Separate device subsidy from plan price

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  • Updated 5 years ago
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The new Wireless Code of Conduct, once it comes into effect will force some major changes. I think Koodo should be proactive here and earn some good will. The current tab system will have to change anyway due to the new rules.

For far too long, Canadians have been conditioned to expect a free (or near free) phone. So few of us purchase phones outright, because there isn't much incetive to do so. Koodo offers us a 10% discount on our bill, which is fair under the current tab structure, as it's the exact amount of the subsidy. But, more and more customers are asking for a tab increase. Under the new regulations, Koodo will not be allowed to collect on the tab past 2 years so in order for Koodo to increase the tab, Koodo will have to restructure how the tab is paid off.

This is what I propose:

1. Increase monthly plan discount to 25% for those with zero tab balance. You already offer this discount to National Grocers employees.

2. Advertise separate pricing on each plan based on tab amount (or 1 year/2 year commitment). Major European carriers have switched to this model after their governments barred contracts over 2 years.

Most customers will still opt for the more expensive plans as the outright price of most smartphones is fairly high. I feel that a solution like this would be fair to both Koodo and its customers.
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Ivan, Mobile Master

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Posted 5 years ago

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smurfette

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Please read last line carefully:

This new policy applies to customers who have entered into terms of any length, including those longer than the aforementioned two-year period. While it’s not certain yet how carriers will deal with the disparity of allowing contract holders to leave without penalty before their terms have expired, the CRTC has set about enforcing a maximum early cancellation fee that cannot exceed the amount of the phone subsidy itself, and must be payable over a two-year period. That means that after two years, if the phone balance hasn’t been paid off, customers will need to merely pay off the remaining amount of the device and be able to leave the provider without penalty.
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Ivan, Mobile Master

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"b.for indeterminate contracts: The early cancellation fee must not exceed the value of the device subsidy. The early cancellation fee must be reduced by an equal amount each month, over a maximum of 24 months, such that the early cancellation fee is reduced to $0 by the end of the period."

So, as I understand this, Koodo will have to split the tab over 24 months. It has to be paid off by the customer by then.
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joshlitz

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The service agreement you sign with Koodo is still a leagally binding contract, without a fixed term.
And yes I am making an assumption here calling it CRTC's indeterminate contract, Im sure more clarifacation will come out prior to December 2nd.
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Some random Mobile Master, Mobile Master

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The way I read this is everyone would have to receive $6.25/month towards their tabs in order to pay off $150 over 24 months. Since Koodo is a for-profit company, my guess is each phone will have a different price tag which will become a mix of tab+monthly plan. Koodo will still only give us 10% of our monthly plan, so they'll adjust our tabs accordingly. Which also leads me to believe that if you are to change to a cheaper plan, they will also have to charge you the difference it makes on your tab in order for it to be cleared at the end of 24 months, as expected.

Example: Quebec customer comes in and gets a Lumia 520 @ $150 and wishes to use the tab. The plan he wants costs $39. Monthly amount that goes towards the tab is $3.94 (10% of $39 plan + $0.40 911 tax). $3.94 times 24 equals $94.56. Customer would then have to shell out $55.44 +tx upfront to get his phone since his tab wouldn't be able to be cleared out in 24 months otherwise. Prorated adjustments would be made throughout those 24 months in case customer changes plan and/or phone. Well, that's how I see it anyway. Don't count on having more than 10% of your plan going towards your tab, it's not gonna happen.
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Dennis, Mobile Master

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I <3 the math. I think TopperCNC is prolly right about Koodo doing something like in his example.
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Moonmack

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Maybe rather than paying the extra $55.44 from your example up front it would be split over 24 months?
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Erwin

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Totally agree on that, its time for Koodo to make some bold changes that will rock the mobile industry. We started with the revolutionary Tab system, now its time for Koodo to make another mark. Maybe something that other wireless providers won't be able to offer.

Like you said maybe 25% each month towards the tab or tab automatically clears after 2 years no matter which plan the customer chooses.
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RudyW

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Why do you think 25% towards the tab is something the others can't do? I'm thinking they would, the day after koodo does, in which case they all just reduced their bottom line for nothing to show.
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Ivan, Mobile Master

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So what if the others do it?
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RudyW

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Race to zero is not in for profit companies best interest. Why would decimate the market unless they themselves gain market share through whatever they do. Doing things that are easily matched by others is not going to achieve that. I'd love if companies were that stupid because we on the other would benefit from lower prices.
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Boolanger

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I don't really see how the CRTC ruling is going to change anything especially anything that would need to make Koodo redo the current setup.

Koodo is already setup who the rule is laid out, but better. Cause we don't need to wait 2 year to cancel without a fee and then pay off the rest of the phone. We cancel and time as long as we pay off the rest of the phone (tab)
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smurfette

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what i was trying to point out above. thank you. I am not good with words.
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RudyW

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The tab, under the new rules would be screwed. Koodo couldn't collect outstanding tab on a customers who walk after 2 years.
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Dennis, Mobile Master

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Watch the video in you huffingtonpost link you posted. You have to pay the remaining subsidy still
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RudyW

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That what I said all along.:-)
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MatB

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Phone Manufacturers should also do their part by making it easy on Canadian consumers to get affodable phones (not phones for 500$/600$).
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Dennis, Mobile Master

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Or they should sell their phones in retail outlets or on their site like Apple and the Google Nexus. And the wireless service providers can stop selling phones and just concentrate on improving their service
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Some random Mobile Master, Mobile Master

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One big reason why smartphones prices are so high is simple: we keep buying them through carriers in order to have very large subsidies that artificially make us believe that the phone is affordable. If you take subsidies completely out of the whole context, the wireless landscape changes dramatically. If carriers, all of them, can't lure you in with subsidies, what is there left to try with? Plans... awesome plans.... It's well known that BYOD customers can shop around to their heart's contents. Now, apply the same logic to the whole pool of wireless users in Canada and you get what I like to call a complete a_* kicking. The Big3 have large subsidies and sucky plans. The flankers have a little bit better plans, and smaller subsidies. See a pattern here? No subsidies = awesome plans! I don't mind paying retail for the device I wish to use, if the reward is unbelievably low priced plans with lots of features.
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Dennis, Mobile Master

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@Joshlitz, I have had tons of discussions with people on here about this. But some people disagree with this idea/philosophy. That it is our choice for buying a locked phone from the providers and that we should not be entitled to anything else because of this choice
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Don

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Are you bloody serious when you say that it is OUR choice we buy our phones from providers ? The North American providers dictate the way the cell phone makers have to specially build the phones for them. That's why we keep getting lower quality phones vs the international models. Also, there is almost no way to buy an unlocked version of phones without being importing them from outside the country :-(
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joshlitz

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@DennisL, It does come down to whatever choice you as the consumer make. I believe the idea of free phones needs to be changed.
I find people are far less willing to invest in their own device, something that is used 24/7, in their pocket, backpack, being thrown around in there purse and so on. People rely so heavily on their smartphones, yet are so unwilling to make the investment for a quality product.

This problem arises when Koodo gets the backlash for phone issues and repairs. Not Koodo's phone, the consumers, Samsung, Apple, LG, Nokia product.

Your TV breaks and you don't go to Shaw for a new one...

Im just a big fan of this idea!
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Dennis, Mobile Master

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@joshlitz, Dude we are kindred spirits. I agree 100%. I see how some people treat their devices. If they realize that they are paying for it via higher plans they would place more emphasis on care. Like a laptop.

@Don, im not saying that. But others have. Check out some of the long discussions. Everyone is entitled to their opinons:
http://community.koodomobile.com/kood...

http://community.koodomobile.com/kood...
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Moonmack

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I really like the idea of a full fare phone if it means I get a great plan. I also like being able to buy my phone from the mobile service provider because it means the phone will be compatible with the network. I know you can always check frequencies, etc. but this can be complicated for many people. I think I've still seen some questions on this forum if someone can bring their AWS or CDMA phone to Koodo. Of course the answer is in some circumstances (Pentaband phones for example).
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Dennis, Mobile Master

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Most of the elements of the Code deal with contract services, so the impact on no-contract customers that already own their unlocked phone would be minimal.
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Ivan, Mobile Master

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I disagree. Koodo makes more money from those of us who bring our own devices. They don't have to subsidize anything.
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smurfette

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Really now this is getting silly. Everyone needs to stop guessing and just wait till December 2,2013. Or later this year when Koodo announces what will happen.
They will have to following the correct policies of the CRTC.
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Some random Mobile Master, Mobile Master

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I have to agree with Philo here. That was a bit harsh smurfette. Disagree all you want, but to straight up ask that everyone shut up, now THAT is getting silly... no offense.
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Dennis, Mobile Master

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And Philosoraptor will be voicing his opinion long after the date LOL
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Ivan, Mobile Master

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I wish I could star Dennis' reply, lol. That's gold right there ;)
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Dennis, Mobile Master

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You know it ^^

Great use of the ' with a name that ends in s btw

A lot of people get that wrong.
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Ivan, Mobile Master

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Thanks! English is not even my native language.
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Sherlock Holmes

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Philosoraptor, how will Koodo be forced to make changes to the tab? Please explain.
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Sherlock Holmes

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I understand now. Thanks Rudy. Seeing as how the Tab isn't a fixed term contract, I believe that the Code of Conduct does not apply towards the tab systems as they way the phones are priced on a tab system isn't the same as on a fixed term contract.
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Ivan, Mobile Master

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Tabs are indeed contracts. The Code refers to them as "indeterminate contracts". It states that "The early cancellation fee must not exceed the value of the device subsidy. The early cancellation fee must be reduced by an equal amount each month, over a maximum of 24 months, such that the early cancellation fee is reduced to $0 by the end of the period". Does this not force the carriers to have their tabs reduced to zero balance after 24 months, whether it be by forgiving the remaining balance (as Fido does), or by increasing payment amount from 10%/month, or by raising plan prices, or by not offering subsidies for plans that cannot be paid of at the normal rate after 24 months?
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Sherlock Holmes

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Koodo does not have early termination fees. Take a look at their terms of service and you will see nothing of the sort exists. The remainder of the negative tab balance is not covered as an early termination fee as a fixed term contract would.

Sure, any signed document that's agreement between two parties is a contract, but the code of conduct covers fixed term contracts with an early termination fee. Koodo's system does not fall into this.

If you think it does, then please, point out exactly where it says "Tab systems are also considered early termination/cancelation fees" and then you might have some proof to your claim, but as it current stands, you don't.
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Sherlock Holmes

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Plus the negative tab is capped at -$150, which is less than most of the cost of the overall phones in terms of what you are talking about.
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Ivan, Mobile Master

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What? The code does not refer to the overall cost of devices, but rather to the portion of the device cost that is directly subsidized by the carriers.

Now, it doesn't matter that Koodo doesn't explicitly mention an early cancellation fee. In Koodo's case, the fee for early cancellation is the balance itself. The Code was created (among other reasons) to prohibit carriers from getting creative with their language.
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Mo D.

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If I read correctly, yes, all monthly-plan-based contract cancellation fees shall be $0 after 2 years.

However, any device subsidisation remaining will still be payable.

i.e.

Cancellation fees are calculated: Remaining monthly fees on the contract + remaining device subsidy.

So, if you buy a $650 phone for $50 on a 3 yr plan, then the phone has been subsidized by $600. and so, every month, the phone subsidy is ($600/36). So, then when you cancel, you still owe back the remaining ($600/36)*x months left on your contract, however are no longer responsible for the x monthly bills left on the contract.

Of course, this assumes carriers don't change anything on/before the Dec 2 effective date. We will have to see what the game plan is, which we'll never know because "the details cannot be made public for competitive reasons".
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RudyW

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Nope. There will be $0 of anything after 2 years.
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Mo D.

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Not entirely on topic, but a sign of things to come? I hope not:

http://mobilesyrup.com/2013/06/07/rog...
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Ivan, Mobile Master

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That's affecting only customers on older contracts. Not applicable to FlexTab customers.
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Dennis, Mobile Master

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Funny how Rogers could make that change so quickly but changes with respect to the CRTC would take 12-18 months to update their systems
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Mo D.

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Yeah I am just saying that this is a blatant attempt to cash in on those who want to upgrade to the new plans after Dec 2, before their old plans expire... and clearly a sign that the Big 3 are gearing up to KEEP their profit margins whilst maintaining the new CRTC code. So, if we're unlucky, rates for everything the Big3 sell will go up... decreasing the need for competition across the spectrum, and slowing Canadian Wireless progress down again. Just my $0.02
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Dennis, Mobile Master

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I think we need contract lawyers to interpret the CRTC Wireless Code of Conduct.

So much discussion, questions, and interpretation regarding cancellation fees, termination fees, subsidies, how a Tab fits into all this, etc
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Ivan, Mobile Master

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My bet is that Koodo will keep mum on this until the time comes.
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Zaphod Beeblebrox

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Don't they always? :P
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Zaphod Beeblebrox

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There isn't really an official answer as Koodo would know just about the same amount as you do. When customers call in asking about it, I give them the same answer we all have given in this thread. I even direct them to this community to discuss it. All these posts, Koodo would look at considering the imoportance it all has. I'm sure they will have something in mind when the time comes.
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Moonmack

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I'm guessing they may still be trying to figure out what it means to them ... ?

Edit: When it takes me 15 minutes to reply sometimes the answer appears earlier than the question ...
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Zaphod Beeblebrox

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Well I haven't heard anything around the office, just the usual chit chat that we all know about.

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