New phones could end old rates
Providers’ two-year plans driving up prices
There’s a new dynamic to consider before you sign on the dotted line for the bendable iPhone 6 Plus or the square BlackBerry Passport. That old rate plan that you fought hard to negotiate, at a time when the providers were willing to fall over themselves to get you as a customer, could be lost.
Rogers Communications Inc. recently instituted a rule that says if you want a new subsidized smartphone — and there’s not as much subsidy these days because contracts are now amortized over two years instead of three because of government rules — kiss your old monthly plan goodbye. The other two major providers, Telus Corp. and Bell Canada, do the same thing.
“In June we made a change so that when a customer upgrades to a premium smartphone and wants to receive a subsidy, they’ ll move to a two-year, in-market, share everything plan,” said Jennifer Kett, a spokeswoman for Rogers, referring to plans that allow you to share data over multiple devices in your family.
Buy your own phone outright and you get to keep your old rate plan. As far as I can tell, that means keeping the same rate for the foreseeable future. It almost seems like a permanent hedge against inflation, to prevent your rate from going up.
The problem is people want the newest smartphone toy but more often than not they don’t have the cash up front. The top-of-the-line version of the new iPhone with all the trimmings, like a nice little case and an extra year of warranty, is $1,233 before tax. Let’s make that $1,393 since most of us pay tax. The new BlackBerry is close to $800.
If you get a contract, you get this great “deal” on the phone as long as you commit to a plan over the next two years where you agree to certain monthly payments. No two plans are alike in any way. In fact, Rogers has thousands of cellphone plans that still exist thanks to old grandfathered plans that customers have held on to forever.
Those customers might be on to something. Judging by the rate on the Rogers Share Everything plan, I probably can’t come close to the 6 GB of data I currently get with unlimited calls on the weekend and at night. I can also call 10 of best buddies anytime and it doesn’t count as using up my weekday minutes. I believe Rogers thinks it’s one of my 10 best buddies because it is always calling my cell trying and sell me a new plan.
“Over the last year we’ve worked to simplify our price plans. Current plans are easy to understand, designed for how customers use their phones and include services like unlimited Canada-wide calling and messaging, voicemail and call display — fea- tures customers on many older plans have to pay up to $30/month extra for. These plans can help families save money versus paying for two, three or more separate plans,” Ms. Kett said.
All true. Different cellphone plans will work for different people but I worked pretty hard to get the pricing on my old plan — even threatened to leave — and Rogers produced a new plan seemingly out of thin air. Now, it’s doing its best to get me out of that plan.
“Older plans were designed so customers could pay off their device subsidy in three years; new plans mean customers have their device subsidy paid off in two years. Customers can also choose to upgrade to a new device without a subsidy and keep their old plan,” said Ms. Kett.
Michael Geist, Canada research chair of Internet and e-commerce law at the University of Ottawa, said the share-everything plan can make sense when you have a lot of family members who need phones.
But he added some of these grandfathered plans are at a terrific rate. “The carriers have always been looking to get out from under their grandfathered plans,” Mr. Geist said. “There have been efforts to circumscribe those plans.”
The professor says some of the more generous plans of the past were brought in during more competitive times, like when the iPhone was coming into the marketplace.
“Now they want these deals to go away because their prices are going up,” Mr. Geist said.
The answer is keep those old plans and buy your phone outright.
As an aside, when you get an unlocked phone, you can slip a new SIM card into your phone when you travel for local rates. It costs $50 to unlock a subsidized phone so calculate that into your decision.
There’s one other thing you can do. Not get a new phone. That will save you even more money.