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Canadians can pay off their mobile phones, but their bills might not drop. Here’s why

Consumers who enter into a cell phone contract often agree to pay the carrier for the cost of the device over the duration of the 24 month contract - but as Anne Drewa reports in Consumer Matters, it's up to customers to be diligent to ensure their monthly bill goes down when the phone is paid off.

Greg Severson says he felt cheated. He had paid off his phone after a 24-month contract with his carrier ended. But his bill didn’t go down.

“After the first 24-month contract, I thought I was going to have a reduction in my total bill by the amount I was paying to pay off the phone,” said the Langley, B.C. resident.

Coverage of Consumer Matters on Globalnews.ca:

Severson was talking about a portion of his monthly bill known as the “device subsidy” – it’s the part of a customer’s cell phone bill that pays off a device over a 24-month contract.

When he asked for an explanation, Severson said he was told his old phone plan no longer existed and it was recommended he upgrade to a new device and a new contract.

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“I feel as a consumer we have absolutely no say. They hold all the cards,” said Severson.

When Consumer Matters reached out to Severson’s carrier Telus, a spokesperson said in a statement:

“This customer should have easily been able to transition to a bring-your-own-device (BYOD) plan when he contacted us in July 2017, when his existing two-year contract from 2015 was coming to an end. We proactively communicate with our customers in the final three months of their contract to offer affordable device upgrades and access to plans that match or are even better than our in-market promotions for new customers. We also have a variety of bring-your-own-device (BYOD) plans customers can select should they wish to keep their existing device. It appears that when the customer contacted us in July 2017, we presented him with BYOD plan options but he ultimately decided to upgrade his device as part of a new 24-month contract, which is why he started a new device balance.”

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Severson disagrees with that account.

He said it was just easier to sign up for a new phone and contract, rather than argue with his carrier to remove the device subsidy.

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“It wasn’t worth the fight,” he said.

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There is nothing in the Wireless Code – a code of conduct for wireless retailers – that requires cell phone providers to remove the device subsidy from a customer’s bill after 24 months.

The Commission for Complaints for Telecom-Television Services (CCTS) told Consumer Matters:

“When the CRTC reviewed the Wireless Code, it was proposed that the monthly bill should decrease by the amount of the device subsidy once the contract term expires and the device subsidy is repaid. The CRTC decided not to include this requirement in the code. Our suggestion for customers is to be mindful of the expiry date of the contract and of the device subsidy. At that point, customers have the right to seek a better deal, either from their current service provider or from a competitor.”

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Global BC also reached out to the major carriers and asked what happens to the device subsidy once a customer’s 24-month cell phone contract expires and the phone is paid off.

Here are their responses:

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Telus:  “We proactively communicate with our customers in the final three months of their contract to offer affordable device upgrades and access to plans that match or are even better than our in-market promotions for new customers. We also have a variety of bring-your-own-device (BYOD) plans customers can select should they wish to keep their existing device.

Rogers: “We let our customers know well in advance of their fixed-term contract expiring to remind them of the variety of options available, including switching to a bring-your-own-device plan or upgrading their device on a new fixed term contract. If they do not choose one of these options, the customer’s plan continues on a month-to-month basis to ensure their service continues uninterrupted.”

Bell: “At the end of the term, a customer can choose a new BYOD plan with their current phone, decide to get a new subsidized device and plan, or simply continue with the same rate plan, it’s up to them.”

Freedom Mobile: “Once the MyTab balance has been cleared, the customer’s recurring month MyTab fee is automatically removed from their account. We do not require customers to request for their MyTab payments to be removed from their monthly bill after the device balance is clear.”

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With the exception of Freedom, no carrier confirmed to Consumer Matters that the device subsidy is removed from the total bill at the end of the 24-month contract if the customer doesn’t do anything to change plans.

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Merchant Law is now looking into the device subsidy issue and may seek a class action if the firm receives enough public response.

“The consumer protection acts are in place and we believe that the conduct of the companies in this case is in violation of the [B.C. Business Practices and Consumer Protection Act,] ” said lawyer Steven Roxborough from Merchant Law Group.

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In the meantime, the B.C. government is promising more transparency when it comes to consumers entering into contracts with carriers.

“Using provincial jurisdiction we want to make it clear when consumers enter into a contract, they know exactly what that contract is about, they know exactly what the fees are, they know exactly what the charges are and so there’s greater and better transparency,” said B.C.’s Minister of Public Safety and Solicitor General Mike Farnworth.

The CRTC does not know how many Canadians are aware of the device subsidy charge and how it works.

The commission said it received 11 calls in 2017 and six calls in 2018 complaining about providers continuing to charge the device subsidy once their contract terms expired and it had been repaid.

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