges for incoming or outgoing SMS are pure profit.
    It is misleading for carriers to suggest that per-message charging is necessary to cover the costs of the (charged-for) service. You are right that the network infrastructure is expensive, but it doesn’t make sense to try to recoup those costs with piddling per-message charges for features which, themselves, have no marginal cost. If the costs of rolling-out, maintaining, and upgrading the wireless network are so onerous as to require additional fees, how about a transparent fee for that purpose? Like, say, a network/system access fee? Instead, telcos trot out the “OMGz so expensive!!!11″ rationale in defense of their BS obfuscation pricing.

  • http://www.bitpicture.com Marc Lostracco

    dzastins: As I’ve said above, this has nothing to do with charging a lot of money for a product, and everything to do with HOW the money is charged. Right now, the telcos charge for text messaging, and though it obviously costs money to build and maintain network (actually, less and less these days), they prey on the perception that these made-up costs go towards a service specifically. Since text messaging is built-into the GSM standard, it comes with the technology, and therefore, charging extra for something that is already included is sleazy.
    As for the poor telcos who have to maintain a wireless network over desolate, uninhabited Canada—they’re hardly in the poorhouse, and they charge scads and scads over what it costs to build the network, or else they wouldn’t have gotten into the business in the first place. And don’t forget that mobile wireless service only really exists in significantly populated places and travel corridors.
    You claim that you need a citation that the telcos sell your personal data, yet I linked explicitly to the Rogers TOS, which claims just that—multiple times. You have to opt-out if you don’t want that. It’s not unusual (the banks to it too). For example, one one of my Rogers accounts, they have an unintentional misspelling on the mailing label, but because of that, I can see exactly what junk mail comes from the sale of that data because it has the same misspelling. If you set up an account for which you use a P.O. box that you don’t use for anything else, you’ll get junk mail from their “agents, dealers and partner companies.”
    You say that if I want to use my MP3s as ringtones, I should get a BlackBerry or Windows device. That’s the solution? It ignores my point that they deliberately disable these features, not because of illegal file sharing, as you seem to insinuate, but because it competes with their incredibly lucrative, locked-in ringtone business.
    And yes, the wireless industry is largely unregulated, particularly by the CRTC.

  • http://undefined dzastins

    I take your point re: your Rogers experience. It does not surprise me, given their magazine and TV empire that a little junk mail shows up in your mailbox. I don’t see this as specific to the wireless business. I haven’t noticed it with my Telus contract, but then again, they haven’t misspelled the name on my account!
    Back to the messaging side, though. There is incremental cost to sending an SMS, the cell sites are designed to handle a given amount of network traffic. If volume is high enough, this needs to be upgraded to maintain quality of service. This costs money, obviously. The cost is not zero.
    That it costs more per subscriber to maintain a network in Canada vs Europe, for instance, is a fact. This issue has to do that we are the 2nd largest country in the world by landmass.
    Ringtones. The record labels keep most of these profits. It is related to file sharing (a.k.a. stealing) in that they are pretty much screwed without this revenue. Look at the CRTC tariffs for SOCAN and CMRRA. This is a wireless carrier responsibility. Platform, carrier responsibility. Network and billing, carrier responsibility. No one is getting rich from ringtones. It is certainly not incredibly lucrative.
    What do you propose with respect to regulation? If they regulated the airwaves LESS – there would be less of a barrier to entry, more competition, lower prices.
    What will happen in the short to medium term is that new entrants to the business will drive prices down. Then long term there will be consolidation and again the government (CRTC) will sell spectrum to new entrants to the market.

  • http://undefined DanL

    RE: maintaining the network in Canada vs Europe.
    BULLS#|T I say good sir! This is demonstrably false. Just take a look at the cellular network coverage maps in Canada. None of the networks actually cover close to even a quarter of Canada’s landmass so citing Canada’s size as the reason is just plain silly. The networks in Canada cover the areas where the majority of the population live.
    Also very importantly we should mention that our prices are still way higher then Russia which is the country with the largest landmass.
    And take a look at the cell phone coverage maps for AT&T or Verizon for the USA (the 3rd or 4th largest country by landmass, I don’t remember) the bulk of the country is covered!!!
    RE: Deregulation
    As to the lack of regulation in the industry – it is true that within Canada the cell phone communication industry is largely unregulated BUT there is one very important regulation which is conspiring to keep our prices high – the protectionist policy of the CRTC which does not allow for foreign investment/ownership in our mobile carriers. Most European countries have cell phone providers which are part of a multinational corp also operating networks in other countries all over Europe and even worldwide – even in the USA there is foreign investment – T-Mobile is owned by Deutsche Telecom.
    Currently the CRTC’s regulations are that “(1) Canadians must hold at least two-thirds of the voting shares in the holding company that will acquire the communications company, and (2) Canadians must exercise control-in-fact over the holding company and the communications company.” What foreign company would want to invest in Canada and build a network in Canada if they didn’t actually own the company???
    Deregulation is good for the consumer so long as it is actual deregulation and not just deregulation at first glance. The reason that the Triarchy can continue to exist in Canadian telecom is because not many CANADIAN companies have the resources/interest to build a cellular network and international companies are effectively barred from doing business.