CRTC Should Be Bolder With Wireless Code

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.

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. Exasperated by cellphones locked to a specific carrier, even though the carriers maintain pricy termination policies that ensure that the

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  1. The smaller providers are not going to be able to make a dent until they can get coverage outside of major urban areas. While that may work for some people, there are others who don’t want to incur roaming charges because they happen to leave their city for a bit. It’s going to take a lot of money (hense the removal of foreign investment limits) to get that to happen.

  2. Unlocking is not so simple

    Your comments are generally spot-on as usual, but I think you’ve overlooked one aspect of unlocking. The carriers would potentially lose a large chunk of overseas roaming revenue if the phones were unlockable for free, since most users would simply swap in a foreign SIM while travelling (there are even small MVNOs geared toward just these kinds of roaming customers). If I were Rogers, I wouldn’t be afraid of unlocking moving my customers elsewhere; I’d be afraid of losing my exorbitantly-priced overseas roaming revenue.

    Tom N

  3. Jean-Francois Mezei says:

    I shall be bold next thursday !

    (attempt #2 because your captcha are ureadable)

  4. Angry at excuses. says:

    Which is why unlocking should be simple
    Tom, any reasonably smart consumer can figure out what to do to avoid exorbitantly-priced overseas roaming charges. For example, they have the option of buying a simple (i.e. cheap) phone once they arrive from any of those small MVNOs you mention, or even locally before they leave. Which is exactly why unlocking should be simple. Consumers shouldn’t be forced to jump through hoops like this.

  5. Agreed!

    Sorry, maybe I wasn’t clear: absolutely, I believe unlocking should be a simple, inexpensive (or better yet, free) process. But from the carrier’s perspective, there is a tangible loss of overseas revenue associated with it, which is not really acknowledged if you only consider unlocking as a domestic (ie non-roaming) issue. Business clients generally won’t buy a new phone; they will often just keep using what they’ve got. But if they could use their own phone (with contacts and everything intact) and pay much less, I suspect many business folks would do that. I’m quite happy to tell Rogers to suck it up and deal with it, but it’s telling a half-truth to say that there would be no revenue impact for the Canadian carriers with unlocking (which is what Dr. Geist seems to be implying).


  6. unlocking should be free
    there should be no charge for me to use a device that i have paid for on the carrier of my choice. ever. i dont care about their revenue once i am not their customer.

  7. Riley August says:

    Not Enough
    This isn’t going to be enough to get Robots Everywhere to reopen a Canadian office anytime soon. Unless you start doing something about the carrier access surcharges that make importing a phone from the US or China stop costing 1/3 of the price of buying one in Canada, we have no interest developing mobile software in your country. Industrial applications just require too much hardware for testing and the cost increase of operating in Canada over the US is approximately 200%.

    Until the government stops trying to drive mobile developers out of business, Canada will keep getting behind.

  8. Tom – I’m baffled by your comments about unlocking.

    Unlocking a cell phone is very simple and cheap. Anyone can do it online or at their local mall for $10-$20*.

    If the consumer can handle getting a new SIM in their destination country and fitting those ever-smaller SIM’s into their phone, then they can easily handle getting their phone unlocked.

    Yes, you shouldn’t have to pay that $10 to get your phone unlocked, but compared to the other issues on the table that is one of the smallest.

    (*I believe Apple blocks its users from doing this, but that needs to be taken up with Apple – all other phones follow a simple convention for unlocking.)


  9. port out fee
    One of the most prominent complaints by wireless consumers is the Port-Out Fee that every wireless company charges when a customer leaves to another provider. Basically if a customer wants to change their wireless provider without changing their phone number they need to pay a Port-Out Fee which is just another full month of payment. So anybody who wants to change his provider is stuck with doubled bill on their first month with the new provider(one for old provider, and one for the new) even when the customer is no longer in a contract. This is absolutely ridiculous policy that every wireless company has just to screw up their cash cow one last time. GET RID OF PORT OUT FEE!

  10. Ruckus Wireless says:

    Wireless Bridge
    I just came onto your post and found it quite interesting. I am also associated with IP Camera Software, Ruckus Wireless and enjoy to read the stuff on the same as its rarely found on internet. Thanks again for writing such a good post.

  11. port out fees and subsidy
    I was just reading through the comments and to be honest, I’ve never known a Canadian carrier that would charge you for a port-out unless you needed to buy out the remaining months of your subsidy. As far as I know (and i work for a telco) it is illegal to charge a port-out fee, you cant be penalized for changing carriers.
    If we get rid of the practice of using a hardware subsidy, do people realize that they would then have to pay full price for their phones? Thats how they do it in europe and you have to buy your phones outright. Most people would freak out if this was the case in Canada too. And even if you are still in the subsidy period, your carrier will unlock your phone to let you use any other sim card, you just have to have an account in good standing and pay a small fee..its still a pretty good deal all things considered. and just for the record, contracts are gone, you have an agreement that says, I give you this phone that costs 700 for 200, you agree to use us for x amount of months and each month counts towards the value of your subsidy. theres a real easy fix here folks. BUY YOUR OWN PHONE OUTRIGHT and get a month-to month plan…and like magic…voila! you just got what you are asking lamakers to do, but without all the nonsense and carrier bashing ; )

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