Monday, January 28, 2008

This Is Not A Rant

So the other day I was sitting at my desk at work and my cell phone rang. It showed up on the call display as a local number which I didn't recognize. After answering, there was a brief pause, followed by a greeting in a very thick accent. It was Fido, wanting to know how my cell phone service is. Fido is my mobile phone service provider. They used to be a cute little upstart with good usage plans and no guerrilla marketing tactics. Then they were bought by Rogers.

After determining that I was largely satisfied with my service, except that it costs too much, the rep went on to tell me he could give me a free phone and a great plan for the next 24 months.

"But I have to sign a contract?" I prompted.
"Oh, no, sir, Fido doesn't have contracts. You would have an agreement."
"Ah," I replied, "and that's different from a contract?"
"Okay, and if I decide I want to cancel my Fido service next month...?"
"Oh, then you have to pay a cancellation fee."
"Well then, I can see how that is different than a contract. How about this? You put in my account notes that if anyone ever offers me a contr- sorry, agreement, ever again, I will cancel my service."
Unperturbed, he pushed on. "But sir, if you sign up for an agreement, I can offer you-"
I cut him off and repeated that if I was ever offered a contract again, I would cancel my service. He told me to have a nice evening, although to be honest, he didn't sound all that sincere. I told him the same. I was definitely not sincere.

This leads me to the lesson. This has come up a few times in the last month. Everyone seems to have a lot of misinformation about how cell phones work. Disclaimer: this rant really only applies to Canada.

Firstly, the "system access fee" is a scam. There was, in fact, a class action suit in Saskatchewan about how cell phone providers have been collecting this fee for themselves even though it stopped being a government levy many years ago. I was told once by a Bell rep that they split the cost of the plans into usage cost and system access fee because people wanted to know how the plan was divvied up, but I seem to recall that the plan that cost $30 before the split, cost $30 + $6.95 after. You also probably pay a monthly 911 system access fee. Even though you can dial 911 from any payphone for free.

Another serious point of misinformation seems to be about the difference between plans and contracts; or agreements; or shackles; whatever you want to call them. The important thing is that your plan and your contract are completely disjoint. And for those of you who thing this is completely obvious, I talked to two reasonable and intelligent people with two different misconceptions about this just this month.

A contract is just a statement that if you cancel your phone before N months (where N is usually 36) you will pay the phone company some large chunk of money. This renders you basically helpless in the event that the phone company wants to, say, charge you a new random fee for no reason. Keep in mind that it is usually stated explicitly in the contract that they can change your plan without notice whenever they want. So you may think you've signed up for unlimited something something for 3 years, but really, all you've signed up for is 3 years of getting hosed.

Your monthly plan is the usage you pay for. You can get a plan without having a contract. I have been without a cell phone contract for about 3 years now. And since there is now a law stating that if I change cell phone carriers, I get to keep my cell phone number, I have no reason to stay with my provider if I don't feel like it. They want to increase my fees? Too bad. I'll go somewhere else and it won't cost me $200 to cancel, even if I leave tomorrow. And I don't even have to change my number. I recently used that fact to knock literally $20 a month of my cell phone bill.

Sure, they'll offer you lots of little goodies to sweeten the pot: $100 off your cell phone cost; a $2 a month discount for the first 3 months. But you can get that same plan without a contract if you forego the $6 in savings and buy your own cell phone. At the time I bought my phone, Fido was selling the LG Chocolate for $200, if you signed up for a 3 year agreement. I got mine for $200 on craigslist, almost brand new. No agreement. Plus mine is unlocked, which means I can take it to any GSM carrier. Which, of course, limits me to Rogers of Fido.

The main reason that I recommend all this is that they are trying to get new carriers in the game. My fear, of course, is that because everyone is tied up in contracts already, any new carrier will find it impossible to sign up new customers. This will stifle competition, which will encourage the players we have now to continue to screw us. However, if, in a year or two, we get a new carrier with more reasonable rates and enough of us are free to leave our current providers, we may start seeing our rates come down. And that, in my opinion, would be a welcome change.

So the next time your cell phone company offers you some random thing if you agree to extend your contract, tell them to get stuffed. Buy your own cell phone and rest assured that whatever plan you sign up for will stay the same, even without a contract. Because if they start changing your plan around, you can just leave.

Please, feel free to post a comment with your provider and how much you actually pay per month, ie. your plan plus extras plus system access fee plus 911 fee plus whatever other ridiculous fees plus taxes. Post anonymously if you're embarassed about it. I'm curious, in any case.


Rob (a.k.a. Dad) said...

Atta boy! Looks like you're a SIM card, er, chip off the ol' block.

We're with fido too, but on pre-paid (two phones). I've looked at all of the cellular networks, and none of them -- fido included -- has any kind of rate plan that fits our (admittedly atypical) usage pattern.

And of the pre-paid options, fido still seems to be the best for us.

Free voicemail and caller-id, plus no fixed monthly fee are the main draw, and the air-time rates aren't too usurious.

Since we basically only use our phones for brief, mainly local calls there's no point in paying a monthly system access fee as well as for a fixed block of minutes that we'd never use up.

We don't even bother with paying for voicemail on our landline -- another usurious fee with most providers. If I want to be sure someone can get ahold of me, I give them the cell number.

And you're right -- you always need to ask yourself "why are they so interested in convincing me that a contract is in my best interest". They're a business and their aim is to maximize profit, not look after your interests -- which applies to any company trying to sell you a product or service; caveat emptor more than ever.

LauraS said...

I think all phone companies are essentially evil and I'm terrified of being locked into a contract that just sucks the money right out of me. Instead, I do VOIP and pay-as-you-go for my cell. The cell costs 25 cents/minute, but I don't use it to chat, so my bill is only $11.50/month. I recently needed to replace my cell phone... Telus in store wanted to sell me a phone for $200, but I went to Futureshop and bought a decent little LG flip for $35. So cell phones can be inexpensive if you're careful, but insane, I think, if you're not.

terriblenews said...

$35? No kidding. I'll have to keep that in mind... Unfortunately, I have become horribly addicted to the crack that is my cell phone. I don't think I could get by on a pay-as-you go. Withdrawal is a horrible thing. :*)

Anonymous said...

they're all evil! kill em all!

Marcus Rogers / Vancouver said...

This spring Fido / Microcel Solutions let me know that I was overdue for a payment. I went to their Fido Corporate Shop on Georgia in Vancouver and used the house phone to call their accounts receivable dept to establish the balance owing. I was told I owed $150 and paid the amount in full.
When I got home later that day and checked my mail the bill was waiting for me in my mailbox (they're always late and very close to the demand date). It said that I had been overcharged $50 and this ammount wold be credited to my account against my next bill, the actual amount I had owed was $100. Having called Fido that very day for an account balance I realized that they must have known perfectly well the actual amount outstanding at the time of my call and had deliberatly overcharged me. I called Microcell Solutions and asked for an immediate refund of my money, they admitted to the overcharging but I was told in no uncertain terms that they would not and could not refund my money. I wonder if they charged all or many of their customers this overage, amounting to a forced loan of potentially millions of dollars from their customers with no interest paid on the money taken from us.... I am interested in pursing a class action lawsuit or criminal charges against them if this is the case.