OTTAWA-GATINEAU – The CRTC’s new Wireless Code issued today allows consumers to cancel their mobile wireless contracts after two years even if they have signed on for a longer term, and also places caps on data overage and roaming charges.
The code, which will apply to new wireless contracts beginning December 2, 2013, requires wireless service providers to cap data overage charges at $50 and national and international roaming charges at $100 within a single monthly billing cycle. Additional charges cannot be added without a consumer’s consent.
The Commission says capping these charges is the best way to address the problem of “bill shock” that consumers face when their mobile phone bill ends up being significantly higher than their normal monthly bill.
Consumers will also be able to cancel their contracts at any time by notifying their service provider, with the cancellation taking effect that same day. Customers who cancel a contract before the end of the commitment period cannot be charged any penalty other than the early cancellation fee.
For wireless contracts that include a subsidized smartphone, the code states that the early cancellation fee must not exceed the value of the device subsidy, and must be reduced by an equal amount each month for a maximum of 24 months until that amount falls to $0.
Many carriers already offer customers some of the stipulations set out in the new code, such as caps on international data roaming and allow for phone unlocking.
“We have been making a genuine effort over the past number of years to listen to our customers and respond with significant improvements. As a result, we already do a lot of what is in the new code,” said Ted Woodhead, Telus senior vice-president of federal government and regulatory affairs, in a statement. “Telus believes that many aspects of this new code will give Canadians a strong and friendly set of protections.”
The code does not impose an outright ban on three-year contracts, which incumbent companies such as Bell defended before the Commission at its hearing earlier this year as a pro-consumer option.
Instead, the CRTC has taken what Simon Lockie, chief regulatory officer of Wind Mobile, calls a “sophisticated and subtle” approach to the situation by not placing any restrictions on the ways in which both incumbents and new entrants can attract or motivate customers to join them.
“You don’t want to ban those kinds of things outright because they’re pro consumer. What you want to do is suggest that you can’t use that as an artificial retention tool beyond two years,” Lockie told Cartt.ca. “These three-year contracts were used by the incumbents as an anti-competitive retention tool and we think that capping cancellation fees at 24 months is a major positive for competition.”
Moving to two-year contracts may sound like good news for consumers, but carriers like Rogers and the CWTA maintain that the reality will instead lead to lower device subsidies and consumers paying higher upfront purchase prices for their smartphones.
“That’s the one thing the CRTC did that I’m not sure will be necessarily welcomed by customers,” said Rogers Ken Engelhart, Rogers’ vice-president of regulatory affairs, in an interview. “Time will tell whether that’s right or not.”
Engelhart said he is also concerned that the December 2 starting date does not provide enough time for carriers to develop and implement systems to monitor customers’ data usage and other requirements to comply with the new code. “That’s a pretty daunting IT challenge to get done in six months.”
Other provisions introduced in the code include allowing consumers to have their cellphones unlocked after 90 days, or immediately if they paid for the device in full. Wireless service providers will also be required to provide customers with a clearly stated, easy-to-understand written contract that outlines prices (including taxes), services provided, commitment period, terms of subsidized devices and other details.
The CRTC’s decision to include provisions to cap fees and limit contracts to two years is good news for consumers and has been welcomed by advocacy groups such as the Public Interest Advocacy Centre (PIAC).
“The Wireless Code has rules to help wireless customers where it counts – the bottom line,” said PIAC executive director and general counsel John Lawford. “It also makes it easier to switch companies because those costs are limited and are clear,” he added.
Internet advocacy group OpenMedia.ca agree and say the new code is a positive sign that the CRTC is beginning to consumer concerns more seriously.
The organization says more work remains, however, in other areas, such as the new critical information summary, which is not currently mandated to be a comparison tool, and will only need to be provided to customers after completion of a sale. In addition, while new caps have been introduced for there are caps for data, the code does not place any caps on additional voice or texting charges.
Ontario not-for-profit DiversityCanada Foundation contends that the Wireless Code fails to address the needs of some prepaid customers.
Under the code, service providers of prepaid cards are required to keep customers accounts open for seven calendar days after an activated card has expired to allow the customer more time to “top up” their account and retain their prepaid balance.
Celia Sankar, executive director of the DiversityCanada, says if customers miss the top-up expiration date, they risk having their service cut off.
“Balance expiry amounts to disconnection for prepaid consumers, because they can only use their phones if there are funds in their accounts,” Sankar said in a release. "When you consider that it is the less affluent consumers who most heavily use prepaid wireless services, the inequity baked into the wireless code is inexplicable.”
The commission has set up an information page for consumers about the Wireless Code on its website, and includes a checklist outlining consumers’ rights.
The CRTC says it plans to conduct a formal review of the Wireless Code within three years of its implementation.
