Telcos passing off cellphone charges as a tax
Canada's cellular industry will pocket nearly $1 billion in 2004 from a special systems "access" or "licensing" fee that wireless consumers believe ? and are regularly being told ? is a mandatory government charge.Only it isn't mandatory at all, nor, as many are led to believe, is the $6.95 that appears on every mobile phone bill being passed along to a government body, such as Industry Canada or the Canadian Radio-television and Telecommunications Commission.
"Nobody is required to charge a $7 access fee," says Ian Angus, a telecommunications consultant and president of Angus TeleManagement Group in Ajax. "It's fake. It's a method of doing a rate increase that doesn't look like a rate increase."
The article goes on to note the amazing coincidence that four so-called competitors came up with exactly the same fee, at almost exactly the same time and with almost exactly the same cover story. The implication is obvious. And the industry response?
One industry insider said the fee is the result of one company making the move and the others quickly following. "Somebody always has to go first, nobody's working together," he said.
Sorry, Charlie, but when price-fixing occurs with a wink and a nod rather than through overt conspiracy, it's still price-fixing. We obviously need stronger anti-trust laws since too many of the people who claim to believe in the benefits of competition really don't. Nor, it seems, do they believe in truth in advertising.
"Our concern was misinformation to consumers," says Earl Hoeg, director of spectrum management operations at Industry Canada.In response, Industry Canada tried to get the carriers to put the following statement on every customer invoice: "System Access Fees are neither required nor collected by the Government."
The statement went on to say that carriers' licence fees are paid to the government for use of radio spectrum, but that they shouldn't be directly linked to customers. "Industry Canada encourages consumers to seek the best value from among the competing service providers that have been licensed," the statement concluded.
The carriers were furious over the government's proposal. Telus called it "inappropriate meddling" and an "unwarranted intrusion," not to mention a blatant attempt by Industry Canada to overstep its responsibilities. The company said competition will deal with the issue.
We're still waiting.
Rogers simply said the fees are common practice throughout North America so the department should just mind its own business. Microcell said Industry Canada didn't have the jurisdiction. Bell said its messaging to customers is accurate, and besides, claimed the cost of printing new text on its invoices would be ? get this ? a "considerable expense." It didn't define considerable.
Facing stiff resistance from the industry, the department backed off. Instead of requiring a statement on invoices, it took a less invasive approach. From now on, a wireless carrier is breaching its condition of license if it tells its customers that the system access fee or licensing charge they're paying is being collected on behalf of Industry Canada.
The Star made a few calls in preparation for the article to see how customer service representatives at the cell phone companies are now explaining the $6.95. "It's kinda like a government license fee sorta thing." Except for Telus and Microcell who lied outright.
The Telus agent was direct: "It's through the CRTC... it's a monthly fee everyone would have to pay." Is it collected for the government? "That's right, we're collecting it for the CRTC."Similar comments came from Microcell. "Our provider in Canada has to charge that fee. It's a government charge," the agent said. "The CRTC is asking us to charge that amount to our customers. It's government regulations basically."
This is actually a pretty clever strategy on the part of the cell phone companies. Not only do they get their $6.95 but they have a nice little disinformation campaign going. By leaving the consumer with the impression that this is a mandatory government fee, they bolster the argument that the private sector, when left to its own devices, would be much more efficient, and so consumers would be much better off, if only it weren't for the evil government and all its regulations, bureaucracy and outrageous fees and taxes. But in this case it isn't the government's behaviour that's outrageous at all.
