Darren Entwistle, President and CEO of TELUS, in Vancouver on May 11. Telus says its SIM charge 'is not an administrative fee.'Rich Lam/The Canadian Press
The CRTC is warning Telus Corp. T-T that a new fee the company plans to charge customers could breach the regulator’s ban on activation charges set to take effect later this week.
The commission issued a letter to the carrier on Tuesday saying it hoped the matter could be resolved before the rule change kicks in Friday.
It comes a day after Telus distributed a memo to employees saying it will begin charging customers up to $25 when they switch to a new SIM card. The company insists the fee doesn’t violate the CRTC’s new rules.
In the document, Telus said it would introduce a $15 SIM purchase fee for new activations.
The one-time charge, which would take effect Thursday, cannot be waived, the memo said. Customers would see it on their first bill, both for physical or eSIM purchases.
The memo instructed staff not to encourage customers to call in to have SIM cards refunded or credited “for any circumstance.” It also said an additional $10 shipping charge would apply in some cases.
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It’s the latest test of the CRTC’s new policy that prevents telecommunications companies from charging customers when they cancel, change or activate plans.
That policy was announced by the CRTC in March in a move meant to make it easier for consumers to switch internet and cellphone plans. The commission said it hoped to empower Canadians to take advantage of better offers without having to worry about unexpected costs.
Activation fees have ranged from roughly $30 to $80, acting as a barrier to Canadians being able to take advantage of competitive offers, according to the regulator.
The new rules apply to individual and small business customers of all mobile providers, along with individual home internet customers of mainly large providers.
In his letter to Telus, the commission’s vice-president of consumer, analytics and strategy Scott Hutton said a SIM card or eSIM is required for the delivery of wireless service that a customer purchases, and therefore doesn’t meet the CRTC’s criteria for an exemption to the new policy.
He said such exemptions are in place for fees related to optional services and products that consumers agree to purchase, such as add-on equipment that is not required to deliver the service.
“A fee associated with providing a SIM card or eSIM may be considered to be an activation fee that is prohibited,” Hutton said.
“It is my hope that this situation can be resolved at this stage and will not require more formal regulatory action on the part of the commission once the prohibition comes into effect.”
But Telus said its SIM charge is different than the type of fee the regulator is trying to outlaw.
“A SIM card or an eSIM has always been a physical or digital product for purchase, rather than an administrative fee,” said Telus spokesperson Martin Nguyen in an e-mailed statement.
“The sale of a SIM product is not new. Customers have always been able to purchase a SIM card or eSIM on its own or as part of a plan, and our approach remains unchanged.”
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The memo said the charge is meant to cover “real costs” associated with providing a new SIM product to a customer, such as those related to manufacturing or licensing, procurement, warehousing, packaging, shipping and distribution, retail handling, network provisioning and customer support, among others.
In the document’s FAQ, Telus added that it has eliminated an $80 connection fee it had previously been charging customers, which bundled manufacturing and provisioning costs.
“Now that it’s been eliminated, we’re charging for the actual SIM-related costs separately – which is $15,” the memo said.
“A new SIM card or eSIM is required for your phone to connect and enjoy the benefits of Canada’s largest and most reliable 5G network.”
It said eSIM activations also involve “real backend work even though there’s no physical card.”
The memo said the new fee would apply to purchases across all channels except web, however the company clarified it does charge Telus and Koodo customers for SIM or eSIM purchases on all online bring-your-own device orders, and when they are purchased as a standalone product online.
Telus is not the only telecom provider at odds with the CRTC over what constitutes a prohibited fee under its new rules.
Last month, the CRTC warned Bell Canada BCE-T that a new $40 “device handling” fee could be in violation of the upcoming rule change.
A letter from the regulator said that the charge, which applies when customers choose to purchase a device along with their wireless service plan, would also “not appear” to qualify as an exemption to the policy.
However, Bell has said its fee, which applies to purchases made in stores, online or by phone, is meant to cover fulfilment costs associated with a device order. Despite the CRTC’s warning, the charge hasn’t been eliminated.
“The CRTC’s new rules prohibit fees for activating or changing a service but do not apply to optional purchases a customer chooses to make, such as buying a device,” said Bell spokesman David Marcille in a statement on Tuesday.
“This one-time charge helps cover our costs of providing that device. Customers who do not buy a device from Bell are never charged this fee.”
The CRTC has unveiled a handful of consumer protections this year, which also include new rules that give consumers self-serve options to adjust their plans and mandate service providers to notify customers when a promotion is about to expire.
But some of the major providers appear to be irked by certain new measures. Speaking at the Canadian Telecom Summit in Toronto last month, the head of the Canadian Telecommunications Association, which does not represent Telus, took aim at the regulator’s direction.
President and CEO Robert Ghiz said prohibiting fees meant to cover the cost of delivering services is an example of regulation that moves “beyond setting the rules of the market and further into managing its day-to-day operations.”
“Providers are being asked to take on new responsibilities that extend beyond their traditional role, frequently without a clear mechanism for recovering the associated costs,” he said.
“Some of these decisions attempted to solve problems that really did not exist.”