Rogers: I don’t hate you, I hate your policies.
Here we go again. Another Rogers ‘experience’ in the bag and another decision to avoid using Rogers. I mentioned in my last rant about Rogers (iPhone Unlocking Policy) that I would very likely be buying my next phone outright simply to avoid being forced to keep Rogers as my carrier. Well that time is here and despite really wanting to buy my new iPhone 4S from Rogers (I like to save money as long as I’m provided good incentive to do so), their hardware upgrade policy has made the decision for me to buy the phone outright instead. Here’s why.
These are my options:
- Factory Unlocked – I can take it with me to Mexico and anywhere else in the world and use a local carrier for cheap. Great!
- $749 for the 32GB iPhone 4S – OUCH! That’s pricey.
- Only 1 year left on my contract with Rogers, then I’m free to re-negotiate and (probably) switch carriers
- Locked to Rogers for the full three (3!) years from today
$269$429 ($319 + $75 Hardware Upgrade fee + $35 Administration fee) for the 32GB iPhone 4S.- Add another two years to my contract, putting me back to three years down the road until my next phone.
Can you tell why I refuse to renew my contract? Before I get into the details of my comparison, let me first say that I paid $199 for my iPhone 3GS two years ago and that my 3GS is unbearably slow to the extent that I am unable to do most of my work on my phone. The 4S will resolve this problem.
If I were in the US, my contract would be done and I wouldn’t be paying any penalties – I would be free and clear to pay the regular $299 for the 32GB iPhone 4S and enter into a new 2-year contract. Yes it would be $30 more in the US – $30 more for 1 less year on contract? I’ll take it! Oh wait, I can’t; not an option in the great white north. 2 years is reasonable, 3 is not. As of 5 years ago, three year contracts made sense since phone technology was advancing at a roughly equivalent pace. Every three years a new slew of phones would tide you over until three years after that. But it’s a new decade: phone technology is advancing so fast that 3 years is pretty much two lifetimes for a cellphone. 3 year contracts simply don’t make any sense anymore.
Wait, why is it so much more expensive than the new contract price of $269?
Good question. I filled out a bunch of inormation on Rogers’ website and it came back with the magic number of $429. Which means it’s marked up 63% above the normal 3-year contract price even though I’m getting exactly the same thing a brand new customer of Rogers would get. AND the phone remains locked.
For an additional $320 I get the wonderful ability to renegotiate my contract in a year (or change providers) and the ability to head anywhere in the world and make use of my phone at a decent rate. By the time I’m paying $429, what’s another $320?
The results of this analysis are that Rogers is failing to recognize a few key facts:
- 3-year contracts no longer match with the pace of innovation in the mobile device market
- I’m more than willing to pay a reasonable premium to do an early hardware upgrade. $160 on top of the regular price for the phone is not reasonable.
- When your upgrade premium brings the price of the phone to more than 50% of the outright purchase price, it begins to tilt the scales in favour of buying outright. This is especially true because there are two major benefits to buying outright: factory unlocked condition and the ability to negotiate a new contract with retentions (or simply walk away).
Rogers should be doing a better job keeping their customers around. It’s in their best interest to keep you upgrading your phone and renewing your contract, yet these new upgrade policies are not accomplishing that. How can they do this? Here’s a few ways.
- Come up with a better hardware upgrade policy – especially for those at the two year mark. I would be willing to pay $50 to do the upgrade a year early. Maybe as much as $75 – but no more than that. You’ll note that $75 brings the price to only 46% of the outright purchase price – keeping the balance below that precious 50% mark.
- Do what they did a few years ago when the iPhone 3GS came out a year after the 3G. Upgrading to the 3GS (2 years early no less) from the 3G cost only $100 on top of the phone price. That also falls perfectly into line with my $50 at year 2 suggestion above ($50 / year early).
- Reduce the benefits of buying outright. Allow customers to unlock their phones after a few months of their contract (or immediately after the return policy is over). If I didn’t have to wait until the end of the 3 year contract to unlock my phone, I would absolutely lock-in for another 3 year contract with Rogers and save the $320.
Hi Jordon
I love a good rant as much as the next guy. But this actually sounds about right.
What you’re calling an “upgrade premium” is actually the repayment of approximately 1/3 of the subsidy you received when you bought a $700 phone for $200 two years ago and promised Rogers they’d have 3 years to recoup their discount.
Once you fulfill your previous obligation I assume you’ll get the same deal everyone else gets on a new contract.
Once again, you’ll have the option of paying the true cost up front or “financing” the phone with a subsidy from whatever company you pick and inevitably paying it back over time (or with early cancellation fees or upgrade fees) :-)
Good luck,
Sheldon
(in the same boat as you with a 2 year old 3GS on a 3 year contract)
Sheldon,
I don’t object to a company splitting payment for a device over time. However, even if we do the math at face value, here’s how it works out:
16GB iPhone 3GS originaly outright price: $649
Price I paid for it on 3 year contract: $199
Remaining value to spread over three years: $450 / 3 => $150 per year
That’s at 100% face value. If we compare that to the $160 Rogers is asking me to pay to upgrade now (leaving off the price of the 4S of course), then they’re only asking me to pay $10 more. Sure it’s only $10, but why should I be paying more, as a ‘loyal’ customer, than a brand new customer? If anything I should be provided incentives to stick around longer. This is what I do with my business – when a customer needs more resources, we give them a great deal on upgrade pricing if they’ve been with us for longer than a year. Similar deals have been offered by dozens of other businesses in the past. Not Rogers. You have to wait for your contract to be over and threaten to cancel before they give you any leeway at all.
All that said, we all know that nothing about a phone contract is truly ever at face value. I’ve spent roughly $800 / year (on the low end) for the plan and phone combined. Subtracting the $150 value of the hardware, Rogers is making a cool $650 annually from me. I’m sure there are tons of fixed costs that could be thrown against that number, but since those are spread across millions of subscribers, they’re likely negligible for this argument. If they’re making $1300 from me after 2 years, why not automatically offer me $50-100 off the upgrade? That’s nothing compared to the profits they’re making. These are the calculations that should be done to provide an objective loyalty metric.
Want more proof of a lack of face value? An outright purchased phone is not identical to one purchased on contract; the phone with the contractual obligations is locked to the carrier. The locked phone then has an additional purchase price of $50 associated with it (because that’s what Rogers charges to unlock an iPhone after 3 years on contract). But the $50 is not a cost for Rogers – it costs them nothing to unlock it. It’s just another set-back for me with each phone I buy from them.
Then there’s the comparison of ‘everyone else’. In the US the monthly plans are roughly the same price (if not cheaper) and the initial purchase price is almost identical (it was for the 3GS (16GB) at $199, and is $30 more for the 4S (16GB) at $199 vs $169). Yet the US carriers can spread the identical remaining cost of the phone across two years without any problems and allow the purchase of a new hardware device without any ‘penalties’ at the two year point. I’m sure Rogers could handle that without any issue as well. They choose not to. If I could pay $199 for a two year contract, I would do so.
The point of this article is to demonstrate some problems with Rogers’ policies. I explained how their hardware upgrade policy does not provide any kind of loyalty incentive (in actual fact it’s a disincentive) when compared against an outright purchase.
I also emphasized that 3-year contracts (which are banned in the UK and only appear to exist in Canada) are detrimental to consumers and, when combined with the hardware upgrade policy, could easily dissuade consumers from renewing their contract when approaching the two year, time-to-ugprade, point.
Since the current hardware upgrade policy is relatively new, it’s possible these comparisons were not accurately analyzed before rolling out the policy. If enough Rogers customers compare these options objectively, it could be a negative effect long-term for Rogers.
Hi Jordan,
Moved here from Europe about 6 years ago. Couldn’t believe the rip-off that are cell-phone plans when I moved here. So far, I have managed to avoid getting on a contract but really want to get a decent smartphone like the 4S. Are any of the others any different in terms of the gouging we get on price from the operators here in Atlantic Canada? Who would you think of moving to if you left Rogers?
Nicely argued post by the way.
Ronan,
I don’t believe any other Canadian operator offers a different pricing plan other than $159/$269/$369 on 3-year contract for the 4S. Sadly 2-year contracts don’t exist anymore, although when they did they would only save you $100 anyway.
From what I’ve read, Telus’ hardware upgrade policy is no better, but everyone I know who is using Telus seems quite pleased with both signal, customer service, and the upgrades they’ve been provided (even a year before contract renewal).
Perhaps when Eastlink begins selling cell phones, they will start offering real competition rather than colluding on price-fixing for just about everything like the big three.
Wait, isn’t Canada supposed to have an organization specifically designed to keep telecommunications companies from price fixing and to keep competition alive? Silly CRTC.
Hey Ronan, I would suggest Koodo (at the moment, we’ll have to see what Eastlink comes up with, but they won’t have a network outside Atlantic Canada). No lock-ins, you can cancel you contract at 30 days notice and add or remove add-ons within a few minutes (for example if you go on Holiday you can deactivate some add-ons and save a couple of bucks). Virgin would be another option, but Koodo generally has better rates for calling abroad (5 cents/min to many destinations). Since you’ve moved here from Europe you probably want to call to Europe at times. Also international text messages do not cost extra – if they work. Sadly Koodo blocks a lot of incoming text messages. And caller ID for calls to Europe does not work correctly, my number always shows up at the called party’s phone as +902… (which is a Turkish number) instead of the correct +1902… I’ve told Koodo three times, but they can’t fix it since they don’t *understand* the problem.
If you switch to Koodo ask some Koodo customer for a referral code (before you sign up). This will get both parties 25$ on the tab.
HTH
Thanks Jordan
I’d love to see better cell phone plans in Canada and would applaud a reasonably priced 2-year plan!
I do a lot of work in the US and never use my Rogers phone there! I use a T-Mobile pay-as-you-go for voice ($0.10 / anytime minute including LD) and a Virgin Mobile pay-as-you-go MiFi for data ($30 for 30 days unlimited).
I wish Canadian carriers could compete with similar prices. But you’ve probably hit the nail on the head when you said “I’m sure there are tons of fixed costs that could be thrown against that number, but since those are spread across millions of subscribers…”. Those FIXED COSTS are spread over 327 million US cell phone subscribers and only 24M subscribers in Canada.
I think this time around I’ll just buy an unlocked phone at full price and switch SIMs at the border. I’m tired of carrying two phones. I was on a one-year blackberry contract with T-Mobile and switched it to pay-as-you-go at the end of the contract. They did not charge to unlock the phone at the end of the term.
BTW, Eastlink provides my business phone service and has a option that rings all 3 of my phones at the same time from one business number: my land line, my Rogers phone and my US Cell phone.
Regards,
Sheldon
Hey, 3 year contracts never made sense. They were one of the *reasons* that the Canadian market was evolving slowly like maple syrup running down a maple tree. As a result, Canada is the least developed and most expensive mobile phone market in the western world. A disgrace. You can’t even go to an independent shop and buy the 3G phone you want. You actually have to travel to the US and buy it there. If it wasn’t so annoying, it would be to laugh out loud. And, believe me, people abroad who are in the know are laughing about us Canadians. We need to get rid of the Canadian ownership requirement in Canadian telecommunications laws and introduce some tough regulation plus consumer protection laws to get competition going.
So far for my rant. :-)
I also never really liked 3 year contracts, but at least a few years ago there were other options. When I bought my Windows Mobile 6 phone (she was a beauty ;)) there was a 2 year contract price. Although not a great deal, it was still discounted from the outright purchase price by about $150, if I remember correctly. Not a great deal, but at least an option.
Bell is more negotiable and is better at keeping their customers around.
Rogers has the worse signal ever tested on 10 different phones ,90% of the time its on 2G switching to 3G,DROPPED CALLS all the time,tested on new blackberrys LG samsungs you name it all high end phones.Dont sign any 3 year contracts or you will be sorry.