Bell introduced a $3 monthly digital service fee at the beginning of 2008 to pay for service upgrades and maintenance. (Ryan Remiorz/Canadian Press)

Bell Canada Inc. says it is raising the price of its satellite television service in the new year to match rivals and pay for satellite upgrades.

Bell's television customers are receiving bills informing them of the increase, typically about $4 a month. The increase is based on programming, with customers who are subscribed to many channels facing a bigger hike than those with less.

Customer service representatives are saying the increases, which also apply to customers in the midst of term contracts, are in order to bring the company's pricing in line with competitors and to pay for continuing investment and service maintenance. One representative told CBCNews.ca the hike would help pay for service on the new Nimiq 4 satellite, which launched in September.

Bell, however, introduced a $3-a-month "digital service fee" at the beginning of 2008 to help pay for that same investment and maintenance.

Consumer groups said the Montreal-based company is guilty of double-dipping.

"It's not fair, they're both for the same service," said John Lawford, legal counsel for the Public Interest Advocacy Centre. "How can you split off one fee and say, 'We're just using this fee to improve this part of our business?' Overhead is overhead. The more you split fees, the more you can raise them because they look like they're for different things."

Bell officials did not return a request for comment.

Internet experts also questioned Bell's logic in regard to the company raising prices to compete with rival providers. Bell's real competition isn't cable providers such as Rogers Communications Inc. and Vidéotron Ltd., but the internet — where a growing amount of programming is free and legally available, said Darren Meister, associate professor of information systems at the University of Western Ontario in London.

"It would not surprise me if [personal video recorder] sales are hitting a plateau because people are just using free services on the web. It's the ultimate in time-shifting," he said. "I have heard people saying, 'Why am I not just watching all of my television on the internet?'"

Industry analysts also said the rate hike is coming at a bad time, given the worsening economic conditions.

"Obviously it's cautious times for the consumer and people are taking a closer look at the line items in the bills they receive," said Kaan Yigit, president of consultancy Solutions Research Group. "I wouldn't see an across-the-board backlash but it does give an opening to Rogers, Shaw, Cogeco and others to market to dissatisfied customers."

"A price increase at this time sends out the wrong signal in that Bell is risking looking like it's out of touch with consumers' fears and reality," he added.

Lawford said there isn't much consumers can do to avoid the rate hikes, given that both the Canadian Radio-television and Telecommunications Commission and the Commissioner for Complaints for Telecommunications Services do not deal with television pricing.

As with cellphone and other telecommunications services, Lawford warned consumers to avoid signing long-term contracts or opting for the up-front bundle discounts that are offered for multiple services. Contracts are often worded in a way that gives the service provider to ability to change prices at any time, which potentially negates in the long term any discounts that may be gained in the short term.

"It's difficult when you're in the enthusiastic stage to think, 'What happens if this relationship doesn't work out?' We recommend you go for shorter-term with higher costs because the penalties of cancelling are typically so onerous," he said. "The other thing with bundles is that it's hard to leave when you're mad about just one service. Most people don't want to switch all their services at once."

Bell recently lowered prices and did away with the system access fee on its Solo brand mobile phones, just days after rival Rogers did the same with its Fido service. Both companies are moving to head off the increased wireless competition when new carriers begin operations next year.