The Canadian Radio-television and Telecommunications Commission has released the draft of its long-awaited Wireless Code of Conduct, along with an invitation for public comments on it (the deadline is Feb. 15). In a nutshell: there’s some good in the document, but otherwise there’s nothing earth-shattering or unexpected. Which makes it something of a letdown.
The regulator should be given credit for making the proposed code relatively short and easy to understand. And the way the draft is laid out makes it simple to see what rules consumers are pulling for, and which are favoured by carriers. From the consumer’s standpoint, wherever the CRTC presents a number of possibilities to set a rule, the correct answer is almost always Option 1.
For example, Option 1 under the “unlocking phones” provision would require a service provider to unlock a device after 30 days of service, no questions asked. Option 2, however, introduces questions of whether the customer is getting a subsidy for the device… yadda yadda… before determining whether the carrier has to unlock it. Like I said, Option 1 is the consumer-friendly choice – and with this whole code supposedly being enacted to protect the consumer, the choice is obvious.
A few other good Option 1’s: the code will come into force within six months of its publication, rather than through a phased-in approach; it’ll apply to all cellphone contracts rather than just new ones; consumers have the right to cancel a contract at will if the carrier changes its terms, rather than depending on a bunch of ifs, ands or buts; and an outright ban on automatic contract renewal, versus some nonsense about how a contract can be renewed automatically depending on its length.
There is, however, one Option 2 that is actually good. Under “additional information specific to pre-paid services,” Option 2 would prohibit expiry dates on prepaid credit. That’s definitely a welcome move.
Perhaps the worst Option 2 deals with early termination charges. Option 1 lays out a rather simple and specific system: “The early termination fee cannot be more than the ‘Amount applied toward subsidy each month’ as set out in the contract summary multiplied by the number of full months remaining on the contract. If this amount is fully paid before the consumer cancels the service, no early termination fee will apply.”
Option 2, on the other hand, gets into a complicated calculation using “economic incentives” provided by carriers multiplied by months in a contract, divided by 48 (and possibly again multiplied by the circumference of the Sun). It’s confusing to say the least and looks plenty ripe for abuse. Exactly what is an “economic incentive?” Does a coupon for Burger King when signing up count? This is one option that should be stricken from the code and never spoken of again.
There are a few other bright spots. The CRTC spells out that its code will presumably exist alongside any other federal or provincial laws and regulations, which will actually supersede it if they are more beneficial to the consumer. This clause will do much to counter fears that carriers are trying to overwrite existing provincial laws that are more pro-consumer.
The regulator is also giving administration of the code to the Commissioner for Complaints for Telecommunications Services, which will have the ability to award compensation to consumers of up to $5,000. I’m not sure if the complaints agency has that legal power, but it’s a nice gesture to start with.
One other bonus put forward by the code is the ability for consumers to cap or limit bills and features. This is important because sometimes big charges can be racked up without the consumer having any say over it; they may forget to turn roaming off while in another country, for example, or their friends may decide it’s funny to send them text messages while they’re overseas and thus jack up their bill. Hey, it happens, because we all have at least one douchey friend.
There are also some areas of concern. Many consumers will be upset by the lack of an outright ban on three-year contracts, but realistically, such a rule would be somewhat arbitrary and perhaps even backfire – four-year contracts, anyone?
The CRTC has smartly tried to eliminate those long contracts indirectly by requiring carriers to disclose to customers the costs of their device and the subsidies they’re getting for it. Theoretically, if the customer sees how much of a discount they’re getting on their phone on a monthly basis, they’ll know how long it should take to pay off, which should ultimately discourage inflated contract lengths or at least free up subscribers to cancel earlier.
But in practice it won’t, because there’s no mechanism to prevent carriers from inflating their profit margins on phones and therefore exaggerating the subsidies that customers are getting. In other words, there’s nothing to stop a carrier from saying that the phone it paid $200 for is actually $800 to the consumer, so naturally a three-year contract is necessary and desirable. The CRTC’s code needs to be clearer and stricter on the numbers carriers are actually allowed to give customers.
The regulator is also making an effort to force all-in pricing, where “any advertisement that is incorporated by reference into a contract will include the total amount the consumer must pay for the services on a monthly recurring basis.” That explicitly spells out that such advertisements indicate whether sales tax and any “government-mandated fees” are included, but it implicitly excludes bogus charges like regulatory recovery fees, system access fees and any other completely made-up additions. The wording of this clause should be amended to include all such charges.
And lastly, going back to Option 1 for unlocking phones, the code will explicitly permit carriers to charge whatever they want to open up devices. What’s up with that? If the customer has paid for (or paid off) their phone, it should be unlocked free of charge, end of story. It’s their property. (A reader points out that Option 2 may in fact be better in this case because it requires carriers to unlock phones they have supplied for free if they were bought without subsidy and are off contract. It is worth noting that neither option makes mention of the carrier’s obligation to unlock phones that it didn’t supply.)
The code hits on about half of the issues I identified back when the process was launched last October, which is not bad given that the other half involve pricing – an area the CRTC clearly doesn’t yet have the stomach to wade into. Long-distance, text messaging, call display and data charges are all problems that will have to wait for another day.