PIAC says 3-year device plan review could force Wireless Code change

If the CRTC finds that device financing options beyond two years do not violate the Wireless Code, it could end up causing an amendment to those rules, the Public Interest Advocacy Centre has said. The CRTC has already stated earlier this month that the three-year device financing plans available since Rogers Communications Inc. introduced them in June -- followed by Telus Corp. and a pledge from BCE Inc. to do the same -- could trap customers with their providers beyond two years by forcing them to pay off the rest of their device balance to switch providers. On Friday -- exactly four weeks after it forced the telecoms to stop giving customers those options -- the CRTC reinforced its belief that the longer options could pigeon-hole customers into service plans beyond the allowed two-year timeframe outlined in the code in launching a formal review of the practice. “This difference between the duration of terms of wireless service plans and device financing plans may lead to costs for Canadians who wish to switch to a different service plan or WSP at the end of a service plan term,” the CRTC said in a document that launched the review. The Wireless Code does not allow providers to charge service cancellation fees or penalties beyond that two-year timeframe, which is the issue at the heart of the matter. While Rogers and Telus argue that the device and service terms are two separate bills, critics have said the longer device terms effectively extend the duration of the shorter service terms in exchange for lower monthly costs on the device. The CRTC -- while acknowledging that the 36-month option could be beneficial by reducing the device price -- seems to agree with critics. “The Commission is concerned with the possibility of customers having to pay the remaining balance of their device financing plan immediately if they wish to change to a different service plan or change WSPs at the end of their wireless service plan’s commitment period,” it said Friday. “It appears, therefore, that the device financing and wireless service plans may not, in fact, be functionally separate, as WSPs have claimed. Customers cannot obtain a device financing plan without a wireless service plan, and the cancellation of the wireless service plan triggers the payment of the remaining balance of the device financing plan.” If the device financing operate like a subsidy -- which blends the service and device cost with typically some cost upfront for the device -- the CRTC argued the requirement to pay off the rest of the device could be read as an early cancellation fee. If device financing is separate from the service plan and is not a subsidy, then having to pay off the device to terminate could be viewed as a penalty or other fee -- also against the code, the regulator argued. But it wants to hear from the providers about why those aspects of the plans shouldn't be found to be in violation of the code. It's also asking why device financing options shouldn't be defined as "contracts." The deadline for submissions is October 15. John Lawford, executive director of PIAC, said the CRTC process is problematic because it had already given the telecoms a chance to explain their position when it asked for comment earlier this month. He added the CRTC could have issued an order that the telecoms violated the code, given the commission’s stated position on the matter. But if the CRTC determines that the code wasn’t violated, it could mean the Wireless Code is up for an amendment, Lawford added. If the CRTC goes the other way, it could issue a mandatory order permanently banning the practice and has fining powers to deal with violators. The regulator also intends to provide "direction and guidance" to the Commission for Complaints for Telecom-television Services (CCTS) on how to deal with complaints related to the device financing options. The CCTS previously said that the 36-month device financing options could be in violation of the code. Shaw Communications Inc., which owns the Freedom Mobile brand, previously said that the longer financing option violated the code because it prevented customers from switching after two years. On Friday, the CRTC reflected on that. "The Commission is of the preliminary view that certain device financing plans may create a new barrier for customers to take advantage of competitive offers in the market." As part of it's proceeding, the CRTC is asking what the benefits are to having device financing beyond 24 months and how these financing plans comply with the code's objectives of "making it easier for Canadians to understand their mobile contracts and switch service providers, and of preventing bill shock." In an emailed statement, Bell spokesman Marc Choma said the telco "support(s) new options like 3-year installment plans that make the latest premium smartphones more affordable for more consumers." Quebecor Inc. spokesman Merick Seguin said the company is still reviewing the decision and doesn't have a comment. Quebecor CEO Pierre Karl Peladeau said on a conference call earlier this month that he was happy the CRTC was looking into the practice. However, if it decides to allow 36-month device financing, it should apply that to the subsidy model as well, he said. -- With reporting by Ahmad Hathout at ahathout@thewirereport.ca and editing by Michael Lee-Murphy at mleemurphy@thewirereport.ca

PIAC says 3-year device plan review could force Wireless Code change

News | August 30, 2019

Unlock all the Canadian telecom, broadcasting and digital media news you need.

FREE TRIAL

SUBSCRIBE

Inside The Wire Report

Information

Hill Times Publishing

Get in Touch With Us

PIAC says 3-year device plan review could force Wireless Code change

News | August 30, 2019

Unlock all the Canadian telecom, broadcasting and digital media news you need.

FREE TRIAL

SUBSCRIBE

Related Stories

New area codes coming for Toronto and B.C. next spring

CRTC keeping thousand-block pooling deadline in place

ISED starts consultations on right to repair

Eastlink unveils video streaming app

Reuse & Permissions

Inside The Wire Report

Information

Hill Times Publishing

Get in Touch With Us