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3-Year Contracts Removed In The UK, Canada Next Up?

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This is one of those Cinderella stories for Canada, that is if it comes true would be a dream.

News this week comes from Ofcom, the UK independent communications regulator, who has stated that wireless contracts must be limited to a maximum of 24 months.

With this in place, 3-year wireless phone contracts are effectively eliminated. Moreover, Ofcom states that consumers and businesses must be offered the option of a contract lasting no longer than 12 months.

The reason for the policy change is that shorter contracts may work to promote more competition and provide options to consumers to switch between company’s for better prices and services.

Recent Canadian wireless entrants such as WIND, Mobilicity and Public Mobile have all introduced no-contract offerings in an attempt to “free” Canadians. However the existing, larger carriers such as Rogers, Bell and Telus continue to use 3-year contracts.

If such a contract policy change was introduced in Canada, I’m sure Canadians would unanimously rejoice. The USA uses 2-year contracts and now the UK as well. Let’s go Canada, wake up.

[via IntoMobile]

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  • Well, let’s not kid ourselves. Limiting the ability of carriers to offer 3-year contracts would come with a price, and that would be higher initial upfront costs for handsets as telcos would have a shorter period in which to recoup the subsidized costs of the phones. No more “BlackBerry FREE! with 3-year contract!” It would be “BlackBerry $150 on 2-year contract.”

  • Alex

    exactly my thoughts

  • Miker_74

    I don’t think this will ever happen in Canada until the government dissolves the CRTC.  The BIG 3 have the CRTC in their back pocket…Come On Harper Government, stand by your base platform and get rid of the false ‘consumer aid’ that is the CRTC.  They are just a bunch of chumps looking out for the corporations, consumers would be less abused without the CRTC because we would actually have a voice.  As it is, by the time the CRTC approves and enforces 2 year max contracts we will all be dead anyway.

  • I just renewed my contract not to long ago (got myself an iPhone4) and they changed thier cancelation fee!

    When I had my Motorolla Razr and even my iPhone 3g, it was $200 to cancel. Now, it’s over $400!! to cancel.. WTH? Ah well, been with Rogers for like 6 years or so and I haven’t needed to cancel. lol

  • splicer100

    I can’t believe it takes them 3 years to “recoup the subsidized costs of the phones”.

  • Theused

    Doesnt anybody realize that wind, mobilicity and such also charge you $600 for a new phone. Yea you might sign a new 3 year contract to get that new iPhone for $159, wireless providers are only trying to make money and recover the cost of the hardware they subsidize for you.

    Make up your mind, get a cheap phone on a contract or pay full price and stay out of a contract.

  • Theused

    Who are you kidding?? When was the last time ANYBODY here accualky waited 3 years before getting a new upgrade?? I’ve worked for cell companies and it’s 1/100 that ppl actually complete there contracts before upgrading.

  • I would gladly pay for an unsubsidized phone, instead of signing a 3 year
    contract.

  • Tminusg

    Were screwed no matter how you look at it. The big 3 won’t let something like that happen and if they did they would just give the 2 year contract price that they have now what is it like 400$. Theres no way we will get the US price of 199$ on a 2 year contract.

  • Miker_74

    Now you have to wait 30 months before being eligible for new customer pricing, unless you want to pay the early upgrade fee.  So I am gonna have to agree with you with the 1/100 bit, until recently when they made it 30 months so now its more like 80/100 wait to upgrade.

  • Kevinmatthewroach

    While it is true they are recouping the hardware costs, they still reap in enormous profits. Millions of users paying average of 40+ dollars a month not including the fees already charged for phones ON contracts.

    Rogers offers me a free hardware upgrade every year. I doubt they would do that if they hadn’t managed to make money off of me yet.

    What’s a 500$ phone when I spend thousands with them every few years?

    They profit from you within a few months. Why should it take 3 years to pay off 450$ worth of hardware?

  • Steve

    Canadians get screwed everytime they use a cell regardless of the length of contract. When pricing in half that of states it will be something !!!!

  • Urby

    Uh, no.
    The argument is NOT contract vs no contract it’s 2-year and less vs 3-year. 
    3 year contracts are ridiculous, and they have made phone upgrades hell to people who want to change their phones at rates that other countries’ wireless carriers deem normal. They are indeed anti-consumer and defending them proves that you’re strictly in the brainwashed state of mind that the Big-3 intend you to be in.

  • Theused

    So you spend $1000 a year and expect them to give you $500 off a new phone every year.

    So they profit $500 each year from you, now you gotta take in to concideration that they need to pay for their employees,the network, and so forth. Between all that, how much do you think they “profit”??

  • Urby

    Maybe you’re reading somethings different than we are. 
    No one said every year. 2 year contract means every 1.5 or 2 years, and it’s sustainable everywhere else in the world but Canada, despite the fact that Canada has some of the highest cellphone costs in the world? Please…
    As for your proof:
    “In a nutshell: The wireless division added 45,000 net new postpaid subscribers, which included the addition of a record number of new smartphone customers. It also saw the  wireless data revenue growth stay extremely strong increasing at a rate of 30%.”
    So don’t you worry too much about the Big-3…
    source: http://thecellularguru.com/2011/04/26/rogers-reports-first-quarter-2011-earnings/

  • Sparky

    Excuse my language, but that’s completely bullshit.

    If the US’s carriers can ‘recoup the costs’ in two years, with even cheaper plans than we have here for the most part, then there’s no reason Canada’s carriers cannot.

    I do not for a moment accept the excuse that it’s more expensive for carriers in Canada. These companies post huge profits. It reminds me of the auto-insurance industry in Ontario. Last September the gov’t introduced new insurance regulations that effectively cut coverage in half. Insurance companies continue to charge the same price for half the coverage yet they continue their multi-year trend of record profits.

    I hope Canada follows the UK and brings some real change for us.

  • Miker_74

    Just because you seem to be in the dark ‘Theused’ when it comes to profits I thought I would do some research on your behalf.  This is from Rogers’ Annual Report for 2010 found in the Investor Relations portion of their website (www.rogers.ca).  On page 26 of the report you can find that Rogers’ operating profit for 2010 just from wireless business was $3.146 billion (that is billion, with a ‘B’).  So to answer your question which was most likely rhetorical, they profit about $3,146,000,000 annually (not that much, I know…and this is jsut Rogers).
    @03703c0c3f6bdd5e62db040aa3879d49:disqus 
    Side note: this is just operating profit, it does not include other revenues and expenses outside of operating, most notable taxes (maybe 40% of the 3.146 will got to the Government).  Rogers’ bottom line Net Income was $1.528 billion, I would say about 75% of that comes from their wireless business.

  • Jdyajxy

    If they priced their products at $400, that would be too unattractive. No one would sign contracts, therefore defeats the purpose of having contracts.

    Prices should stay the same with 2 year contracts. Some fido and Telus contracts are 2 years, the pricing is pretty much the same.

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