Customers call scrapped cellphone fee misleading, and some are still paying it

Thought that annoying system access fee was a thing of the past? Turns out, the saga isn’t over. Some people are still paying the controversial wireless phone charge. Meanwhile, a class action lawsuit targeting the fee is making its way to trial.

Lawsuit alleges companies misled cellphone customers into thinking fee was a government charge

For years telcos, including the big three, Bell, Rogers and Telus, charged a system access fee for wireless plans, typically $6.95 a month. (CBC News)

Thought that annoying system access fee was a thing of the past? It turns out the saga isn't over. Some people are still paying the controversial wireless phone charge, even as a class action lawsuit targeting the fee makes its way to trial.

For years, phone companies — including the big three: Bell, Rogers and Telus, charged the monthly fee — typically $6.95 — as an extra cost on top of the price of a regular cellular plan.

The big three each dropped the fee in 2009, facing competition from new providers who didn't charge it. The telcos were also named in a class action lawsuit certified in 2007

Tony Merchant and his firm are heading up a class action lawsuit targeting telcos that charged a system access fee. (Aldo Columpsi/CBC)

The lawsuit alleges Rogers, Bell and Telus plus some smaller players misled customers into thinking the system access fee (SAF) was a tax levied by the federal government, when in fact most of it was flowing into the companies' coffers.

"The whole process was designed to give the impression of a government fee," claims Regina-based lawyer Tony Merchant, whose firm is heading up the lawsuit.

"The companies were unjustly enriched, so they received money for providing nothing extra."

It's not over

Despite the lawsuit, Bell, Rogers and Telus haven't entirely eliminated the fee. Harry Sivalingam in Toronto recently discovered this when he checked out his father's wireless bill. To his surprise, his dad, 70-year-old Shanmugam, is still being charged a monthly $6.95 SAF by his provider, Telus.

"I was shocked," said Sivalingam. "Why and how this is possible?"

It turns out, when the telcos dropped the charge, existing customers who didn't migrate to a new plan continued to pay it — a small number of people by this point. 

Sivalingam also discovered that if he switched his father to a different plan, he'd be worse off because all the ones currently on offer are more expensive — even without the added SAF.

Even so, Sivalingam says he doesn't understand how the telcos can continue to charge such a contentious fee. "I don't think it's fair."

Telus was the first phone company to drop the SAF, a decision it made "based on customer feedback requesting greater simplicity," said spokesperson Jacinthe Beaulieu.

She added that the company made it clear to all customers that they could switch to new plans that excluded the charge. Rogers and Bell also said that anyone still paying the fee has always had the option of choosing a different plan. 

But switching hasn't necessarily translated into cost savings. When Bell, Rogers and Telus scrapped SAFs in 2009, they each raised the price of most of their new monthly plans by $5.

Rogers also added a government regulatory recovery fee ranging from $2 to $3 a month. That fee also faced criticism, and the company eventually dropped it in 2012. 

'They were deceived'

Lawyer Merchant suggests the telcos didn't completely discard the SAF in 2009 because it would have been a blatant admission of wrongdoing.

"They came down in-between. They didn't immediately abandon [it] and they didn't continue, either."

His suit alleges that between 1982 and 1987, Canadian cellphone users had to pay an individual licensing fee to the federal government.

In 1987, the rules changed and the telcos were instead charged a licence fee. Merchant claims that even though that fee eventually worked out to "pennies" per customer, the telcos kept charging customers an added SAF and pocketing most of the profit.

"People were used to paying these amounts and they were used to seeing the charge," said Merchant. "They were deceived."

Bell, Rogers, Telus and the Canadian Wireless Telecommunications Association each declined to comment on the lawsuit.

However, Bell takes a position on its Bell MTS website for Manitoba customers, stating that it "denies that it has improperly or illegally charged the SAF."

Bell MTS also makes it clear to customers still paying the charge that the SAF isn't a government fee. Instead, it says the charge helps "recover the costs associated with operating and maintaining a wireless network."

What difference does it make?

Consumer advocate John Lawford says added fees on a bill do a disservice to customers, even if eliminating them results in no cost savings.

He says consumers need to understand the full price of their service, something that's difficult to do when a bill includes a variety of separate charges.

Consumer advocate John Lawford says added fees on a bill do a disservice to customers, even if their elimination doesn’t result in any cost savings. (Christopher Gargus/CBC)

"You can't compare service prices across providers, because they break their bills up into a million different forms," said Lawford, executive director of the Public Interest Advocacy Centre. "You don't know exactly what you're paying and whether your bill went up."

He would like to see Canada's telecom regulator, the Canadian Radio-television and Telecommunications Commission, explore ways to mandate more clear billing for telecom customers.

"What you want is more detail on what you're buying and less detail — more like one price — on what you're paying for."

About the Author

Sophia Harris

Business reporter

Sophia Harris has worked as a CBC video journalist across the country, covering everything from the start of the annual lobster fishery in Yarmouth, N.S., to farming in Saskatchewan. She now has found a good home at the business unit in Toronto. Contact: sophia.harris@cbc.ca

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