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System access fee lawsuit may be bad, bad news

05 Jul

Just what sort of fear can an $18 billion lawsuit inspire? The correct answer, if a recent change by Rogers in how it bills cellphone customers is anything to go by, is “very” to “pants-crapping.”

No sooner did the Supreme Court of Canada refuse an appeal by the country’s big three wireless incumbents to stop the mammoth class-action against them from proceeding than Rogers quickly moved to eliminate its controversial “regulatory recovery fee.” The company says it’s to give customers a more transparent bill, but given the timing it seems obvious Rogers is looking to avoid possible future liability from what could already be a very costly lawsuit.

The company put the regulatory recovery charge in place in 2009 as a replacement for the system access fee, the hated charge that all incumbent providers had for years been levying. In many cases, employees misinformed customers by telling them the fee – which was usually around $7 or $8 a month – was a CRTC or government charge.

By 2009, the fee was all but extinct because of the impending arrival of new cellphone carriers such as Wind and Mobilicity, who promised not only lower rates, but also bills that weren’t stacked with all sorts of cash grabs disguised as bogus charges.

Rogers, however, was the only provider who found it too difficult to get off this particular brand of sauce. The regulatory recovery fee was ostensibly intended to help the company recover the horrible burden of dealing with the laws of the land, yet it was essentially a diet version of the system access fee. It was lower, between $2.46 and $3.46 per month depending on province, but it was still as completely bogus. (Everyone from shoe retailers to chocolate bar makers have to deal with regulatory costs, but you don’t see them tacking on extra charges.)

Should this mega-lawsuit by class-action specialist Tony Merchant make it to trial and actually succeed – I’m no lawyer, but it’s pretty clear he has righteousness on his side – there will be rejoicing. Even if the lawyers pocket everything and the millions of victimized cellphone subscribers don’t see a dime in restitution, there will be much joy at seeing their former tormenters paying through the teeth. The same will happen even if the lawyers settle for half as much.

But in the aftermath, things would likely get ugly. Just as home internet rates have been steadily rising since the entry of new wireless players, for consumers this is a classic case of “be careful what you wish for.” The arrival of Wind, Mobilicity and the rest has been very costly to the incumbents, and they’re taking it out elsewhere, according to numbers from PricewaterhouseCoopers.

If anyone thinks the incumbents will cheerfully give back a cool $18 billion without taking revenge clawing it back in some other way… well, let’s just say it would be nice if there were some institution – say the courts, regulators or government – that could prevent that from happening.

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4 Comments

Posted by on July 5, 2012 in bell, mobile, rogers, telecommunications, telus

 

4 responses to “System access fee lawsuit may be bad, bad news

  1. James Plotkin (@J_Plotkin)

    July 5, 2012 at 11:14 am

    Having worked for Rogers years ago, I can confirm for you that even internal (non 3rd party) employees at the lower levels were entirely unaware of the SAF scam. In training we were always told that the fee was to maintain the network and went toward the maintenance and construction of towers.

    Needless to say that this is what we were told to tell clients when they started screaming bloody murder about the charge.

    It’s really good to see the telecos getting what they deserve on this one. The fact that they have been carrying on with this for so long is the definition of chutzpah. Especially considering the CRTC smacked them all those years ago for claiming that the system access fee was a CRTC charge. Can you believe the nerve of these people. Rogers in particular is notorious for having a black blooded corporate culture. I can’t think of a company that cares less about its customers, other than maybe Bell…

     
  2. craigbamford

    July 5, 2012 at 2:42 pm

    The fact that they CAN do this just shows how deep the problem of oligopoly in our country really is. The market should quickly discipline companies that try this sort of nonsense; if it doesn’t, then you don’t really have a market in the first place. And if you don’t have a market? Well, then it’s time to take steps.

     
    • petenowak2000

      July 5, 2012 at 4:05 pm

      With any luck, the impending lifting of the foreign ownership restrictions will help take a step in that direction.

       
      • craigbamford

        July 5, 2012 at 5:32 pm

        You’d think so, but natural monopolies aren’t so easy to crack. I’m more than a bit concerned that it’ll just end up being three American companies buying into a plump oligopoly.

         
 
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