Telus scraps activation fees, pressures Bell and Rogers to follow

Telus Corp.’s elimination of “activation” and “equipment exchange” fees for new and renewing customers will put pressure on its chief wireless rivals to follow suit, Brownlee Thomas, principal analyst at Forrester Research Inc., said. Telus said in a release Monday it will scrap the $35 activation fee it previously charged new subscribers as well as the $25 fee to subscribers switching to new devices. The company said it will now charge $10 for customer SIM cards to operate their devices on the Telus network. “A new SIM card is only required when customers don't already have a compatible TELUS SIM card for their device,” the company said in the release. In a telephone interview Monday, Thomas said the change “raises the cost of winning customers” in the Canadian wireless landscape. She said other carriers that currently charge activation fees will be pressured to follow Telus’ lead, and that those who didn’t charge an activation fee before will see one of their advantages removed. “If it’s a permanent change, it changes the game for everyone,” she said. Thomas said the fee elimination is “specifically targeted” at Telus’ rival incumbents, BCE Inc. and Rogers Communications Inc., and that she anticipates those companies to scrap their own system activation fees as a result. “I can’t imagine them not,” she said. Telus reported in August that it added 394,000 gross subscribers during the three-month period that ended June 30, 2012, including prepaid and postpaid subscribers. At between $25 and $35 per addition, the company would have garnered between $9.85 million and $13.79 million in activation and exchange fees over that period. Bell and Rogers have higher churn rates, or rates of customer turnovers, than Telus. Bell and Rogers had 428,265 and 506,000 gross additions during the same three-month period, according to companies' quarterly results. Rogers charges new customers a $35 activation fee, according to its website. Bell did not provide details about the company’s activation fees by deadline. New entrants Public Mobile, Mobilicity and Wind Mobile said Monday they do not charge activation or equipment exchange fees. Brent Johnson, Telus’ vice-president of mobile solutions, said that, in advance of the announcement, the company rarely collected the full fees from its new and renewing customers. Instead, he said, the company often waived the fee for those who asked, and added that the fee incurred costs because customer service agents deal with complaints about the fees. The company expects to reduce its customer service costs as a result, he said. “When you remove them or eliminate them, there are many ancillary and associated benefits that help make this both a short-term and long-term positive win for us and our consumers,” Johnson said. He said the company is not targeting any competitors with the move and is instead trying to alleviate a source of customer concern. He said Telus has received numerous complaints about the activation fees in recent years and that the decision to scrap them fit with the company’s “customer-first” policy. “When we listen to our customers, we generally get rewarded,” he said. “So it’s very much a win-win set of changes.” New CRTC chair Jean-Pierre Blais has emphasised the interests of consumers since his appointment in June. He said in October that the commission will inform the public about their telecommunications options in an effort to build an “informed and empowered” constituency of consumers. Thomas said she expects Telus and any carriers that follow suit to recover the revenues by increasing their pricing for service plans or device subsidies. “You know they’re going to bill it into the price of their subsidies. They’re going to get their money back,” she said. Johnson said the company does not need to increase its service fees to compensate for the change and that the $10 SIM card fee is a more transparent way to compensate for the revenue drop. nkyonka@thewirereport.ca

Telus scraps activation fees, pressures Bell and Rogers to follow

News | October 15, 2012

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Telus scraps activation fees, pressures Bell and Rogers to follow

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