Furor over text message fiasco prompts Ottawa’s intervention

Industry Minister Jim Prentice has summoned representatives from Bell Mobility and TELUS to Ottawa to explain what he calls their “poorly thought out decision” to charge customers for incoming text messages.



Jack Layton’s petition against text message fee hikes – Listen to podcast.

Prentice has sent letters to the CEOs of Bell and Telus asking to meet before Aug. 8 to hear an explanation of the pricing structure, according to a statement on Industry Canada’s Web site.

“I believe this was a poorly thought out decision,” Prentice says.

The decision has also “raised serious consumer concerns, particularly with regard to charges for unsolicited, unwanted, spam text messages.”

The two Canadian wireless telecom providers revealed to customers, in June invoices, that they will be charged 15 cents for every text message they receive – a service that had previously been free.

Traveling texters will also pay more when they send a message from out of the country. The new charges take effect in August.

The decision sparked immediate and widespread protest.

The NDP launched an online petition to “Stop the text message cash-grab” that garnered more than 5,000 signatures in its first 16 hours. A companion Facebook group had more than 3,000 members at time of press.

“People are upset because it’s getting harder and harder to make ends meet at the end of every month,” says Jack Layton, the NDP leader. He said companies are gouging consumers in a variety of ways.

Layton is calling for government action to stop the rising cost of Canadian cell phone bills. Consumers, he noted, don’t have control over incoming text messages, so  charging them for these is unfair.

Bell is happy to meet with the minister, though nothing is arranged yet, says Pierre Leclerc, director of media relations for Bell in an e-mail to ITBusiness.ca.

Bell’s price hikes take effect Aug. 8 and Telus puts its fees in place Aug. 24. Consumers will also pay 25 cents for each message sent to another country. Roaming customers will have to fork out 60 cents a message sent from outside of Canada starting on Aug. 17 at Bell.

A Bell document posted on Web site mobile syrup shows the new prices for text messaging.

Rogers Wireless has not announced any changes for its text message billing. Bell and Telus customers with a text message bundle are also unaffected.

Some of these changes – particularly the charges for incoming messages – are tantamount to a betrayal of public trust, Layton suggested.

“The airwaves…don’t belong to the private companies involved, they’ve given the basic privilege to use the air waves by the public,” the NDP leader notes. “There should be some basic reciprocity here when it comes to being fair to consumers.”

Canadians commenting in the NDP’s Facebook group demanded the right to cancel their contracts with Bell or Telus. Many complained they couldn’t stop the flow of messages to their phone, especially from spammers.

“When you receive calls you don’t want, you just don’t have to answer them, but with text messages, you don’t have a choice,” writes Versa Wilson of Sudbury, Ont.

One expert points to how perspectives on wireless services have changed in Canada over the years.

Five years ago, an increase in the cost of wireless services wouldn’t have caused such a fuss, says Kaan Yigit, analyst with Solutions Research Group in Toronto. But times have changed.

“Now people see their wireless devices as essential, not optional,” he says. “It’s kind of like electricity or running water – it’s a must-have.”

An undercurrent of consumer anxiety over an economy seeing rising food and energy prices at a time when no new wealth is being generated is also playing a role, Yigit adds.

Consumers, he says, are reacting to a rise in of the cost of something they use on an everyday basis.

Another Canadian analyst, however, has a different take on the issue.

Bell and Telus are consciously targeting high-value mobile customers, says Steve Yang, communications research analyst with IDC Canada in Toronto.

Both companies, he notes, have sub-brands set up to target the lower-value market.

“For example, Koodo Mobile is a separate brand that Telus created in 2008 to target lower-value customers. I didn’t see charges for incoming SMS [on] Koodo’s Web site.”

The carriers are also looking to move pay-as-you-go customers to a monthly billing model that is easier to process, Yang adds. This gets people on contracts, and is a more efficient way to process payment.

Bell’s Leclerc, meanwhile, justifies the new charges.

“Anyone who plans to send or receive a significant number of text messages really should be on a plan,” Leclerc says. Only about five per cent of Bell customers who use text don’t have a payment plan.

An internal Bell document dated May 22 posted to Web site ‘mobile syrup’ includes scripting examples for customer service to use one the phone. The script focuses on selling bundles to customers that range from $5 to $15 a month for unlimited texting.

Bell customer service employees are coached to sell text plan bundles, document posted to mobile syrup.

“Mr. Client… our $5/month bundle provides you with 250 text messages (sent) costing you only 2 cents per message and savings of over $30!,” the document says.

The document also includes strategies for retaining customers upset over the policy change. Strategies include asking the client to opt for a text bundle, and reminding them of penalty fees for canceling a long-term contract.

Bell and Telus have been defending their double-dipping fees in the media by pointing to U.S. carriers who are already charging for incoming text messages. They’ve also said the price hike is needed to maintain the networks for the popular communications tool.

“Almost all wireless carriers in North America have taken this pay-per-use billing approach for individual incoming texts,” Leclerc says. “All the major carriers in the U.S. do so, and indeed many charge 20 cents per message.”

And IDC’s Yang notes that in the U.S., AT&T and Verizon have been charging for incoming messages since earlier this year.

But that’s not a good enough reason to apply the price hikes in Canada, Layton says.

“Just because other governments won’t stand up for their consumers doesn’t mean the Canadian government should stand idly by.”   

The carriers are also promising customers won’t have to shell out for spam messages they receive. Clients can also opt to not have text messages sent to their phone.

“It is highly unlikely they would ever receive any (spam messages) thanks to strict network safeguards we and all wireless carriers have put in place,” Leclerc says.

But those promises don’t cut it, Layton says.

“These companies are not putting the consumer first,” he says. “The government should be checking in.”

Telus did not respond to interview requests by ITBusiness.ca by time of press.

Canadians sent about 10 billion text messages last year, according to the Canadian Wireless Telecommunications Association. In just the first three months of 2008, they sent 4.1 billion messages.

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