Goodbye to cellphone system access fees?

The cellphone system access fee may be heading toward extinction with reports that Rogers Communications Inc. is relaunching its Fido discount brand without the hated charge.

The cellphone system access fee may be heading toward extinction with reports that Rogers Communications Inc. is relaunching its Fido discount brand without the hated charge.

The Toronto-based company will relaunch Fido on Tuesday, according to the National Post, with new plans and a new logo. Rogers will also scrap the $6.95 monthly system access fee on postpaid customers. Prepaid Rogers and Fido customers already do not pay the fee.

Liz Hamilton, a spokesperson for Rogers, declined to comment.

"We don't predict future pricing either on specific plans or rate cards," she said.

Industry observers said the company's move is likely to spell the end of the system access fee, which is thoroughly hated by consumers.

"It's the No. 1 complaint about cellphones," said John Lawford, counsel for the Public Interest Advocacy Centre. "People are getting a little more traction with their pushback in a lot of telecom issues now.… We just might see the end of it. We'll see them slowly disappear."

Lawford warned, however, that the removal of the fee may not necessarily translate into lower monthly bills. At the very least, he said, the bills will be more transparent and easier to understand.

"If their bill isn't split into a thousand pieces, people will be able to see that," he said.

The relaunch would be an effort to head off increased competition from new cellphone providers that are starting up across Canada next year. Toronto-based Globalive Communications Inc., which operates long-distance and internet provider Yak, has announced it will launch a network across the country except in Quebec, in the second half of 2009.

Montreal-based Quebecor Inc. has also announced it will launch a network servicing Quebec through its Vidéotron subsidiary within 12 to 18 months.

Another newcomer — BMV Holdings, a firm backed by several high-profile investors — last week said it will roll out service next year to Ontario and Quebec.

Halifax-based Bragg Communications Inc., which operates cable provider Eastlink, is also expected to announce its own cellphone network in a few weeks. Toronto entrepreneur John Bitove may also launch service in major Canadian cities through his company Data & Audio-Visual Enterprises.

All of the newcomers won spectrum during the government's auction of airwaves this summer. All are expected to offer lower-cost services than Canada's existing three national players, Rogers, Bell Canada Inc. and Telus Corp., and none will charge customers a system access fee. BMV, for example, last week said it will offer unlimited talk and text service for $40 a month with no additional fees.

The market is set to go from what the government last year deemed uncompetitive to crowded next year, and existing providers are being forced to lower prices and make services more transparent to prevent an exodus of customers when the newcomers launch.

Telus scrapped fee with Koodo

Vancouver-based Telus was the first major provider to scrap the system access fee for postpaid customers when it launched its discount brand Koodo in March. The company still charges the $6.95 fee to its own Telus-branded postpaid customers, as does Rogers with its core offering.

Bell charges all of its customers system access fees on its core and Solo discount brands, ranging from $3.95 for prepaid service to $8.95 on some postpaid plans.

Julie Smithers, a spokesperson for the company, would not comment on whether the company had any plans to drop its fees.

"We'll always be competitive in our markets," she said. "But we don't comment on future plans."

The Montreal-based company on Monday announced it would allow customers to carry over unused minutes from one month to the next, although the feature is only available to customers who sign a three-year contract before the end of the year.

A number of smaller airtime resellers, including Virgin Mobile and President's Choice, also do not charge a system access fee.

Canada's existing cellphone companies — Rogers, Bell and Telus, as well as MTS Allstream and SaskTel — are currently embroiled in a class-action lawsuit over system access fees. Regina-based lawyer Tony Merchant claims the companies have misrepresented the charges as government-mandated fees for years and is seeking a repayment of nearly $20 billion. Merchant's lawsuit was certified as a class action last year and is still before the courts.

The fee began as a government licensing charge in the 1980s to cellphone providers for using public airwaves. In 1986, the government transferred the collection of the fee to cellphone providers, who were to incorporate them into their monthly charges. Instead, the carriers opted to keep them separate.

The cellphone companies say the charges, which no other carriers in the world break out separately, are for ongoing maintenance and investment in their networks.

Merchant also this summer launched another class-action against the cellphone companies for their 911 fees. The companies are required to collect this fee by Canadian Radio-television and Telecommunications Commission, but the mandated rate is a maximum of 11.5 cents per month.

The carriers, which are charging 95 cents, are therefore profiting from a government-mandated charge, Merchant says.


Peter Nowak


Peter Nowak is a Toronto-based technology reporter and author of Humans 3.0: The Upgrading of the Species.