Telco “discount” toll plans no discount for many consumers

Ottawa – Subscribers of Bell Canada’s First Rate long distance plans are in for another surprise: the so-called monthly “Network Charge” that Bell began to charge last year will increase from $1.25 to $2.95 – a whopping 136% – on December 14th.
“This is one more example of the phone company gouging consumers through fees that are not part of advertised rates”, said Philippa Lawson, Senior Counsel at the Public Interest Advocacy Centre. Rates under so-called “discount” toll plans offered by phone companies are no longer regulated, so companies can charge what they like. Bell customers who choose to pay regular toll rates (i.e., those that apply if you are not on a plan), however, are exempt from the charge.
Last fall, Bell introduced a $1.25 “Network Charge” on all of its “discount” toll plans. In the spring, the Company started applying a minimum monthly charge of $4.95 on its popular First Rate plan, a move caught the ire of many of its customers, especially those who did not make enough use of long distance to warrant the minimum $6.20 bill.
According to Bell’s own data, 25% of its customers make less than 7½ minutes of toll calling per month, and 50% make less than 43 minutes per month. Hence, a significant proportion of Bell customers will actually be worse off under its heavy promoted “discount” plans – plans that used to be free of any monthly charges.
Now, Bell is increasing the unregulated “Network Charge” by another $1.70, meaning that even more of its customers will be better off on regular toll rates. Yet, the company continues to promote its “discount” toll plans as the best deal for consumers, says Ms. Lawson. “Our research shows that the Company is directing customers to discount toll plans even when the customer would be better off under basic rates”, she said.
Many people signed up to the First Rate plan when it was totally free of charge, and only noticed the changes after they received a higher-than-normal bill. “Bell is changing the deal midstream, without the customers’ agreement”, said Lawson. “This is fundamentally unjust; they are effectively terminating the original deal and replacing it with a new one that is to the detriment of many customers,” she said. “Such changes should not be allowed without clear, informed customer consent. A bill insert does not constitute consent, in my view.”
With a minimum monthly charge of $7.90 for Bell’s First Rate plan, Lawson estimates that most Bell subscribers may now be better off under regular toll rates, given their relatively low usage of toll service.
Her advice for consumers: “Watch out! Phone companies are slipping in charges wherever they can, without having to change their advertised rates. The heavily promoted discount plans may be less economic than they first appear.”
CONTACT: Philippa Lawson, 613-562-4002 x.24
Nathalie St. Pierre, Consumers Union (Quebec) 514-521-6820