Scrapping system access fees brings ‘little benefit’ to Canadian cell phone users

The dropping of system access fees by the three big Canadian carriers has come much too late, industry observers say.

What’s more, the actual benefit to customrs will be scant because of the way the carriers have gone about it, they add.

What the carriers are giving with one hand, they are taking back with the other, noted Tony Merchant, principal at the Calgary-based Merchant Law Group LLP that launched a class action lawsuit in 2004 against companies that charged the fee.

The big three celluar carriers — Bell, Telus and Rogers — have recently hiked the price of most of their monthly plans by as much as $5.

Merchant also questions why it took so long for the carriers to eliminate system access fees. While they may not admit it, he said, this move “amounts to an admission that the charges where not legit to start with.”

Bell Canada was last of the big three Canadian carriers to drop the controversial fee when it quietly eliminated the $6.95 monthly charge last Friday without officially announcing the move.

Julie Smithers, a spokesperson for Bell, told that the move to drop the fees were part of a initiative “to make billing more easy to understand for our customers.”

Late last year, rivals Rogers Wireless and Telus Mobility scrapped systems access fees to some of their cell phone brands.

With Bell following suit this week, no national cell phone carrier currently charges the fee.

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Fee fiasco

The carriers should now start paying consumers back, the money they wrongly collected, Merchant said. His class action lawsuit is seeking a return of some $20 billion in fees to consumers.

System access fees date to 1986 during the early years of cellular phone service in Canada.

At the time, the Canadian Radio-television Telecommunications Commission (CRTC), required telecom service providers to remit to the CRTC what amounted to an $80 or so levy per cellular customer, said David McGuinty, member of parliament for Ottawa South. Eventually, the carriers absorbed that fee and got it back by charging their users a monthly fee of $6.95.

“Some18 to 20 months later the CRTC told the providers there was no need to collect the fees,” McGuinty recalled. “But guess what, the telecoms never stopped collecting.”

Last year McGuinty sponsored a private member’s bill (Bill C-555) also known as the Get Connected Fairly Act which sought for greater transparency in cell phone and Internet connection contracts.  The bill “died” on the order paper when Prime Minister Stephen Harper asked the governor general for the dissolution of the 39th Session of Parliament. McGuinty has since re-introduced bill C-555.

Canadian cell phone users, McGuinty said, are prey to a host of hidden extra charges that jack up the cost of their monthly bill far above those of their U.S. counterparts and other cell phone users around the world. “The average cell phone bill of a Canadian comes up to $40 or $50 a month, which is about 40 per cent more than what Americans pay.”

“We should blow this whole thing open. We’re talking about 21 years and billions of dollars of misleading payments,” he said.

Benefits of competition

Consumer pressure and a healthy dose of competition are two critical factors that have eventually led to the abolition of system access fees, says one telecom expert.

“There was so much pressure on the telecoms that they had no choice but to abandon the fees,” said Roberta Fox, principal of Fox Group Consulting in Mount Albert, Ont.

Fox said the likely entry of new players into the Canadian telecom industry as a result of last year’s wireless spectrum auction is also weighing heavily on the incumbents.

“The telecoms are doing this to assuage their clients and to reduce customer churn when new entrants start offering deals.”

But she doubts consumers can ever get back the access fees they previously paid. “The companies can easily say it’s all gone and used in network enhancement and new service expenditures.

Axing a $6.95 monthly fee might sound trivial, but Fox said the move benefits a range of users.

For instance, students and fixed income earners such as pensioners will definitely feel the savings. Business operators with a substantial mobile workforce also stand to benefit from the move.

“One our clients in the medical field who maintains some 1,000 cell phones will surely appreciate the savings,” said Fox.

How you can save more on you bill

“At the end of the day, consumers need to take a closer look at their cell phone bill,” says Mark Golberg head of Mark H. Goldberg and Associates, a telecommunications consulting firm in Thornhill, Ont.

Goldberg said cell phone users need to ensure that they are signing only for the type of services and charges that they actually want to pay for.

“Ask for a sample of what you’re monthly bill will look like and if there’s anything you don’t understand ask for an explanation,” he said.

Pay special attention to add ons such as: emergency or 911 calls, long distance charges, e-mail access or text messages, incoming call charges or time-of-day charges.

Here are nine other tips to cut down your cell phone expenses.

1. Evaluate your current plan. If you find you have more left over minutes, maybe it’s time to downgrade to a less costly plan. Many providers have a free rate plan analysis service, take advantage of it.

2. Try switching to the network of people you call more often. Many providers offer discounted or unlimited calling to five ore more numbers of your choice.

3. Ditch unwanted or seldom used perks such as mobile TV or premium ringtones.

4. Rather than making costly 411 calls, use Google’s free service 1-800-GOOG-411

5. If you use a lot of data, consider a phone with built-in WiFi and take advantage of free public hotspots or your home wireless network.

7. Consider a pay-as-you-go plan. Avoid hidden monthly charges, contracts, credit checks and cancellation fees.

8. Find out if you employer is eligible for a corporate discount from cell phone carriers

9. Watch your bill closely and pay it on time. Billing errors and late payments can jack up your payments.

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