Canadian Telcos Change Tune Over Implementation of CRTC’s Consumer Wireless Code With Lawsuit Threat

The CRTC released its consumer wireless code last month, receiving kudos for new measures that should eliminate three-year contracts. Now the major telecom companies are preparing a lawsuit challenging the rules associated with the implementation of the code. While the code will take effect for any new, renewed, or changed contracts starting on December 2, 2013, the CRTC has stated that all consumers should benefit from the code by June 3, 2015 or two years after its initial release. The telcos object to this position, arguing that it retroactively applies new conditions to contracts that existed prior to the start date of the code. According to an affidavit from SaskTel, the major concern involves the potential for consumers on three-year contracts to walk away from those contracts in June 2015 without further payment, despite terms that could run months longer.

Yet during the wireless hearing, some telcos assured the CRTC that customers would benefit from the code within two years. For example, SaskTel told the Commission that its customers now upgrade their devices (and thus would fall under the code) roughly a year and a half after signing the initial contract:

Customers are turning over their devices in the second to third year. We have introduced an early device upgrade program in October of last year which gives customers the ability to upgrade their device at any time. Since we have implemented that program we’ve seen customers upgrading after about 17.5 months.

Indeed, the company stated that a significant percentage of its customers would be under the code after two years, despite the fact that the majority of them sign three year contracts. At para 8911:

THE CHAIRPERSON: So, as I understand, you have about 600,000 contracts that are churning, I guess, and renewing at different rates. You may have been present when I — we asked questions of other companies to be able, maybe through an undertaking, to tell us in your normal course of renewing those, assuming a prospective implementation, how much of those contracts within after one year, two years, three years would eventually have been switched over to a fully implemented code?

MR. ANDERSON: We will see if we can provide some accurate numbers for the 22nd, but I’ve got to believe intuitively — again, we see a large percentage of our customers upgrading plans prior to the three-year term because they want to get the new devices. So intuitively I’ve got to believe even if you didn’t have that phenomena, you’ve got probably one-third of your customer base every year is upgrading to a new contract anyway. So after two years you’ve probably got two-thirds of the customer base not allowing for any churn, competitive activity or customers that just simply want to upgrade for the new device. So I’ve got to believe after two years you’re going to get a significant percentage of the customers that will be onto a new contract, but we will try and see if we can quantify that a little better —

Telus was similarly asked directly how long it would take for its customer base to benefit from the wireless code. The exchange (at para. 2836):

THE CHAIRPERSON: Okay. Assuming that — and I take it that you will want to address that perhaps in your comments, but assuming that, from a factual perspective, if you look at the amount of churn, that is, new clients coming in, as well as patterns of amendments from the past, how long would it take, on a prospective basis, for all of your customers to be subject to the —

MR. WOODHEAD: I would say, probably, somewhere between two to three years, and probably closer to two. And, you know, I don’t want to leave this as me sounding like I am afraid of anything in this code, or that we are afraid of it, it’s about the application of it. We actually want customers to have the benefit of some of these things, it is the actual — and, again, we will get to it, I think, in the response to Commissioner Molnar’s question, in the undertaking, but there are some operational challenges around applying it retrospectively.

THE CHAIRPERSON: And I have never mentioned application retrospectively. I am asking, let’s say that we — and I am just saying six months. I know that some people will comment that six months is too quick, but let’s assume that in six months we decide the new code applies. Without it applying retroactively, but prospectively, when will Canadian customers, in your customer base, be able to benefit?

MR. WOODHEAD: I think two years.

THE CHAIRPERSON: Within two years.


The telcos provided confidential data to the CRTC that may have backtracked somewhat on this timeline, but what is clear is that many still want to lock-in as many Canadians as possible under three-year contracts. The CRTC had expected the carriers to shift more quickly to two-year contracts, but they seem likely to stick with three-year contracts through the two busiest sales periods of the year (back to school and Christmas) as they fight in federal court for the right to enforce those long-term contracts right down to the very last day.


  1. Well that explains alot…
    Fido, my cellphone provider, is continuously calling me to “give me a rebate” that will probably be attached with a 3 year contract (forget the fact that I never had any contract with them…)

  2. What’s the point here? Some service providers did say that many of their customers would be under the Code within two years. But I don’t think they said they would accept retrospective application. In fact, didn’t Sasktel file a legal opinion on that exact topic?

    And here’s what another telco said:
    Engelhart (Rogers): “But, I mean, it occurred to me as I was hearing the question, it’s three years. I mean, to get every last customer who’s in — the person who signed the contract the day before the Code came into effect, it’s going to be three years later.
    Now, a lot will be doing an early hardware upgrade and getting a new contract, but every last one, the answer is three years.”

    So where is there a change of tune?
    Also, as a lawyer, do you have an actual legal opinion on whether or not the CRTC has the authority to impose regulations retrospectively?

  3. @Darren
    The change of tune is that they are still forcing 3 year contracts on people, which further pushes back the date that customers would benefit from the new code. If they continue on in this fashion until forced to make changes in 2015, it could mean some customers wouldn’t see any benefit for almost FIVE YEARS.

  4. Yes — the pull-quotes, even shorn of context, are consistent with the telcos’ position. In fact, explicitly so: each quote is careful to specify that lots of customers will benefit from the code relatively soon, and others will be under contract for longer.

    I didn’t understand how we get from “the code will take effect for any new, renewed, or changed contracts starting on December 2, 2013”, at the beginning to the assumption at the end that “they seem likely to stick with three-year contracts through the two busiest sales periods of the year (back to school and Christmas)”. Which is it — do you mean that although they are not challenging the start date of December 2, 2013, by challenging another aspect of the Code the whole thing will be prevented from being applied?

  5. CharlieFox says:

    Whine whine whine.
    It’s legal to change the contract on the customer mid-contract, but illegal when the government changes the code. And they wonder why they always have a bad reputation.

  6. @Name
    @Name, that’s not correct. First, they don’t “force” three-year contracts on anyone — just buy the phone and go contractless. Second, they have not challenged the December 2, 2013 start date, so they are forced to make changes in 2013, not 2015 — it is not possible that some consumers wouldn’t see any benefit for five years.

  7. @Name
    Several of the carriers (e.g. Koodo and Telus) have provided early contract termination and renewal provisions for several years now. Customers just pay off the unrecovered handset subsidy and they are free to end their contract anytime – they don’t even have to wait two years.

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