Three-year financing, if approved, should extend to subsidy model: Péladeau

Quebecor Inc.’s CEO Pierre Karl Péladeau said he’s “happy” that the CRTC is examining the practice of extending device financing options for a 36-month period, but suggested that if it receives the regulator’s blessing, it should be applied “regardless of business model.” “There’s no reason 36 months should be a good timeline for a financing option, but not for a subsidy option,” Péladeau said during the company’s second-quarter conference call on Thursday. The comments come nearly a full-week after the CRTC launched an investigation into the longer financing option, which extends a full year beyond what the Wireless Code allows for service contracts. Critics of the three-year device deal, which lowers the price of the device over an extended period at $0 upfront, say it effectively locks customers with the company beyond the two-year contract limit because customers must pay off the rest of the device -- something that can be unaffordable for some -- if they want to leave after two years. Rogers Communications Inc., which last month introduced the model that was mimicked by Telus Corp., argued that it’s not offside of the rules because the device and service bills are separate. BCE Inc. pledged to offer a similar option a day before the CRTC announced its review of the practice. The regulator froze the practice, but allowed those already on it to continue to benefit from it. The commission had already asked the telecoms to answer questions about financing practices before it came down on the 36-month deal. Videotron, which is Quebecor’s telecommunications division, only offers a subsidy option for its mobile services, which means customers pay for telecom-discounted phones -- often, but not all the time, requiring some customer expense upfront -- with their service bill over the course of their maximum two-year contract. The financing option, by contrast, helps telecoms reduce the discounts (subsidy) they traditionally have been providing by allowing customers to pay for the full cost of any phone at $0 upfront -- with the service and device bills separated for transparency. The wireless industry used to feature three-year wireless contracts, but that was effectively nixed with the introduction of the Wireless Code in 2013 and its elimination of early-cancellation fees after a two-year commitment. On Thursday, Videotron announced two-thirds of its total gross customer additions over the year brought their own devices, meaning they only come in to purchase service. That brought down its mobile average billing per user (ABPU) to $52.56 this quarter compared to $53.70 in the same quarter last year. The company saw an increase of 38,300 mobile subscribers in the second-quarter, more than the 31,900 it added in the same period last year. The number includes not only its premium Videotron brand, but for the first second-quarter since its launch last fall, but also the new low-cost flanker brand Fizz. Last quarter, the company said Fizz made up a “minimal” part of its wireless division, and the company’s executives refused on Thursday to break down what portion of its additions come from the new brand. In fact, the executives said they will “never” separate the brands. The company’s total wireless subscribers sat at 1.23 million by the end of the quarter, which represents an increase of 14.1 per cent, or 152,700, over the past 12 months. Despite not deviating away from the subsidy model as others have, Videotron did respond to the incumbents’ “unlimited” offers, which stipulate that customers who exceed their monthly data cap will have their speeds slowed down instead of being charged extra for going over. Rogers also introduced that change in the market in June, at an offer of $75 for 10 GB at full speed. The Montreal-based company also deviated from the practice a bit, electing to continue overage billing but offering customers a promotion of 17 GB (10 GB plus seven additional gigabytes) at full speed for $75, according to its website. The reasons were clear for Videotron president and CEO Jean-François Pruneau. “People are buying big data buckets not to do emails and SMS; they’re buying big data buckets to do video and whatnot,” he said on the call with analysts. Pruneau said he believes throttling speeds after the 10 GB represents a “bad customer experience” due to the speed requirements for video playback. He added that his company’s customers don’t consume that much data anyway to be worried about overage. “The average data consumption from Videotron customers is much lower than 17 gigs on a monthly basis,” he said. “That was a way for us to answer to the incumbents’ initiatives and in fact, if you look at our results in July, it looked like our offers are pretty good because we’re way ahead of last year. Mobile service revenues increased 11.9 per cent, or $15.6 million, to $146.4 million due to the increased number of subscribers in the quarter. Internet subscribers stood at 1.7 million, following a decrease in the quarter of 3,900 subscribers this quarter compared to a loss of 500 in the second quarter of 2018. Still, the company saw a 12-month increase of 32,800, or two per cent, for the segment. Television subscribers decreased 24,200 in the quarter, a bigger drop than the 19,500 the company lost in the last second-quarter, for a total of 1.56 million subscribers. That base now shows a 12-month decrease of 47,600 subscribers. Club Illico subscribers totalled 431,000, with a decrease of 700 in the quarter compared to an increase of 8,500 in the same period last year. The total represented an increase over the year of 39,100 subscribers. The other major segment, media, increased its revenues to $190 million in the quarter, compared to $186.5 last year. Total company revenues were up 1.8 per cent, or $18.2 million, to $1.06 billion compared to the same period last year, while over the same period, its net income jumped to $138.7 million compared to $53.7 million last year. — With reporting by Ahmad Hathout at ahathout@thewirereport.ca and editing by Michael Lee-Murphy at mleemurphy@thewirereport.ca

Three-year financing, if approved, should extend to subsidy model: Péladeau

News | August 8, 2019

Unlock all the Canadian telecom, broadcasting and digital media news you need.

FREE TRIAL

SUBSCRIBE

Inside The Wire Report

Information

Hill Times Publishing

Get in Touch With Us

Three-year financing, if approved, should extend to subsidy model: Péladeau

News | August 8, 2019

Unlock all the Canadian telecom, broadcasting and digital media news you need.

FREE TRIAL

SUBSCRIBE

Related Stories

Bell seeks CRTC clarity amid class action alleging unreasonable prison call rates

Bell, Northwestel tell CRTC to leave billing dispute with Iristel in hands of the court

Bell, Northwestel, reach agreements with Iristel to suspend disconnection notices

CRTC greenlights Northwestel Connecting Families packages

Reuse & Permissions

Inside The Wire Report

Information

Hill Times Publishing

Get in Touch With Us