Bell Canada is initiating a price increase for monthly wireless plans that it no longer offers, potentially affecting thousands of Canadians that have stubbornly held on to older offerings that, in many cases, offer superior value.
The increases, which apply today to so-called 30-day plans -- those that are month-to-month, allowing customers to leave at any time without penalty -- are between $2 and $5 per month, and will affect dozens of older deals, from days before two-year contracts and share plans.
The move shows Bell at its shrewdest, attempting to move long-time customers to new higher-cost share plans that include unlimited calls and text. But many of the older plans, like the popular "Fab 10" options from the early 2010's, included up to 6GB of data for under $60, a price per gigabyte that would be unheard of in today's market. In those days, it was voice minutes, not data, that customers mainly yearned for. But as screen sizes increased, and with it smartphone usage in general, airwave-clogging data bandwidth became the hot commodity, edging out voice revenue among the Big Three.
The move shows Bell at its shrewdest.
When the Wireless Code of Conduct was implemented in 2013, carriers began offering share plans that tied a portion of the device's subsidy to a customer's monthly plan. Want the latest Galaxy for less up front? Pay the difference over two years with an extra $20 per month. Want to save some money over the course of a contract? Buy a cheaper unlocked phone and bring it your carrier of choice. But this option, dubbed Bring Your Own Device, or BYOD, caught on quickly, perhaps more so than any of the carriers were intending.
And so earlier this year, the Big Three crawled back some of their BYOD benefits, cutting that all-important discount from $20 to between $10 and $15. While investors applauded the move -- Bell's stock is up nearly 10% since January -- customers decried the price increases as punishment for the savvy. Buying a $200 unlocked Moto G and bringing it to Bell or Rogers to save $20 per month -- $480 over two years -- fostered substantial savings. Now, that same strategy yields only $240.
With this latest price increase, Bell is once again ratcheting the pressure for long-time customers to move over to these newer plans. Though they have substantial benefits, including unlimited nationwide calls and texts, and value-added services like Mobile TV, many customers would pay as much as double for the same amount of data which, for most people, represents the mobile plan's true value.
Once the change comes into effect, Bell will also begin charging an extra cent per megabyte for data overages -- $0.06 from $0.05 -- which translates to an extra $10 per gigabyte. Customers who go over their limit will now pay $60 per gigabyte, a number that in many countries is so high as to be unbelievable.
With this latest price increase, Bell is once again ratcheting the pressure for long-time customers to move over to newer plans.
All of these moves are meant to spur ARPU, or average revenue per user, during a time of relatively slow growth, owing to a maturity in the Canadian market. Carriers must contend with the fact that they are less likely to attract new postpaid customers, most of whom are either first-time smartphone users or have transitioned from the lower-margin prepaid market, than they were just two years ago. Most Canadians already have a smartphone, so carriers are battling to keep customers, and keep them paying more. The holdouts -- the customers affected by these unilateral price increases on older plans -- are the treasure chest of untapped ARPU for providers like Bell, Rogers and Telus. Intermittently dosing the experience with friction, while teasing the benefits of these newer share plans, could be the tipping point.
Either way, starting today customers will pay more for the same service.
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