Bell defends $100 coupon for deferral account rebates, says ‘it’s a good deal’

Bell Canada is sticking to its $100 coupon offer as a means to rebate consumers its deferral account funds. Bell’s position comes despite arguments from competitors and consumer group the Public Interest Advocacy Centre (PIAC) that the coupon is a “hook” to lure customers into long-term contracts. “We're not sure why they (PIAC) would want to restrict customer choice. Especially in this case, where we're offering a higher value than the rebate itself. I suppose we should thank them for bringing more attention to the $100 offer—it's a good deal,” Bell spokeswoman Jacqueline Michelis wrote in an email. In August, the CRTC directed Bell to rebate residential customers, in non-high cost serving areas, $250.6 million from its deferral account funds. The rebate, which totals $67.41 per wireline subscription, must be distributed before March 29, 2011. The deferral account funds, held by Bell and other phone companies, stem from inflated phone service costs in low-cost urban areas between 2002 and 2006. The higher prices were instituted to spur new competitors. In its decision, the commission said Bell could provide customers options through the rebate. “The rebate plan may include options for customers, such as an option to accept a promotion of greater value than the value of the rebate obligation, as long as the full value of the promotion is provided within six months of the date of the decision,” the commission wrote. In November, Bell sent out a letter to customers informing them of the CRTC ruling. Bell said customers could receive a rebate cheque of up to $67 or use an alternative $100 in-store coupon that can be applied toward a new Bell Mobility activation or Bell TV subscription. “Don’t wait for your home phone customer rebate cheque in the mail next year. This is a limited time offer, only available in store,” Bell wrote in the letter. The letter said the coupon is applicable to Bell TV customers who purchase or rent a receiver before Jan. 15, 2011, and to Bell Mobility customers who activate a new device with a minimum two-year contract by Jan. 31, 2011. Bell also noted price adjustment charges would apply to customers who terminated their contracts early. But on Nov. 29, PIAC filed a complaint with the CRTC about Bell’s coupon offer, arguing it is a “hook to bind consumers into new two-year contractual commitments.” “This campaign offends consumers, violates the Commission’s directives, and should be stopped,” PIAC wrote. The group said the offer is a direct violation of the commission’s directive. “One cannot claim that a consumer has received the full benefit of a transaction within six months if one feature of the transaction is to keep the consumer beholden to the service provider for a further 18 months,” PIAC wrote. Michael Janigan, executive director at PIAC, said in an interview that, by signing up customers for a two-year contract, Bell is spreading out the time period over which it has to pay the rebate. “In this circumstance, they give customers a $100 coupon which contains the rebate plus this little extra … but they also make it such that it is effectible over a two-year period because that’s how long you have to sign up for in order to get the benefit,” Janigan said. “It seems to be on its face a violation of the six-month stipulation ... The fact that the money comes off the first bill doesn’t mean that it’s not a two-year period over which it applies.” PIAC requested that the commission order Bell to stop the coupon rebate campaign and accept no further coupons. It also requested that Bell inform customers who have already used the coupons that they are no longer under obligation to enter a long-term contract. On Nov. 29, Quebecor Media Inc. sent the commission a letter in support of PIAC’s application. “Like PIAC, QMI firmly believes this campaign is an insult towards consumers that flaunts the commission’s directives, and must consequently be stopped,” Dennis Béland, Quebecor’s senior director of regulatory affairs for telecommunications, wrote. QMI said Bell’s offer is a “gross marketing tactic” that attempts to lure consumers into long-term contracts. Béland said in an email Bell’s coupon offer is an anticompetitive use of the funds. “With this latest offering, Bell is taking money that customers overpaid on their wireline services a decade ago, and using this same money to now hoodwink them into two-year contracts for wireless and TV services. This has to stop,” Béland wrote. Rogers Communications Inc., Cogeco Cable Inc., EastLink, Execulink Telecom Inc., Bruce Telecom, Huron Telecommunications Co-operative Ltd., Mornington Communications Co-operative Ltd., Nexicom Telecommunications Inc., North Renfrew Telephone Co., Ontera, Tuckersmith Communications Co-operative Ltd., Wightman Telecom Ltd. and WTC Communications also filed letters of support for PIAC. But on Dec. 6, Bell told the commission its $100 credit option is fully compliant with the commission’s directives. Bell said customers will receive the $67.41 rebate cheque unless they choose the $100 credit option or a $75 bill credit offered on new Bell TV or Internet subscriptions or hardware or speed upgrades. The company added that all customers will receive the rebate by March 2011 regardless of the option they pick. “While it is not surprising that Rogers and QMI oppose the $100 credit option, it is frankly puzzling why PIAC opposes consumers being given the choice of receiving a cheque for $67.41 or a $100 credit option,” Bell wrote. In a reply letter, dated Dec. 8, PIAC said Bell had failed to address its objection that the coupon locked customers into contracts. PIAC also said the coupon is not as “pro-consumer” as Bell characterizes it. “The fine print notes the $100 discount ‘cannot be combined with any other offers, including in-store hardware or accessories promotions or discounts.’ If this coupon is supposed to produce extra value for consumers, why are the discounts otherwise available not applicable?” PIAC wrote. PIAC noted that if Bell excludes promotions worth more than $33, the company is effectively using the deferral funds to pay for discounts it would have otherwise provided. But Michelis said the coupon is practical during the holiday season. “Considering that several hundred thousand people will sign up for a new Bell service at this time of year in any event, the promotion makes sense for a large number of customers who would be selecting a new Bell service anyway,” she said. Michelis would not say how many consumers have chosen to go with the coupon. The CRTC’s ruling on the complaint is expected before the end of January. kfournier@thewirereport.ca

Bell defends $100 coupon for deferral account rebates, says ‘it’s a good deal’

News | December 14, 2010

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