In less than six weeks following the announcement of its new Infinite plans, Rogers’ CEO Joe Natale said there are already 365,000 subscribers, with 50 percent of that number on the carrier’s 36-month device financing plan. Natale said the plans are in line with what the federal government wants.
“We made it instantly more affordable to purchase the latest devices of the year at zero dollars,” he said during a conference call in which the company presented its Q2 2019 earnings results.
“Customers are evaluating the longer-term payment plan as they can purchase the latest devices. These new financing options not only make this affordable but it is more transparent.”
According to the company’s earnings, Rogers added 77,000 postpaid subscribers amounting to a total of 9,257,000 postpaid subscribers.
In the three months that ended on June 30th, the carrier reported a prepaid net addition of 8,000 for a total of 1,451,000 prepaid subscribers, a loss from the 1,705,000 prepaid subscribers it reported in Q2 2018.
Rogers announced its new Infinite unlimited data plans on June 12th. The plans start at $75 CAD for 10GB of high-speed data for every line. It should be noted that once a customer goes over the data, the company throttles speeds to 256Kbps.
Natale said that while growth seemed to have slowed down in the first quarter, most of the business coming from the wireless industry happens in the second half of the year, attributing to large sales events like Black Friday and back-to-school.
Despite this, customer penetration has not changed and stays strong at 87 percent, he said.
“[The] first part of the year, Q1, was quiet but we saw the market [rise] halfway through Q2 and it’s been active and strong ever since. Bear in mind we are in the early part of the year despite half of the calendar year, two-thirds of our volume happens in the second half of the year,” Natale said.
He added that the new plans will stimulate that growth opportunity as well.
Natale noted that the new plans will lift the pressure off of two variables that have limited customers for a long time: affordability of handsets and data overages.
“We had to do two things, take away the overage fear, which creates a burden on our customers…then you take a look at affordability of handsets, they’re more expensive not less expensive and we have a duty to help [customers] figure out how to afford these handsets through choice,” Natale said.
The company had initially projected an outlook that included the majority of Infinite plan customers coming from customers downgrading their plan, while upgraders would take more time to get onto the new plans.
“[Downgraders] would chase savings quickly and upgraders would take a while to understand the plan and commitment,” Natale said. “We actually had the inverse model in our plan so we were quite pleasantly surprised to see the inverse happening.”
In the case of the new plans, most of the new customers were upgraders “waking up and adopting plans sooner than expected.”
Rogers says it is in line with government’s agenda
The new plans sparked a price war between other carriers including Telus and Bell, which both announced new rate plans as well as device financing options.
The three carriers all revealed these new options a few months after Innovation, Science and Economic Development Minister Navdeep Bains said more affordable options were necessary and announced a directive requiring the CRTC to implement this strategy in all of its decisions.
Shortly after, the Canadian Radio-television and Telecommunications Commission (CRTC) announced its review on the state of the wireless industry in Canada. The hearing will take place in January of 2020.
Natale said that the new plans and device financing options “demonstrates we are perfectly aligned with the overall agenda for the government on the regulatory front with respect to making wireless services more affordable and accessible.”
“The more we focus on the customer the more we focus on the customer experience on a whole [and] the more it aligns with the overall regulatory view and policy of the government,” Natale said. “We have had some very encouraging conversations with the minister and other members of the cabinet as a whole.”
Natale says device financing is in line with Wireless Code
While the new plans reflect changes to affordability, questions surrounding the company’s new device financing plan still loom.
The CRTC sent a letter to Canadian telecommunications carriers to better understand device financing plans and carriers have until July 30th to answer questions.
Natale noted that his company has already responded to all of the CRTC’s questions.
“We’ve been cooperative with the CRTC to let them know why these plans are right for customers,” Natale said.
With Rogers’ device financing, customers would be able to pay off their phones over a period of three years instead of two. However, this option has not been evaluated by the CRTC yet.
According to the Wireless Code, wireless service providers that sell phones with an up-front subsidy must make up the cost of the device in equal payments over 24 months. Companies are also not allowed to charge a cancellation fee.
At the time that Rogers announced the rollout of its device financing plan, Brent Johnston, the carrier’s president of wireless services, said that by separating the device and monthly phone plan cost it keeps the company within the Wireless Code‘s rules.
With Rogers’ device financing plan, once the customer pays off their phone cost, they then only pay the cost of their monthly plan. In subsidy plans, the price of the plan remains the same even after the customer pays off the cost of their entire device.
Natale reiterated this sentiment during Rogers’ earnings call.
“We feel that our approach is right for the consumers. We have given consumers a choice of 24 or 36 months. We separated equipment financing from monthly service fee so it’s transparent and open and customers, whenever they like, can pay off the balance and do what they want with the phone,” he said.
“We think it’s in line with the intent and spirit of the Wireless Code.”