Telus’ flanker brand Koodo has made some changes to their Tab system, which will make it more expensive to terminate your contract early.
MobileSirop received advice regarding the change, and Koodo confirmed that he implemented the change yesterday.
A spokesperson for Koodo made the following statement regarding the changes to MobileSirop:
Over the past two years, Koodo has noticed an increase in the number of customers who activate new devices on our network when a phone credit is available, then cancel their service within days for a quick profit. As a result, we are adjusting our service contracts to require customers to repay airtime when they choose to leave their 24-month contract early. If a customer chooses to cancel or renew at any time before the end of the 24-month contract, they will have to repay the phone credit due for the remainder of the months. While the majority of customers are on the terms of the agreement, we are implementing these changes to accommodate a small subset of customers playing with the system.
Essentially, if a subscriber terminates a contract before a Tab balance is refunded, they will have to pay the remaining Tab balance plus “phone credit.”
How does credit work
For strangers, Koodo’s Tab system allows customers to lower the price of their phone when they sign up with the carrier. There are different tab levels including Tab Small, Medium, Large, Extra Large, and Extra Extra Large.
When a customer gets a phone with Koodo, they have the option to add one of the Tab levels and receive a corresponding discount. For example, getting the Samsung Galaxy Note 10+ on Koodo’s super-large tablet means that you would pay $ 740 up front plus $ 720 on the tablet (which equates to $ 30 per month for 24 months). Customers also get a credit of $ 265, bringing the phone’s total to $ 1,725.
On an Extra Extra Large Tab, customers would pay $ 500 up front plus $ 960 on the Tab (about $ 40 per month for 24 months). Coupled with the activation credit, this also totals up to $ 1,725.
However, Koodo’s change to the Tab makes this case considerably worse. Now, when a customer leaves before their bill is paid, they must also repay the credit. In the case of the Note 10+, that’s $ 265 on top of the remaining tab balance. Before the change, customers did not have to repay this credit.
To make the change worse, if you bought the same Note 10+ offered by Koodo directly through Samsung, you would pay around $ 1,459.99 before tax – the same as the cost of the Tab if you didn’t include credit. In other words, the $ 265 credit isn’t really a credit, as customers aren’t really saving that money over buying the Note 10+ outright. If the customer leaves early, they have to reimburse Koodo for it even if they don’t benefit at all.
It should be noted that if you were to purchase the Note 10+ directly from Koodo, you would pay $ 1,725 before taxes.
Change hurts customers who play by the rules
However, this doesn’t just affect the Note 10+ – other phones have credits as well. Currently the iPhone XR has a credit of $ 480, the S10 + has a credit of $ 535, and many other devices offer credits as well.
The change makes Koodo’s Tab a less attractive offering if you’re looking to get a newer device. One of the best things about Koodo’s Tab was that users could upgrade their phones early without incurring high costs towards the end of the agreement period. The new system significantly increases this cost.
However, some users have “played with the system” by activating a phone with Koodo and then canceling the contract almost immediately. This strategy has worked well with older devices, such as the iPhone 8. Koodo offers the iPhone 8 for $ 0 on an average tablet, which costs $ 360 over 24 months. In the case of this phone, there is a credit of $ 485, bringing the total to $ 845 for the phone. Someone who activated and then canceled would essentially pay $ 360 for the iPhone 8 instead of $ 845. This is no longer possible with the new system. For reference, Apple is selling the iPhone 8 for $ 819.
Ultimately, Koodo’s switch to the Tab makes sense in these terms. Unfortunately, the change is also hurting customers who play by the rules, as well as customers who want to get the latest devices.