Cell Phones

Koodo's new pricing seems to violate the Competition Act.

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  • Apr 21st, 2015 8:07 am
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Koodo's new pricing seems to violate the Competition Act.

Koodo unveiled their new price structure today. In a nutshell, they offer two levels of "Tab" financing:

1. "Tab" allows you to finance a new handset at up to $15 per month (a total of $360 over 24 months). It applies to all phones except the iPhone 6 and 6 Plus.

2. "Tab Plus" allows you to finance a new handset at up to $21 per month ($504 over 24 months). It currently applies to only the iPhone 6 and 6+. However, it requires you to subscribe to a higher priced Tab Plus plan.

Here's the problem. Section 77 of the Competition Act prohibits Tied Selling, where a seller "as a condition of supplying a particular product, requires or induces a customer to buy a second product."

In this case, iPhone 6 and 6+ customers are induced to purchase a Tab Plus plan. The customer is already footing the full cost of the phone: a $360 downpayment + $504 term financing. Consequently, The Tab Plus plan adds as much as $888 to the price of the 24 month contract without providing additional benefit to the consumer.

I intend to file a complaint with the Competition Bureau this coming week.
21 replies
Jr. Member
Sep 22, 2007
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You can get a iPhone 6 on a $360 Tab, you just have to pay the difference up front. The website does not state this but it the the same situation that existed with the old Tab, where you could get a iPhone on tab small or medium, with a regular rate plan. But if you wanted a Tab large subsidy you needed to get a Tab large plan.

Maybe that violated the Competition Act too, but no one mentioned it before.
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Sep 23, 2013
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retrothing wrote: Koodo unveiled their new price structure today. In a nutshell, they offer two levels of "Tab" financing:

1. "Tab" allows you to finance a new handset at up to $15 per month (a total of $360 over 24 months). It applies to all phones except the iPhone 6 and 6 Plus.

2. "Tab Plus" allows you to finance a new handset at up to $21 per month ($504 over 24 months). It currently applies to only the iPhone 6 and 6+. However, it requires you to subscribe to a higher priced Tab Plus plan.

Here's the problem. Section 77 of the Competition Act prohibits Tied Selling, where a seller "as a condition of supplying a particular product, requires or induces a customer to buy a second product."

In this case, iPhone 6 and 6+ customers are induced to purchase a Tab Plus plan. The customer is already footing the full cost of the phone: a $360 downpayment + $504 term financing. Consequently, The Tab Plus plan adds as much as $888 to the price of the 24 month contract without providing additional benefit to the consumer.

I intend to file a complaint with the Competition Bureau this coming week.

Koodo is asking for trouble with the consumers and the Government.
Look what the US carriers have advertised for HTC One M9:
http://www.t-mobile.com/cell-phones/htc ... 2S7EB81970
$649 full retail price
$0 down
+ $27/mo. x 24 mos. If you cancel wireless service, remaining balance on phone becomes due. For well-qualified buyers. 0% APR, O.A.C. Qual'g service req'd.

That would have been crystal clear as to the right and obligations of both parties
Daniel

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barter2007 wrote: You can get a iPhone 6 on a $360 Tab, you just have to pay the difference up front. The website does not state this but it the the same situation that existed with the old Tab, where you could get a iPhone on tab small or medium, with a regular rate plan. But if you wanted a Tab large subsidy you needed to get a Tab large plan.
That may be the case, but Koodo does not advertise it. This is why the Competition Act uses the phrasing "requires or induces." Koodo fails to advertise that the standard Tab plan is available with the iPhone. Anywhere.

I think everyone would agree that there is no value in paying an extra $22 per month to purchase a $65 Tab Plus plan instead of a $43 Tab plan with 750 MB. That's a massive $528 penalty over 2 years. In both cases, the customer is paying the full list price for the phone.
Jr. Member
Sep 22, 2007
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retrothing wrote: That may be the case, but Koodo does not advertise it. This is why the Competition Act uses the phrasing "requires or induces." Koodo fails to advertise that the standard Tab plan is available with the iPhone. Anywhere.

I think everyone would agree that there is no value in paying an extra $22 per month to purchase a $65 Tab Plus plan instead of a $43 Tab plan with 750 MB. That's a massive $528 penalty over 2 years. In both cases, the customer is paying the full list price for the phone.

That's a excellent point. There is something off big time with their calculations. They will me making a extra 500 bucks profit off every iPad they sell on a Tab plus because the buyer has to pay 375 up front for a 16 GB.
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Good one OP, didn't even realize it. Will look into this farther.
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Good luck with your complaint. I cannot see any tying, you can purchase wireless services without buying a phone and you can purchase a phone @ full retail without wireless services.
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Good job OP for discovering this and fighting the good fight.

The convoluted structure of these billing schemes can confuse and mislead even the savviest of consumers.
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I don't think Koodo is alone, others do this also. But OP is right, this needs to be fixed
Deal Guru
Sep 28, 2010
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Canadian carriers violating various laws? No, say it ain't so.

Section 77 also deals with "exclusive dealing", which means "[QUOTE](a) any practice whereby a supplier of a product, as a condition of supplying the product to a customer, requires that customer to
(i) deal only or primarily in products supplied by or designated by the supplier or the supplier’s nominee, or
(ii) refrain from dealing in a specified class or kind of product except as supplied by the supplier or the nominee, and
(b) any practice whereby a supplier of a product induces a customer to meet a condition set out in subparagraph (a)(i) or (ii) by offering to supply the product to the customer on more favourable terms or conditions if the customer agrees to meet the condition set out in either of those subparagraphs;[/QUOTE]

Which is pretty much an exact description of the current situation with roaming. The entire premise of locking phones is to require that a customer deal only with the carrier and/or their selected roaming partners and to prevent the customer from dealing with any carrier except those, when using their own property that they received from the carrier at a more favourable price in exchange for a long and otherwise lucrative contract. Actually, that also seems similar to tying, where you buy the phone/domestic service and are forced to be tied to their roaming service as a result.

Section 45 deals, in part, with price fixing.
[QUOTE]45. (1) Every person commits an offence who, with a competitor of that person with respect to a product, conspires, agrees or arranges
(a) to fix, maintain, increase or control the price for the supply of the product;
(b) to allocate sales, territories, customers or markets for the production or supply of the product; or
(c) to fix, maintain, control, prevent, lessen or eliminate the production or supply of the product.[/QUOTE]
(a) is apparent, given the identical pricing between all major carriers and between their subbrands. At best it is due to price signalling and not explicit agreements.
(b) is clearly obvious given their behavior in territories like Thunder Bay where Rogers ceded the area to TBayTel and Bell and Telus follow their pricing.
(c) was best demonstrated with Rogers behavior with the rates they were charging Wind, when they were charging $1000/GB for data roaming in order to eliminate the supply (that rate was intended to make roaming so expensive so as to make it unavailable).

Other defined anti-competitive acts:
(a) squeezing, by a vertically integrated supplier, of the margin available to an unintegrated customer who competes with the supplier, for the purpose of impeding or preventing the customer’s entry into, or expansion in, a market;
(domestic roaming rates)
(d) use of fighting brands introduced selectively on a temporary basis to discipline or eliminate a competitor;
(ChatR, only where Wind exists)
(e) pre-emption of scarce facilities or resources required by a competitor for the operation of a business, with the object of withholding the facilities or resources from a market;
(buying up and hording massive amounts of spectrum and allowing it to sit unused)
(g) adoption of product specifications that are incompatible with products produced by any other person and are designed to prevent his entry into, or to eliminate him from, a market;
(locks on phones)

None of this is new. These are amongst the largest companies in Canada. They own the broadcast and distribution of media in Canada and have shown a willingness to abuse that position to further their positions. They have been allowed to corner related industries so that they have almost end-to-end control of entire industries and related industries (they own the TV shows, own the networks and channels that show them and own the distribution networks into the home (cable, etc) and the secondary distribution networks (all major ISPs).

You can fight it, but you won't win.
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retrothing wrote: Koodo unveiled their new price structure today. In a nutshell, they offer two levels of "Tab" financing:

1. "Tab" allows you to finance a new handset at up to $15 per month (a total of $360 over 24 months). It applies to all phones except the iPhone 6 and 6 Plus.

2. "Tab Plus" allows you to finance a new handset at up to $21 per month ($504 over 24 months). It currently applies to only the iPhone 6 and 6+.
However, it requires you to subscribe to a higher priced Tab Plus plan.

Here's the problem. Section 77 of the Competition Act prohibits Tied Selling, where a seller "as a condition of supplying a particular product, requires or induces a customer to buy a second product."

In this case, iPhone 6 and 6+ customers are induced to purchase a Tab Plus plan. The customer is already footing the full cost of the phone: a $360 downpayment + $504 term financing. Consequently, The Tab Plus plan adds as much as $888 to the price of the 24 month contract without providing additional benefit to the consumer.

I intend to file a complaint with the Competition Bureau this coming week.

iphone 6 plus 16GB
i see is

Retail price $989
Tab Plus discount -504
---------------------------------
Pay now subtotal $485
additional monthly tab charge is $21.00 each month for 24 months,

so is $485 .. not $360
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But the thing is, you can get the iphone on a $360 Tab. You're only forced to take Tab Plus plans if you want full $504 subsidy. It's the same with other carriers.
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They just changed its name from Tab Large to Tab Plus. Where were you when it was called Tab Large? :facepalm: @OP
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actually price still same as tab large if you take tab plus
for example the heavy weight plan 5GB was $94
and if you take tab large = $15 more , so $94+ $15= $109/month

now with Tab Plus
the same plan is $88 + $21 = $109/month

so is same thing
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hvwozq wrote: They just changed its name from Tab Large to Tab Plus. Where were you when it was called Tab Large? :facepalm: @OP
They have made several important changes. It's not as simple as just renaming Tab Large to Tab Plus.

1. Only the iPhone 6 and 6+ are shown as requiring the new Tab Plus (you can select Tab Plus on a high end Android handset as an option instead of the standard Tab, but the iPhone 6 requires you to choose SIM only or Tab Plus)

2. The company appears to have restructured pricing with the intent of firmly splitting the monthly service fee from the handset subsidy. In the past, Koodo has often run promotions that gave additional discounts with wording like "save an additional $200 on Tab Medium." These were the deals that savvy RFDers took advantage of for significant discounts.

3. Only someone with the mathematical ability of a dead gerbil would choose Tab Plus to receive an additional $144 in handset financing at a cost of $28 more per month in service plan fees (an additional $672 over 2 years). It's not a credible option.

And let's be honest, the old Tab Large was a scam as well. They've just made it even more egregious.
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retrothing wrote: Here's the problem. Section 77 of the Competition Act prohibits Tied Selling, where a seller "as a condition of supplying a particular product, requires or induces a customer to buy a second product."

I intend to file a complaint with the Competition Bureau this coming week.
That definition is fitting. But tied selling is only illegal in very specific situations. Please read the rest of section 77.

Also, the Competition Bureau is very difficult to deal with, in my experience. I'd rather deal with the CRA.
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retrothing wrote: Koodo unveiled their new price structure today. In a nutshell, they offer two levels of "Tab" financing:

1. "Tab" allows you to finance a new handset at up to $15 per month (a total of $360 over 24 months). It applies to all phones except the iPhone 6 and 6 Plus.

2. "Tab Plus" allows you to finance a new handset at up to $21 per month ($504 over 24 months). It currently applies to only the iPhone 6 and 6+. However, it requires you to subscribe to a higher priced Tab Plus plan.
In my day, that sheeet wa called layaway.
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mr_raider wrote: In my day, that sheeet wa called layaway.
Heh. Except that when you placed something on layaway at the local Radio Shack, you didn't take possession until it was fully paid for.
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Keigotw wrote: actually price still same as tab large if you take tab plus
for example the heavy weight plan 5GB was $94
and if you take tab large = $15 more , so $94+ $15= $109/month

now with Tab Plus
the same plan is $88 + $21 = $109/month

so is same thing
You have it wrong. $88 plan is not Tab Plus, it is Heavyweight ($360 subsidy).
Tab Plus 4GB plan is $95 + $21 subsidy. So total cost is $116 but with 4GB data instead of 5GB.

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