Hundreds of customers have complained to the federal regulator about Bell Canada's plan to replace its installation fee with a monthly rate increase for all customers.

As of Tuesday, the Canadian Radio-television and Telecommunications Commission (CRTC) had received more than 500 complaints from customers about Bell's application to make the change, which was announced on customers' August phone bills.

Bell Canada says it wants to level the playing field with competitors who do not charge installation fees.
(CBC)

The change will drop a $55 installation fee for new customers, but add $0.80 to the monthly telephone bills of Bell's eight million customers.

According to Bell Canada, customers in Ontario, Quebec, Alberta and B.C. will be affected.

The CRTC is now soliciting public input on the Bell proposal. If it approves the hike, phone rates would increase sometime in 2007.

Bell Canada spokesman Mirko Bibic said the change is a response to the fact that many of its competitors include installation costs in their monthly rates.

"All in all, we feel it will make us more competitive," Bibic said.

He added that the installation fee deters new customers and makes it difficult to win back customers who have left for one of an increasing number of competitors, many of which now offer phone service through the internet.

The rate increase will bring in almost $77 million for Bell, but Bibic said that will be exactly offset by the money lost by dropping the installation fee.

"On average, our subscribers tend to move every 5½ years, and if you work the 80 cents out over the 5½ years, it works out very closely to the $55 service charge," said Bibic. "So again, on average there's no incremental revenue gain here for Bell Canada."

'Why should we subsidize the movers and shakers or whatever?' -Rolly Crawford, pensioner and Bell customer

But customers such as Rolly Crawford aren't buying that.

"Somewhere along the line they are going to make a lot of money on this," said Crawford, who has already filed his complaint with the CRTC.

The 67-year-old Ottawa pensioner said he has lived in the same house for decades, and must pay for the increase from a fixed income.

"Why should we subsidize the movers and shakers or whatever?" he said.

"And why should they not have an exemption for seniors?"

A spokesman for MTS Allstream, one of Bell's main competitors, said he thinks the change will bring in more money for Bell. Chris Peirce added that Bell's decision shows the company still holds a lot of market power, in spite of the growing competition.

"Even when they say they are confronted with competition like they've never seen before, their answer is not to lower prices — it's to increase prices in a unilateral way across their territory," Peirce said.

Customers can provide feedback about the proposal via the CRTC website until at least Oct. 16.