Big telcos spend more to keep customers
Tactic with pop-up ads draws complaints from customers who find them invasive
TORO N TO Canada’s biggest telecoms spent more money to stop subscribers from leaving them last year, but one new retention tactic raised concerns among customers and lawyers alike.
BCE Inc. and Telus Corp. reported increased wireless retention spending for both the full year and fourth quarter of 2016, according to financial documents.
Bell focused on aggressive competition as the driver behind higher retention spending and a $67-million jump in subscriber acquisition costs in the fourth quarter, whereas Telus cited the increased cost of devices as the reason for elevated costs.
It costs nearly 50 times less to keep an existing wireless customer than to acquire a new one, according to financial statements, so it’s no surprise big players are upping efforts to keep subscribers in a market in which they each have about 30 per cent share.
Bell and Telus posted an average acquisition cost of $521 per subscriber compared to retention costs of $11.04 and $11.74, respectively, CIBC analyst Robert Bek wrote in a recent note to clients. While Rogers Communications Inc. no longer discloses its retention numbers, it’s safe to suggest it saw an uptick in costs based on extrapolating from its peers’ results, Bek wrote. (Rogers’ wireless adjusted operating profit margin also dipped slightly.)
Higher retention costs, however, were offset by the skyrocketing demand for data and an overall market expansion that saw the Big Three handily beat analysts’ expectations when it came to the number of new subscribers. They added more than 844,000 wireless subscribers last year, pulling in an extra 292,000 subscribers in the fourth quarter alone.
While the telecoms don’t report retention spending numbers for their Internet and television businesses, Bell reported “richer” acquisition and retention discounts to match competitors’ deals on the wired side of the business.
It’s on this side of the business where the novel retention tactic raised eyebrows. Bell has started to display pop-up ads in the web browsers and on the television screens of customers who are in the process of cancelling their services. The ads, which come up immediately instead of the website requested when a customer first opens a browser or turns on their IPTV, encourage customers to call a special number to discuss their services.
David Fewer, director of the University of Ottawa’s Canadian Internet Policy and Public Interest Clinic, said the tactic first came to his attention about a year ago. Bell isn’t the only provider doing it, he said. His law clinic has received about half a dozen complaints from consumers who find the practice invasive, he said.
“Imagine picking up the phone and before you can dial out, you get a message from Bell saying, ‘Thank you for being our customer,’ ” Fewer said in an interview. “They’re providing a service, they shouldn’t be imposing their message on your eyeballs.”
In Fewer’s view, this tactic is a “fairly straightforward violation” of Internet traffic management rules because it interferes with content. The Telecommunications Act requires carriers to obtain prior approval from the Canadian Radio-television and Telecommunications Commission to control the content or influence the purpose of telecommunications they carry. A consumer would have to file an official complaint with the CRTC for it to investigate the tactic, Fewer said.
“This is part of why they’re getting away with it,” he said. “The nuisance is not outweighed by the inconvenience of filing a complaint.”
Bell disagrees with Fewer’s assessment. In an email, spokesman Marc Choma said the pop-ups comply with all regulations.
“We use pop-ups to recommend services to customers and to confirm service cancellations, and they comply with all regulations — including for (Internet traffic management practices) as they don’t control or alter a customer’s communications,” he wrote.
Still, its customers aren’t so sure about the tactic.
Ottawa resident Wendy Zatylny said the ad was pushed onto her mobile phone when she was on Wi-Fi.
“The minute I started up the browser at one point on my smartphone, the Bell system had hijacked my browser on my smartphone,” she said. “This kind of behaviour starts to erode the trust we have in our technology.”
She lodged a complaint with Bell and called the CRTC and the privacy commissioner to alert them as well, but stopped short of filing an official complaint with the regulators.
Gatineau, Que., resident Marc Gaudet said Bell pop-ups took over his browser four or five times after he cancelled his home phone service (he kept his other Bell services). But when he called the number, he said the customer service representative wouldn’t cut him a better deal.
“I’m surprised that they didn’t work harder to retain me,” he said.
For him, not getting a lower price irked him more than the ads.
“Let’s face it, we get pop-ups, we get advertisements all over the place. It wasn’t a deal breaker for me. It was a bit annoying.”