By Randall Palmer
OTTAWA, June 3 Canadians will be able to cancel
their cellphone contracts after two years without penalty,
instead of the three years that is the industry standard now,
under a mandatory wireless code announced by the country's
telecom watchdog on Monday.
Critics have long held that Canada's three providers that
have almost the entire market, BCE Inc, Rogers
Communications Inc and Telus Corp, impose
customer contracts that are too stringent.
The rules from the Canadian Radio-television and
Telecommunications Commission (CRTC) seemed likely to improve
the ability of the small players to lure customers away, though
Rogers said consumers may end up having to pay more up front if
they buy phones below the retail cost, under a contract.
"I wonder if they made a mistake getting rid of the
three-year contract. There was a lot of evidence at the hearings
that this might mean that people make bigger upfront payments
because they get smaller subsidies. The CRTC doesn't seem to
think that will happen, but time will tell," said Ken Engelhart,
head of regulatory affairs at Rogers.
"The Competition Bureau gets mad at me when I make price
signals to reporters, but logic would dictate that when you have
a smaller period to amortize that subsidy, you're not going to
have such a big subsidy."
One of the small challengers to the Big Three wireless
providers, Wind Mobile, said the rules would help them compete.
"They're better for competition and for consumers, and
therefore as the competitors it's incidentally better for us,"
said Simon Lockie, chief regulatory officer at Wind Mobile,
which launched its mobile service in 2009.
"All we've asked for is a level playing field, and this goes
a long way to establishing that."
The new code also contains features designed to prevent
consumers from being surprised with nightmare bills for hundreds
or thousands of dollars in additional charges - what Lockie
referred to as "explosive, unexpected data bills."
It requires providers to cap roaming charges once they reach
C$100 ($97) within a single monthly billing cycle, and
additional data charges at C$50, unless the customer consents to
pay additional charges.
What the telecoms companies would do is inform the customers
that they are about to hit their limit, at which time their
service would be suspended unless express consent is given to go
"Canadians may finally now be freed of the worst of
cellphone bill shock," said John Lawford, executive director of
Public Interest Advocacy Centre, which appeared before the CRTC.
He welcomed the fact that customers would more easily be able to
Technology consulting company SeaBoard Group said the CRTC
had clearly responded to Canadians.
"The bill shock protection (data usage and roaming) and the
length of cell-phone contracts are areas where consumer
complaints have been loud and strident," said SeaBoard analyst
The code, which will take effect on Dec. 2 and which was
drawn up after thousands of submissions from Canadians, also
will give customers the right to unlock their devices, though at
rates specified by the company.
For customers with subsidized devices - ones sold below cost
but tied to a contract - the company must let them unlock their
devices within 90 days of the start of the contract. An unlocked
phone is able to use any service provider at home or abroad by
swapping in SIM cards, used to identify the subscriber. A
customer with a two-year contract would still have to pay any
minimum monthly fees stipulated, but would be free to use the
cellphone on any network once it is unlocked.
For those who paid for their devices up front, the unlocking
would be upon request.
And customers will be able to cancel their contracts without
penalty except what is necessary to recoup the cost of any phone
that was provided. Contracts in the U.S. are typically for two
Though Canadians pay some of the highest wireless fees in
the world, in the companies' defense is the fact that they
provide coverage in the second largest country in the world,
with a relatively sparse population.
At a telecoms conference in Toronto on Monday, Rogers said
it was happy to see a single code. "Canadians should have across
the country one code that defines the standards they can
expect," said Rob Bruce, president of communications at Rogers.
A CRTC spokesman said that if provincial and federal
regulations have differences, the one that is most advantageous
to the consumer would apply.
Shares of BCE, Rogers and Telus shares were down.