Bell, Rogers hike overage fees for some

Changes made to help customers avoid extra charges, industry observers say

Canada’s two largest wireless operators increased their data overage fees for new customers before the busy back-to-school shopping season, a move industry watchers suggest is designed to convince customers to upgrade to pricier plans to avoid extra charges.

This week, Rogers Communications Inc. increased its overage fees to $7 per 100 megabytes from $5 per 100 MB, matching BCE Inc.’s increase to $7 per 100 MB in April. Canada’s wireless regulator dictates that carriers must stop data overage charges at $50 per account per billing cycle unless a customer expressly consents to keep racking up their bill, so higher fees mean consumers will hit the $50 limit more quickly.

The fee hikes come as data consumption becomes increasingly important for carriers’ bottom lines. As consumers burn through data streaming and sharing videos on their mobile devices, the major operators’ average revenue per user has risen as people upgrade plans or get dinged with overage fees.

Rogers’ increase also comes after the Canadian Radio-television and Telecommunications Commission updated the wireless code to cap overage fees per account, not per line, and to kill device-unlocking fees later this year in a move that will cost carriers collectively about $38 million annually. The CRTC held a public hearing to discuss the changes in February.

Rogers and Bell didn’t specify why they increased their data overage fees, which only apply to new customers or those who upgrade their plans. But both said the majority of customers don’t incur overage fees due to frequent notifications about data usage and data management tools.

Rogers noted it increased the data buckets for its plans to be more in line with usage and specified that only about 10 per cent of its customers each month (about 1 million subscribers) get data overage fees.

Industry players and consumer advocates think the price changes reflect preparation for a deluge of new customers in the fall, a popular time to buy new phones, rather than a reaction to the wireless code updates.

“I don’t think it’s directly related. I would say the wireless code is more symptomatic of a lot of micro management of the wireless industry,” telecom consultant Mark Goldberg said.

Goldberg pointed to the CRTC’s move to kill three-year contracts as an example of indirect price regulation that raised prices by imposing additional constraints on the industry. He thinks higher overage fees, however, are more likely intended to push consumers onto bigger data buckets to reduce their aggravation from muchloathed extra charges.

“If the overage fees increase, then what it’s likely trying to do is create an incentive for consumers to pick a pricing tier a data tier that is less likely to incur those overage charges,” Goldberg said.

Telus Corp.’s overage fee remains at $5 per 100 MB. It has no immediate plans to change this, according to a spokesman. Shaw Communications Inc.-owned Freedom Mobile doesn’t charge any overage fees and instead throttles data speeds once a user hits their monthly cap.

The Competition Bureau said in a statement that it has been actively promoting competition in the telecom sector. For example, it required Bell to divest a chunk of its new subscribers from its purchase of Manitoba Telecom Services to Telus and new wireless entrant, Xplornet.