GATINEAU – While saying it acknowledges some Canadian consumers might want to pay for a new smartphone over three years instead of two, making their monthly payments lower, the CRTC told Canadian wireless carriers this afternoon to stop offering 36-month payment plans.
The CRTC today said that the new 36-month device financing plans first launched by Rogers (since followed in a more limited way by Telus and Bell) “may not be compliant with the Wireless Code since customers may have to pay fees to switch service providers, even after 24 months,” reads the CRTC press release today.
“The Wireless Code was introduced to protect consumers and prohibits service providers from charging early cancellation fees beyond 24 months.”
The carriers require customers to pay off the balance owing for the device should they decide to switch service providers before their payment plan ends. Since the device is offered at $0 down and no interest is charged and bills have been altered to show what customers are paying for their device and for the service, carriers say this isn’t a cancellation fee.
However, until the Commission completes a full review of this practice, devices can’t be sold on 36-month plans anymore. Those who have already signed up for a longer plan before today will be allowed to continue under those terms.
The CRTC said it will soon publish a Notice of Consultation to examine this issue in greater detail but we’re not sure if this will be merged into the already underway review of the wireless industry, or a smaller process on its own. The Commission had asked for details of the 36-month plans under the auspices of the larger review, however.
“Canadian customers have the right to make informed choices based on clarity. We want customers to have options for financing their device, if they so choose, but we also need to make sure these new 36 month device financing plans are fair for consumers. The Wireless Code protects consumers and gives them the ability to take advantage of competitive offers at least every two years. The CRTC is concerned by these financing plans as they appear to make it difficult for a customer to switch service providers even after 24 months,” reads the quote in the CRTC press release attributed to CRTC chair Ian Scott.
It’s worth noting here one of the “quick facts” included in the Commission release says the Regulator can, when it comes to a Wireless Code violation, “impose administrative monetary penalties to wireless service providers for every contravention up to a maximum of $10,000,000, and $15,000,000 for every subsequent contravention.”
We’ll have more to come on this.
