Responds to deluge of consumer protests by slashing fees - but move could be too late
Rogers Wireless Communications Inc. is learning the hard way that the iPhone isn't your average cellphone and that Apple fans aren't your typical cellphone customers.
After receiving a deluge of calls and e-mails, and watching as more than 50,000 potential customers signed an online petition protesting against the company's iPhone pricing policies, Rogers bowed to mounting pressure and slashed its data fees just two days before Apple Inc.'s coveted touch-screen cellphone arrives in Canada.
While poring over e-mails and transcripts from recorded customer calls, Rogers executives quickly learned that customers don't see the iPhone so much as a traditional cellphone as they do a pocket-sized Internet portal, one that is sought after by tech-savvy users.
In order to recover some of the momentum it had hoped to carry to the launch of the summer's hottest electronic device, Rogers came up with a new plan that more than triples the amount of data a customer can send and receive on an iPhone, making it cheaper to surf the Web and send text and e-mail messages.
The Globe and Mail
Analysts applauded Rogers' efforts, but they could prove to be too little too late for consumers who may have already written off the iPhone because of the controversy.
"Our customers told us they wanted to use this phone in a way that they have not used other phones," said John Boynton, senior vice-president of Rogers Wireless and its chief marketing officer.
"They said their historical usage patterns were not a predictor of what they wanted to do with the iPhone going forward. They said they are fine with the price and with not having unlimited data, but they wanted more data."
It's not the first time Rogers has had to contend with customer discontent. Years ago, Rogers' cable division provoked a consumer revolt when it introduced negative-option billing.
That process charged subscribers for new specialty services unless they opted out.
Under the new plan, customers who purchase an iPhone and sign up for a three-year contract any time before the end of August will be eligible for a $30-a-month data plan giving them access to six gigabytes of data. Rogers previously had charged $100 for a 6-GB plan. The special rate is available not just to iPhone customers, but to any Rogers customer with a 3G smart phone, such as the BlackBerry Bold, which is expected to be released later this summer.
However, Rogers - which along with its subsidiary Fido is the sole Canadian carrier for the iPhone - stopped short of offering an unlimited data plan the way carriers in other countries, such as AT&T Inc. in the United States, have done.
Mr. Boynton said that Rogers' strategy was not unique and that more than 50 per cent of iPhone carriers around the world have opted not to offer an unlimited data plan.
"We're not in favour of unlimited plans," he said. "We believe people should pay for what they use. We think that is fair and we don't think that people who don't use a lot should pay the same price as people who use a lot."
Unlike other carriers who plan to sell the iPhone without a contract, Rogers will not allow its customers to purchase an iPhone - which costs $199 for an 8-GB version and $299 for a 16-GB model - without signing a three-year contract.
But Rogers' new plan is comparable to those being offered by many European carriers and represents a huge step forward for the Canadian cellular marketplace, said Amit Kaminer, an analyst with the telecom consulting firm SeaBoard Group.
"It shows that even old 'Fidos' can learn new tricks," he said. "Rogers has listened to the market. With this price plan ... you can actually use the iPhone the way it was meant to be used."
According to Rogers, iPhone users with 6 GB will be able to visit 35,952 Web pages, or send and receive 157,286 e-mails or watch 6,292 minutes of YouTube videos in a month.
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An iPhone primer
WHAT IS 3G?
3G is a term used to describe the third generation of mobile phones and wireless networks. The technology allows for faster data-transfer rates, meaning Web pages, e-mail attachments and video can be downloaded at greater speeds than before.
ALL MY KIDS DO IS TEXT. CAN THE IPHONE DO THAT AND HOW MUCH WILL IT COST?
Yes, the iPhone 3G can send and receive text messages, although the function has been panned by critics. Rogers offers several domestic text-messaging plans: $3 a month for 30 sent messages (for now, receiving them is still free), $6 for 125 sent messages, and $10 for 2,500 messages.
WOULD I MISS MY BLACKBERRY IF I SWITCHED?
That depends. The iPhone 3G promises to work with corporate exchange servers to send messages to your device the moment they land in your work e-mail inbox, just like a BlackBerry. Although BlackBerrys are, according to the experts, the best e-mailing gadgets, the iPhone is designed for consumers. Its large screen makes it a better music and video player, and until BlackBerry releases its consumer-oriented phones, you're comparing apples and blackberries.
Consumer revolts may be accelerating through the Internet, but they've been around since the beginning of prices. Some examples:
Coca-Cola Co. brought back the old Coke recipe in 1985 after consumers rejected the sweeter New Coke.
The loonie retreat
Last year, some retailers reduced prices of some books and cars amid complaints that the loonie's rise wasn't being reflected.
In 2004, McDonald's eliminated the supersize option amid growing public pressure to give consumers healthier food.
In 1984, Nestlé dropped a controversial marketing campaign that promoted infant formula over breast-feeding after a massive worldwide boycott.