The Canadian Radio-television and Telecommunications Commission unveiled
its much-anticipated draft wireless code of conduct lasts week, offering
a promise of new, enforceable protections for consumers. The draft
code, which is open for public comment until mid-February, generated a
mixed reaction. Some consumer groups welcomed it as a step in the right direction. But
other commentators were left underwhelmed, disappointed that the code
does little to address consumer frustrations with issues such as
long-term wireless contracts and exorbitant roaming fees.
My weekly technology law column (Toronto Star version, homepage version) notes the draft code features some welcome changes to the current wireless
landscape, including the possibility of consumer cancellation of
contracts when providers change key terms, clear limits on contract
termination penalties, and monthly bill caps when additional fees are
incurred (thereby reducing the likelihood of bill shock after a trip
abroad). Perhaps most importantly, the code is enforceable, backed by
the possibility of monetary compensation of up to $5,000.
Yet the draft code ultimately disappoints, since its underlying
philosophy is that consumer frustrations with the Canadian wireless
market can be best addressed by more information.
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Appeared in the Toronto Star on February 2, 2013 as CRTC Should Be Bolder With Wireless Code
The Canadian Radio-television and Telecommunications Commission unveiled
its much-anticipated draft wireless code of conduct this week, offering
a promise of new, enforceable protections for consumers. The draft
code, which is open for public comment until mid-February, generated a
mixed reaction.
Some consumer groups welcomed it as a step in the right direction. But
other commentators were left underwhelmed, disappointed that the code
does little to address consumer frustrations with issues such as
long-term wireless contracts and exorbitant roaming fees.
The draft code features some welcome changes to the current wireless
landscape, including the possibility of consumer cancellation of
contracts when providers change key terms, clear limits on contract
termination penalties, and monthly bill caps when additional fees are
incurred (thereby reducing the likelihood of bill shock after a trip
abroad). Perhaps most importantly, the code is enforceable, backed by
the possibility of monetary compensation of up to $5,000.
Yet the draft code ultimately disappoints, since its underlying
philosophy is that consumer frustrations with the Canadian wireless
market can be best addressed by more information.
The "more information" approach is a recurring theme throughout the code:
- Angry with expensive roaming charges? The code mandates that
carriers provide greater disclosure about fees and provide warnings if
your bill starts climbing.
- Frustrated by the use of three-year contracts as the norm in
Canada (which is longer than virtually any other developed country)?
The code requires carriers to disclose all the costs associated with
your plan.
- Surprised by a host of extra fees and charges, often disguised as
"regulatory" charges? The code stipulates that carriers use a plain
language, fully inclusive disclosure of the costs associated with each
plan.
- Exasperated by cellphones locked to a specific carrier, even
though the carriers maintain pricy termination policies that ensure that
the "subsidy" on the phone is repaid? The code may require the means to
unlock, but at a rate disclosed in the contract.
In other words, once the code is operational (which the CRTC says may be
immediate or phased in), consumers will have far more information about
their wireless services provided in more accessible manner, but the
underlying concerns with a market that lags behind many more competitive
countries will remain largely unchanged.
The fundamental problem with the Canadian wireless market isn’t solely a
lack of consumer information but rather the dearth of strong
competitors positioned to shake up the big three incumbent providers
(Rogers, Bell, and Telus). Solving that issue will require more than a
new code of conduct.
The CRTC could be bolder with its code - mandatory unlocking of phones
at no cost (carriers are protected by termination fees), limits on
roaming fees (as is found in Europe), and two-year maximums on contract
length by separating phone subsidies from contractual term are all
doable - but fully addressing consumer wireless frustration will require
federal and provincial governments to act as well.
At the federal level, the most important step for Industry Minister
Christian Paradis would involve fostering a more competitive
environment. After several years with new entrants struggling to make a
serious dent in the market shares of the incumbents, it is increasingly
clear that a series of undercapitalized small players will only yield
modest change.
Instead, the government should remove all foreign investment
restrictions on telecommunications providers, opening the entire sector
to new capital and the possible entrance of a major, world-class
competitor. Moreover, the government must move forward with the
inexplicably stalled spectrum auction process, which should generate
billions in revenues and holds the promise of injecting some additional
competition into the market.
The provincial governments also have a role to play since it was
provincial initiatives on wireless consumer protection that sparked the
carriers to ask the CRTC to act. If the CRTC code fails to fully address
consumer concerns, the provincial governments could step in with their
own legally binding rules, thereby creating a patchwork framework with
long overdue consumer protections.
Michael Geist holds the Canada Research Chair in Internet and
E-commerce Law at the University of Ottawa, Faculty of Law. He can
reached at mgeist@uottawa.ca or online at www.michaelgeist.ca.
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