Eliminate locked phones in Canada, Freedom Mobile tells CRTC

In a departure from the positions of its fellow wireless providers, Shaw Communications Inc.’s Freedom Mobile suggested Wednesday the CRTC should forbid carriers from charging fees for unlocking phones, and direct them to stop ordering locked devices from equipment manufacturers. “Freedom has consulted several large handset vendors and they have indicated they would be happy to sell unlocked phones, assuming numbers warrant,” Bob Boron, Freedom’s senior vice-president of regulatory, said on the third day of the regulator’s review of its Wireless Code. “This will enhance market dynamism. It will foment customer choice and discipline the market in a very considerable way.” Ed Antecol, vice-president of regulatory and carrier relations, acknowledged other carriers that appeared in front of the commission were in favour of keeping unlocking fees in place. “We’ve heard some carriers say it’s a fraud protection. I’m personally a little skeptical about that, for a number of reasons. First of all, you have to give the customer the code after 90 days, regardless, under the current rules, so perhaps it would only delay the fraud if the customer doesn’t intend to pay off the balance of the phone,” he said. Antecol added the customer always has the option of going to an independent shop and getting their phone unlocked, which he said can carry risks, like some features not working. While Freedom charges a $30 unlocking fee, Antecol said, the company considers unlocking fees to be “toxic revenue,” or revenue “we earn that basically angers and displeases customers.” But getting rid of the fees would put the company at a disadvantage, representatives said. As “a small carrier that has the smallest market share in any of the markets we operate in” making such a move unilaterally would disproportionately harm the company, argued Boron. “All of a sudden, our competitors, the more dominant carriers, would realize that all of our customers have unlocked phones and you can imagine targeted promotional plans to Freedom customers that wouldn’t necessarily apply to the other larger competitors because they still have locked phones.” On the first day of the hearing, consumer advocates pointed to high unlocking fees as one of the issues that are still outstanding three years after the implementation of the Wireless Code. John Lawford, executive director of the Public Interest Advocacy Centre (PIAC) said during his Monday appearance there is “enough evidence” for the commission to “be more prescriptive” on that matter. On Tuesday, commissioners questioned presenters Rogers Communications Inc., BCE Inc., and Quebecor Inc. on their unlocking practices. All three carriers said the $50 fee charged for unlocking devices, alongside the 90-day waiting period, were pivotal in stemming fraud. The waiting period, especially, helps as it establishes a customer’s payment history, reps said. It also stops “gray market activity,” according to Claire Gillies, Bell Mobility’s vice-president of marketing. She pointed to a change in policy at Apple Inc.’s Canadian stores during the launch of the company’s iPhone 6s device that removed the requirement for the smartphones to be sold alongside a carrier contract. “You could go in any food court in those 30 malls across the country and you could see exchanges happening. And so those iPhones that were intended for Canadians did not stay in the Canadian market,” Gillies said Tuesday. “We want them to stay in the country in which they were intended for, we want them to operate optimally on our network.” Saskatchewan Telecommunications Holding Corp., which appeared in front of the panel on Wednesday afternoon via video, also argued in favour of unlocking fees. Bill Beckman, the company’s senior director of regulatory affairs, told the panel that the existing rules regarding phone unlocking should be left in place. “Charging an unlocking fee is appropriately left to the service provider as they respond to consumer feedback and competitive pressures,” he said in his opening remarks. “The 90-day period does help reduce fraudulent activity as it prevents customers from obtaining a subsidized phone with no intention of making any payments.” Chairman Jean-Pierre Blais asked the company’s panel whether someone intending to defraud a carrier could easily go have it unlocked “in a back alley,” and if SaskTel’s current approach was “consumer friendly.” “We do believe that there is a benefit to establishing a track record with that customer, and going through those three months of payments and experience with the customer, that does deter a level of fraud. I wouldn’t suggest to you it removes all fraud from the marketplace,” Rhonda Carsten, SaskTel’s director of wireless marketing, said. “So let me understand,” Blais retorted. “I’ve been a life-long subscriber to SaskTel on the wireline side. When cellular phones come along, I decide to get my phone from the Crown corporation. And you’re saying that still, despite those years of loyalty by that customer to you, you still think you need the protection of a locked phone?” “Well, it is the policy because I can’t say for certain that in every instance that customer is a lifetime wireline customer of SaskTel’s,” Carsten said. Blais asked whether SaskTel agreed that “it’s a pretty nice deal to be pocketing a good-bye tax on every customer that decides to churn.” Carsten responded: “No, because the majority of customers are not endeavoring to unlock their phone.” During its appearance, Freedom also disagreed with other carriers on how long it would take to divorce handset pricing from monthly service fees. It was a question the hearing considered Tuesday, with companies saying doing so would require a considerable amount of work and Rogers saying that could take as long as a year and a half. “We’ve moved out handset pricing away from the subsidy model already, with just a modest subsidy left in the term contract, and I don’t think it would be a catastrophe or take 18 months to completely remove the subsidy and separate the handset from the service,” Antecol said. Boron added that the company isn’t “convinced the commission should be mandating that, because we kind of use it as a competitive differentiator in the market.” CORRECTION: The previous version of this story referred to Freedom as Wind, its old name before a recent rebranding, in one instance. — With reporting by Anja Karadeglija at akarad@thewirereport.ca and reporting and editing by Charelle Evelyn at cevelyn@thewirereport.ca

Eliminate locked phones in Canada, Freedom Mobile tells CRTC

News | February 8, 2017

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Eliminate locked phones in Canada, Freedom Mobile tells CRTC

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