Rogers and Telus have stopped offering the 36-month device financing option. The two carriers have reflected this change on their website.
The changes have happened less than two weeks after the CRTC asked wireless service providers to stop offering the option while it conducts its review of the service.
Bell is yet to still remove the option.
The CRTC has asked wireless service providers to stop offering the 36-month device financing option for new rate plans until a review is complete.
The Canadian Radio-television and Telecommunications Commission (CRTC) said in a news release that the option is not compliant with the Wireless Code “since many customers may have to pay fees to switch service providers, even after 24 months.”
“The CRTC is asking all wireless service providers to stop offering device financing plans on terms longer than 24 months until the commission completes a full review of this practice,” the CRTC said.
It added that it intends to publish a Notice of Consultation to examine the issue in more detail.
“At the conclusion of this process the commission will determine what regulatory action should be taken if these plans are not compliant with the Wireless Code,” the CRTC said.
“Canadian customers have the right to make informed choices based on clarity. We want customers to have options for financing their device, if they so choose, but we also need to make sure these new 36-month device financing plans are fair for consumers,” CRTC’s chairman Ian Scott said.
“The Wireless Code protects consumers and gives them the ability to take advantage of competitive offers at least every two years. The CRTC is concerned by these financing plans as they appear to make it difficult for a customer to switch service providers even after 24 months.”
Today, we asked wireless service providers (WSPs) offering 36-month device financing plans to stop doing so while we ensure Canadians continue to be protected by the #WirelessCode. https://t.co/j5wVZNAwWq
— CRTCeng (@CRTCeng) August 2, 2019
36-month option tests the Wireless Code rules
Bell, Rogers and Telus all introduced their versions of device financing options. Bell’s device financing plan at the present moment gives customers the option to pay their smartphone off in 24-monthly payments with zero percent interest.
Rogers’ device financing option allows customers to pay off their phone in 24 or 36 equal payments, an option that Telus began to offer shortly after as well. Bell’s CEO George Cope said the company thought this was smart and intended to launch a similar option soon.
The CRTC had sent a letter to carriers to seek more information about the 36-month option; responses from the carriers were received on July 30th.
The new financing options would essentially let customers pay off their extremely expensive phone over a period of three years instead of two.
The CRTC had not evaluated the device financing options, particularly the 36-month version, when carriers launched them to customers.
According to the Wireless Code, wireless service providers that sell phones with an up-front subsidy have to make up the cost of the device in equal payments over 24 months.
Companies are also not allowed to charge a cancellation fee. This rule allowed customers to have more options and for it to be more affordable for customers.
A three-year financing option could have customers facing a financial burden of paying off their phone even if they switch over to another carrier after two years.
In an interview with the Globe and Mail, Brent Johnston, president of wireless service at Rogers, said that by separating the two (device and monthly phone plan cost) it would stay within the rules of the CRTC. “Clearly it’s the right thing from a customer perspective. It offers a more affordable choice and that’s the primary consideration here,” he said. He emphasized the difference between a subsidy plan that packages the two (device cost and monthly plan price) versus separating the two.
In the latter case, once a person pays their phone off fully, the cost of their bill will automatically drop down to just their monthly wireless service. In subsidy agreements, the price of the plan remains the same even after the customer pays off the cost of their entire device.
A Telus spokesperson said the company was “very diligent in ensuring that our 36-month device financing plan would satisfy the CRTC’s Wireless Code requirements, while also providing our customers with more choice, transparency and affordable ways to manage their device costs.”
“We continue to believe that we are compliant with the Code’s requirements, but will be suspending these offers until the CRTC completes its review. These offers required significant changes to our systems that took several weeks to implement, and will take time to reverse course,” the spokesperson said.
A Bell spokesperson said: “Considering the increasing prices smartphone manufacturers are charging, we’re looking at new ways to make premium phones more accessible to consumers. The CRTC shouldn’t be looking at restricting options that make high-end phones more affordable for more people.”
A Rogers spokesperson said: “Consumer response to our 36-month financing has been very positive — it offers consumers more choice and affordability with zero dollars down and zero interest. While we believe this is the right thing to do for our customers and it is compliant with the code, we respect the directive of the commission and will remove this option from the market during the review.”
It is worth adding that this will take time to implement the change for Rogers. In its Q2 2019 earnings results, Rogers said that 365,000 customers were already on new Infinite data plans and 50 percent of them were on the 36-month device financing option.
Update 02/08/19: The article was updated with comments from Bell, Telus and Rogers.