By Ahmad Hathout
The CRTC said Thursday it is eliminating fees that it believes are keeping customers stuck in internet and wireless service plans.
The regulator said it is targeting fees on activation, changing and canceling of those plans – with some exceptions. The fees will continue to apply where a subsidized device is provided by the wireless service provider – which represents a real cost to the business – and in a situation where the internet service provider is doing an installation at the customer’s home.
“If you were to buy or purchase a cellphone through a service provider, we already have a framework to reduce the early cancellation fee for that particular device until the end of the service contract is zero,” a CRTC official said during a technical briefing with media on Thursday. “And from the commission’s perspective, it’s reasonable that the service provider should be allowed to recoup the cost of a device.”
“Service providers may offer optional services (e.g., Wi-Fi configuration at a customer’s premises) or products (e.g., additional equipment that is not required for the delivery of the telecommunications service to the customer’s premises) that consumers may expressly agree to purchase,” the CRTC reasoned as to why it is exempting those fees. “The Commission considers that fees related to optional services and products do not fall under the category of ‘activation or modification fees’ related to the telecommunications service itself.”
The regulator said it recognizes that prohibiting fees related to the installation of services at a customer’s home “could have a negative effect on future broadband Internet rollout because those installation services represent actual, necessary, and sometimes significant costs.”
Before the Telecommunications Act was updated in 2024 to remove these excess fees, service providers were allowed, under the Wireless Code, to charge early cancellation fees not exceeding the lesser of $50 or 10 per cent of the remaining monthly charges, and activation fees ranged from $30 to $80, according to a CRTC official.
The wireless rules will apply to individual and small business customers of all wireless service providers, while the internet rules will apply to individual customers of the largest national and regional internet service providers, which are those that are under the purview of the Internet Code. The regulator noted that smaller internet service providers, with more limited resources, were concerned about the administrative burden that came with updating their billing and customer-management systems.
Otherwise, the regulator said the service providers noted during the proceeding that they would be able to manually waive the fees at the time of purchase, so it is putting a deadline of June 12 to comply with the rules, after which they will be expected to update their systems to remove said fees.
The Commission for Complaints for Telecom-television Services (CCTS) will administer the new rules and will be required to report on complaints received about activation and modification fees in its annual and mid-year reports, as it already does for other complaints it receives.
“We are taking action to give Canadians more control over their Internet and cellphone services. Today’s decision removes extra fees to activate, change or cancel a plan,” Vicky Eatrides, chair of the CRTC, said in a press release Thursday. “This means that consumers can switch to a better deal without having to pay extra just to get the service that works best for them.”
But the Canadian Telecommunications Association, which includes Rogers and Bell in its membership, said this policy could have negative consequences for consumers.
“Today’s CRTC decision is an unwarranted and self-defeating regulatory intervention in a market that’s already highly competitive and delivering historic price declines,” Eric Smith, senior vice president of the Canadian Telecommunications Association, said in a statement. “These one-time fees help recover real costs that won’t disappear as a result of this decision — it will only shift how those costs are recovered in a market where switching providers is already easy and at record levels.”
Rogers deferred to the CTA when asked for comment.
In response to a question about how the CRTC will respond to the possibility of providers passing the cost to consumers, the CRTC official said during a technical briefing that the regulator will have an idea of what the industry’s reaction will be.
“At at the end of the day, the commission is implementing amendments to the [Telecommunications Act] … This amendment will allow Canadians to take advantage of competitive offers in a competitive market,” the spokesperson said. “I can’t control or predict how these service providers are going to react or adjust their practices because of this, but the commission has created this competitive market and does not, in general, regulate the retail fees for telecommunications services.”
A market report released by the CRTC last month showed that, over a period of five years, the rate of switching was higher for internet and wireless service plans. “Public perception of affordability in mobile services generally improved, with Canadians showing greater confidence in their ability to pay for such services, or else switch to more affordable (or otherwise preferable) options,” the report said about mobile wireless services.
Thursday’s decision is part of the commission’s broader Consumer Protections Action Plan, which includes a roadmap to address bill shock, improve the consumer codes by enhancing customer notification, enhance self-service and protect against service outage and disruption.
The CRTC has said it plans to combine the various codes – including the Wireless Code, the Internet Code, the Television Service Provider Code, and the Deposit and Disconnection Code – into one. It said an announcement related to this proceeding will be made this spring.
Bell, Telus, and consumer interest groups Public Interest Advocacy Centre and the Forum for Research and Policy in Communications did not respond to a request for comment. Cogeco and Eastlink said they do not have a comment at this time.
