Big telcos boost retention spending

TORONTO • Canada’s biggest telecoms spent more money to stop subscribers from leaving them last year, but one new retention tactic raised concerns.

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 statement.

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.

Higher retention costs were offset by the skyrocketing demand for data and an overall market expansion that saw the Big Three handily beat analysts’ expectations new subscribers. They added more than 844,000 wireless subscribers last year.

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 to discuss their services.

David Fewer, director of the University of Ottawa’s Canadian Internet Policy and Public Interest Clinic, said Bell isn’t the only provider doing it. His law clinic has received about half a dozen complaints from consumers who find the practice invasive, he said.

“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.

Bell disagrees. In an email, spokesman Marc Choma said the pop-ups comply with all regulations “as they don’t control or alter a customer’s communications.”