Canadians could be reaping the benefits of shorter wireless contracts sooner than expected, as Telus Corp. announced today it is unrolling two-year contracts for its customers. The plans will be available starting July 30.
In June, the Canadian Radio-television Telecommunications Commission (CRTC) released a wireless code of conduct that all wireless providers in Canada have to follow in setting contracts with consumers. One of the key pieces of the code was that customers can now terminate wireless contracts after two years, without getting hit by cancellation fees.
While the new rules don’t come into force until Dec. 2, Brent Johnston, Telus’ vice-president of mobility solutions, said Telus wanted to be ahead of the curve.
He added that around the world, companies in the wireless industry are moving towards unlimited voice offerings for their customers. Customers are also asking for more options in sharing data between devices, especially as more people are subscribing to data plans for their mobile phones, tablets, and other devices within a household – two reasons why Telus is kicking off the new two-year contracts.
“Clearly the code is coming, and we know it’s going from three years to two years. It is a change, and certainly we wouldn’t ignore that,” Johnston said. But he added Telus is more concerned with upcoming trends like unlimited voice offerings and shared data plans.
“I think Canadians will respond very, very positively [to these new contracts],” he said. However, he added Telus, Bell Canada Enterprises Inc. and Rogers Communications Inc., also known as the Big Three wireless carriers in Canada, will still be pursuing an appeal of the CRTC’s code.
For two-year contracts, Telus announced it will give customers the option of first picking out their smartphones and tablets, and then paying for unlimited nationwide talk and text plans. A customer can then add on a data plan which can be shared between devices.
For example, if a customer has his or her own device already, the cost of an unlimited voice calling and texting plan is about $35. If the customer would rather get a new iPhone 5 or BlackBerry Q10, the customer can add on $20 a month, which represents the discount on the smartphone in exchange for locking into a contract. That brings his or her total up to $55 a month. Then the customer can choose what kind of data plan he or she wants, with one gigabyte of data going for $30 per month.
If the customer would like to cancel his or her two-year contract, he or she must pay off the remaining balance on the device. For instance, if a customer had an iPhone 5 and six months remaining on his or her two-year contract, he or she would owe Telus about $120.
While wireless incumbent carriers may be feeling the squeeze from the CRTC, the real pressure is actually coming from American competitors eyeing a possible foray into Canada, said Eamon Hoey, founder of Hoey Associates Management Consultants Inc. He has been following the telecommunications industry for more than 20 years.
“If any one of the major U.S. operators come to Canada, that will, without doubt, be the nail in the coffin to the current kind of rating schemes,” he said. “If Verizon is anywhere serious about coming to Canada, those guys at Rogers, Telus, and Bell will now get a formidable competitor.”
Hoey said he expects Bell and Rogers to follow Telus’ suit sometime in the near future.
“What we’re slowly going to be moving towards is a restructuring,” he said. “It’s all about this slow adjustment, not only in rates but also in offerings … in terms of how services are provided.”
