Have a grandfathered wireless plan? Here’s what you lose if you sign a contract

By: Ted Kritsonis

June 18, 2016

Smartphone-city

Look at any new wireless plan offered by the carriers, particularly the Big 3, and compare it to whatever plan you have that is no longer offered. Chances are, you’re getting a better deal by sticking to it, but the carriers won’t let you keep it if you want to sign a contract or gain access to certain perks.

This tends to be a conversation I have more often than usual lately, as friends and strangers I meet discuss what their old plan offers them. It generally is a mix of getting more for less than what it would cost to be a new customer today.

Take Fido’s old CityFido plan, which offered free unlimited local calling with a more generous data bucket. Even nationwide calling became part of the plan. At $57/month to start, it looks like a veritable steal by today’s standards.

But when Fido rebranded last year, it scrapped CityFido and other existing plans, opting to go with new ones that —guess what — raised the overall monthly cost. Incentives, like a free two-year Spotify subscription, were meant to “add value” to customers. Fido Roam, which is the same as Rogers’ Roam Like Home service, was also rolled out in May.

Neither of those are available to existing Fido customers on older plans. Same with Rogers. Any Rogers customer who is not on a Share Everything plan can’t get the Spotify promotion or Roam Like Home.

That would seem like a cruel trick to play on loyal and longstanding customers. Someone who has been with the carrier for years is effectively shunned from any of the incentivized services that are “adding value” to subscribers.

Since most grandfathered plans bring in less revenue per user than newer ones do, the carriers have no qualms about leaving them as is, in the hopes that they will want to upgrade to a newer smartphone on contract, thereby forcing them to switch to a new plan. While the subsidy from the carrier is larger for certain flagship phones than it used to be, it’s a policy that applies across the board.

Signing up for a new contract on a phone that is $0 is no different than signing up for one that is $400 on a two-year term. In either case, the grandfathered plan is gone, replaced by a current one that is inevitably going to be more expensive and offer less talk time and data. To push this further, the Big 3 removed all BYOD (bring your own device) benefits in January, ostensibly to combat a sinking Canadian dollar. The more likely reason was because customers on contract are far more lucrative, and so, pushing more consumers to sign up is the best way to have them pay for inflated monthly plans, while keeping shareholders happy.

Some grandfathered or corporate plans look downright generous, by comparison. Remember the old 6GB of data for $30/month add-on? Unlimited local calling? Voicemail and caller ID that cost peanuts (or was free) as an add-on? Or whatever other combination of services obtained through careful negotiation with retention departments?

Where the phone itself used to be the most valuable element to owning a smartphone, it can be argued that the monthly plan has emerged to take its place. Having a grandfathered plan that offers more for less is much harder to replace than a phone, after all.

While it may seem unpalatable to pay a large cost outright for a new device, doing so to retain an old plan makes a lot of sense. The savings in the long run are hard to pass up. This is at least one reason why mid-range phones in the $250-$500 range have grown in sales and popularity the last few years.

It has become a common conversation for consumers to compare respective phone plans with each other because smartphones already look similar, whereas plans do not. It’s hard not to feel a little envious upon hearing someone talk about a plan that is much cheaper per month than your own. The ones who are feeling better than the rest in that regard are those with grandfathered plans.

Only in Saskatchewan and Manitoba (for now, at least) is this less of an issue. With established provincial players like SaskTel and MTS, the big carriers tend to match prices to compete, though never seem to undercut each other to poach market share. Bell’s recent move to acquire MTS is indeed a market share maneuver, with an inevitable price hike that fattens the bottom line further.

Sticking to an old plan, even if it is missing out on some of the newer incentives, is a money-saver if it costs less than what is currently being offered. The carriers will try and say otherwise, but it’s easy enough to do the math.

 

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