Slash the bundle: How to cut your Internet-phone bill

An Angus Reid study conducted last year found that almost half of all Canadians would give up watching television before they would ditch their Internet or telephone service. High-speed Internet, like telephone service, has become an essential service.

Unfortunately for Internet users, Canadian cable and telecommunications companies know this and have spent the last few years jacking up Internet pricing at rates well in excess of inflation.

The big Internet service providers have also cut back on the level of service they provide: A decade ago, Internet plans were unlimited and often included extra features such as music subscriptions and free photo storage. For example, a new Rogers Ultra-Lite customer in 2006 was given an unlimited bandwidth cap. In 2008, that was reduced to a cap of 60GB and in 2010 that cap was reduced to 2GB. The Ultra-Lite package has since been cancelled with new users being forced to buy a more expensive package.

Meanwhile, prices for POTS (plain old telephone service) have continued to increase significantly despite declining usage. In Alberta, Telus will charges $43 a month for home-phone service with three calling features and 300 minutes of North American long distance. In Ontario, Bell charges $58 for a similar plan with five calling features and 500 minutes of long distance.

For consumers in Western Canada, basic high speed Internet and telephone service now costs around $100 a month while households in Ontario pay closer to $130. Up your bandwidth allowance and add some additional calling features and you could be paying close to $200 a month for Internet and landline telephone service.

Not-so Humble Bundle

In an attempt to make these high prices more palatable to consumers, Canadian cable and telephone companies have introduced the "bundle." Bundling is the practice of giving a discount when buying two or more services. In Ontario, Rogers and Bell offer a discount of around 7 to 10 per cent when buyers purchase both Internet and telephone service while discounts in Western Canada are typically a little greater.

For example, Bell Ontario's 15/10 Internet service costs $53.95 per month when purchased as a standalone service or $49.95 a month when purchased with telephone service, a discount of 7.4 per cent. Bell's $54.92 per month Home Phone complete package also receives a bundling discount of $4 per month, a savings of 7.3 per cent.

While a 7 to 10 per cent discount off your current telephone and Internet bill is better than nothing, Canadian consumers looking to achieve greater savings should consider signing up with a third party Internet access provider or TPIA.

Simply speaking TPIAs are wholesalers who purchase Internet bandwidth and telephone service from the big cable and telephone companies at a significant discount and resell individual service to homeowners. In addition, some of the larger TPIAs such as Primus and TekSavvy have augmented their offerings by investing millions in their own hardware and call centres which allow them to deliver a level of service which is every bit as good or better than what you will receive from the big six Internet service providers (Bell, Shaw, Rogers, Telus, Videotron and Cogeco).

While every household has different needs, let's look at some of the savings a household such as mine, might be able to achieve by signing up for phone and Internet service with a TPIA.

Beat the Bundle

The following is a rough idea of my basic home phone and Internet service requirements. I would describe our households needs as moderate. We required more than what was typically offered in the base or "lite" packages offered by Bell but certainly did not need the most expensive Internet and phone packages.

Home Phone Needs

• Unlimited Local calling
• Two calling features: Call Display and Voice Mail
• 250 minutes of long distance calling in Canada

Internet

• Relatively fast Internet connection (10 to 20 Mbps downloads) to ensure that when everyone in the family of four was using the Internet, we would not have any bandwidth issues.
• With two YouTube-loving teenagers, a Netflix subscription and numerous computers, tablets and smartphones we wanted a relatively large bandwidth cap of 100 to 150 GB per month.

Here is what the primary Internet and phone providers in my area could deliver to meet my needs.

Rogers

• Extreme Internet Package which includes 28 Mbps download and a monthly usage allowance of 120GB for $70 per month including the cost of renting a modem.
• Favourites phone plan with unlimited local calling and two calling features $39 plus $5 for 500 North American Long Distance Minutes.
• Total cost for Internet and phone from Rogers would be $114 per month plus less a bundling discount of $11 for a total cost of $103.

Bell

• Fibe Internet 25/10 offered 25 Mbps download and a monthly usage allowance of 125 GB for $64 per month.
• Bell Home Phone Choice offered unlimited Local Calling plus five local calling features and 500 minutes of long distance in Canada and the U.S. for $58 per month ($45 for the plan plus $13 for long distance).
• The total cost after the $8 bundle discount would be $114.

So how would packages from Primus and Teksavvy, two TPIA providers in my area fare against the $103 bundle from Rogers or the $114 bundle from Bell?

Primus

• For telephone Primus offers a Classic Plan $40.80 per month plus $10 per month for 1000 Canada/U.S. minutes.
• This package was cheaper than Bell and similar to Rogers but offered many more calling features and much more in long distance.
• In addition, they offer a triple value package which includes unlimited local home phone with 18 calling features, unlimited 7Mbps High Speed Internet and unlimited worldwide calling (Canada, U.S. and 60 destinations) for $90 a month.

Teksavvy

• This company had far and away the greatest variety of offerings. For just $40 a month, Teksavvy offers cable Internet service with 18 Mbps download speeds and a whopping 300 GB bandwidth cap (modem must be purchased separately). A similar DSL offering is also available for $46 per month.
• On the phone side, Teksavvy offers both POTS (plain Old Telephone service) like Bell and VoIP (Voice Over Internet Protocol) service similar to Vonage or Rogers.
• Teksavvy’s POTS service with our two calling features and required Long distance minutes came to $38 per month.

In summary, a combination of Teksavvy cable Internet and Teksavvy POTS telephone service which would be essentially identical to the service provided by Rogers Cable for Internet and Bell for phone service, would cost $78 per month, a substantial saving over the $103 bundle from Rogers or the $114 bundle from Bell.

Looking to save money on your Internet and phone service, then beat the bundle and look for third party alternatives.