Rogers to end subsidy plans, move to only financing options on January 28

Fido will also move exclusively to financing on February 5th

Starting January 28th, Toronto-based national telecom company Rogers will deprecate its Edge Tab subsidy options in favour of Edge Financing, or just ‘Rogers financing’ going forward.

According to internal documents received by MobileSyrup, the carrier plans to remove Edge Tabs and migrate its Upfront Edge service to financing plans. Upfront Edge allows users to get a phone on contract for a reduced upfront price and either return the device at the end of the contract or pay a predetermined fee to keep it.

The document also addresses some of the questions around why Rogers is making the change. For example, it says that financing will help the company deliver a more straightforward, more transparent experience to customers. It also notes that Rogers won’t force customers to migrate to financing plans on January 28th. Existing customers on subsidized plans may remain on that plan until they choose to upgrade.

Customers on a subsidy plan will still be able to perform a price plan change without having to switch to financing. Additionally, those with multiple ShareEverything lines on device subsidy will see new upgrades of a single line “fall under [Rogers] existing policies” and may require price plan changes. It’s not immediately clear what that means, but it sounds as if subsidized options will still be available for share plans with multiple lines when upgrading a single line in the group.

Rogers provided MobileSyrup with the following statement regarding the upcoming changes:

“Consumers from around the world have enjoyed the benefits of device financing for some time and we’re really pleased to offer our customers this affordable and transparent option. Financing is a clear, simple and fair way for our customers to get the latest smartphones for as low as $0 down and no interest on Canada’s most trusted network.”

Further, Fido will move to exclusively offer financing for new device purchases on February 5th. It’s a significant development, considering Fido does not currently offer any financing options.

Rogers’ CEO discussed ‘sunsetting’ subsidies on earnings call

While Rogers chose to keep device subsidies available as an option for customers after introducing financing earlier this year, the carrier may have had plans to get rid of subsidies for some time.

In the company’s Q3 2019 earnings call, Rogers president and CEO Joe Natale spoke to the impact of financing plans, noting that online hardware upgrades were up 30 percent.

“And as we limit and eventually sunset subsidy plans, the shift from device subsidies to device financing is expected to drive significant cost efficiencies,” Natale said on the call.

Further, Natale said that Rogers thinks the “better model overall is to drive equipment financing and drive it hard.” He notes that with the increasing costs of phones, subsidizing them for customers incurs a huge cost on Rogers — almost $1 billion in 2018, according to Natale.

Rogers’ Chief Financial Officer, Tony Staffieri, echoed that, saying that Rogers believes “instalment financing is a win-win for [the carrier], the industry and consumers in many ways.”

Overall, the argument for improved customer experience and simplicity both appear present in the internal document regarding the upcoming removal of subsidized plans.

The document points out that the total cost of customer ownership over a term is the same on subsidy and financing, even during promotional periods. Speaking of promotions, the document also ensures that financing will still allow for promotions and deals. It also touts the benefit that monthly service and device costs are shown separately on financing bills and that financing costs drop off at the end of the term, making things more transparent for customers.

Ultimately, it seems like the change will ultimately prove beneficial for customers. Having written about carriers for some time now, and also working in carrier stores for several years, I can attest to the increased simplicity of the new plans. Anything that’s easier to understand is an overall win for consumers.