Bulk Contracts for Electricity, Telephone, Cable and/or Internet

November 2015

Paying more in condo fees can be saving you money.

It depends on your priorities.

Condo corporations can benefit from bulk or volume purchases of services. This can result in higher monthly fees and a financial saving for condo residents.

The financial saving results from having a single payer, and primary contact, for services rather than many smaller customers.

In an effort to keep condo fees down, some condominium corporations prefer to have condo owners pay for certain services. For new condo buildings, developers may prefer lower condo fees as a marketing strategy for selling new properties and this practice can be carried over to the condo corporation.

Service providers, by providing discounted services in return for volume, are able to generate higher revenues by having more subscribers while keeping costs down by dealing with only one account.

Telephone, Cable and Internet Services

Within a condo building, some are likely to prefer that telephone and cable services are excluded from monthly condo fees. Others view their inclusion as added value.

Bell Canada and Rogers are battling to provide these services to condo buildings. Bell Canada has filed multiple complaints and estimate they are unable to serve about 20% of those in new condo buildings. Serving these customers requires that Bell Canada obtain access to a building during construction and they are being denied this access.

Rogers dominates in providing television service to condo buildings. Some developers are providing Rogers with access to their buildings during the construction period while declining to provide the same access to Bell Canada.

In an April 2015 ruling the CRTC ruled that Bell must be granted access to a new condo building at Bloor and Yonge.

Individually, telephone (landline) and cable services are each about $45 per month. Having the condo corporation subscribe to cable and telephone services for an entire building can result in per suite savings of more than 50% or about $50 per month.

While this bulk rate saving is significant for those who desire cable service and landline telephones, there is a large and growing segment of the population who desire neither cable services or landline telephones.

For many the only telephone required is a cell phone thereby making the purchase of landline telephone services through the condo corporation unnecessary. Likewise, the popularity of Netflix and the Internet as a replacement for cable may make the purchase of cable services through the condo corporation less appealing.

Today’s reality is that many condo owners pay for cable and landline telephone services that are not being used. Cell phones, satellite dishes and Internet services such as Netflix are becoming increasingly popular.

Cable networks succeed by bundling popular channels along with hundreds of barely-watched channels. Internet services allow individuals to purchase what they want and avoid paying for services or programming that does not interest them. Yet paying for services a-la-carte can be expensive and confusing.

In the US, over 100 million US customers currently purchase multichannel subscription services from cable or satellite systems. Newer Internet services are directed to an estimated 5 million US households who have broadband Internet access and choose not to subscribe to cable or satellite TV.

The US experience shows that few are choosing to cancel their cable subscriptions. Yet many younger people are choosing not to sign up for cable services. Many of these people bounce around using various services for accessing programming at a premium cost.

In a condo building with a bulk agreement with Bell or Rogers, using alternate services means continuing to pay for telephone or cable services that are not used.

Access to a single product integrating cable, Internet and landline telephone service at a competitive price point would allow condo corporations to better service all residents in a condo building. This would eliminate most of the confusion surrounding current telephone, cable and Internet bills. This is what condo residents seem to desire. Yet current pricing, which prices each service individually and can exceed $100 per month, makes this option too expensive and unjustifiable for most condo corporations. This approach would also allow a condo corporation to negotiate a single contract with a service provider that will be appreciated by more building residents.

Neither Rogers nor Bell responded to inquires about their services.

Utilities (Electricity)

Electricity is the most heavily utilized utility and a significant expense in a condo corporation budget.

When condo residents do not pay directly for the electricity they use, it is often treated as being free. Lights are left on when not needed, heat and air conditioning are run with windows open and conservation measures are not considered. Some condo residents end up subsidizing electricity usage for other condo residents.

This situation occurs more frequently in older buildings that were not required to include individual suite meters for measuring electricity use.

When each condo owner pays for the electricity used in their suite, use can decrease by 20% to 30%.

The convenience of not seeing a monthly electricity bill is perceived by some to be a benefit although available data suggests that moving to individual suite metering can provide financial savings.