Wireless users and consumer advocates cheered the CRTC's launch on Monday of the Wireless Code of Conduct after months of consultation and speculation. After taking a few days to digest the new rules (end of three-year contracts, yay!) Huffington Post staffers and our readers still had a few questions about what the code — which applies to new contracts starting Dec. 2 — means for consumers. So we asked the experts for some clarification. (Answers have been paraphrased.)
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How much of the code is new?
Answer from Marc Choma of the Canadian Wireless Telecommunications Association, the industry lobby group representing incumbent players: A lot of these things are already common practice from carriers, but I think it’s good that consumers, on a national basis, know this and it applies to everybody. It’s going to supercede any provincial legislation and that was our main goal going into this because we were seeing a patchwork of regulations across provinces and it was costing the industry a lot of money to adapt their systems potentially 13 different ways.
Are there any restrictions in the code that will prevent the cost of two-year contracts going up as a result of the new rules?
Answer from the CRTC: The CRTC wireless code proceeding did not address pricing, as the Commission had previously determined that there is sufficient competition to protect consumer interests with respect to rates. Service providers are free to determine their rates for service and how much will be charged for phones up front. At the same time, improving consumers’ abilities to switch providers should push service providers to compete on price.
How will the shorter contract length affect handset costs?
Answer from Steve Anderson, executive director of OpenMedia.ca, a wireless consumer advocacy group: It’s unclear. There’s no market reason while the cell phone companies would suddenly raise the cost of cellphone service because people are on shorter contracts. So if they do that it’s really just price gouging. They could try and raise upfront handset costs, but the Canadian companies have higher revenue per user than any other telecom companies in the world and other places where we have two-year contracts, the device cost is not higher than it is in Canada, a great example is the U.S.
Answer from Lawford: It’s call your bluff time. The CRTC is saying “let’s see if it’s true that really your costs are so high and that really you're subsidizing these devices so much, or is it that you’re locking people in so the contract is longer than the usable life of the device?” If we send people back in the market every two years is that going to make competition pick up the slack. If they all go up in lockstep, [then] the Competition Bureau should be looking into what’s going on.
Answer from Choma of CWTA: Changing the length of the subsidy from three years to two years can actually raise the price of the upfront cost for your device. So before you had the option of putting it over three years and you could get a much lower rate for your phone, but now you’ve only got 24 months to earn that subsidy back. Obviously, carriers are going to have to adapt their business models to comply with that. But we’ll have to wait and see how carriers respond.
The new rules allow a fully purchased handset to be unlocked immediately or a subsidized handset to be unlocked in 90 days. What effect will this have?
Answer from Anderson of OpenMedia.ca: Unlocking the phone means it’s easier to switch carriers, easier to go international and use different services that aren’t Canadian, so it makes it more affordable. But I also think that area could have been better, for example they didn’t talk about what the cost of unlocking would be. And even the 90-day part could have been stronger. If I get a contract for a phone I should be able to do what I want with it.
Answer from Choma of CWTA: Most carriers already do that now and some of them actually do it before 90 days now.
Are providers allowed to charge a fee to unlock a phone?
Answer from CRTC: Yes. Since the CRTC did not examine rates or prices, it is up to the provider to decide on their unlocking fee. However, as of December 2, that rate must be clearly identified in your contract and your critical information summary.
Answer from Shawn Hall, Telus spokesman: We already do that – we charge $35 and allow unlocking after 90 days. That covers our costs of providing the service.
What are the effects of the new rules on people who are not on a contract or already have their phones unlocked?
Answer from the CRTC: People not currently on a contract will be covered if they sign a contract after December 2. If they are currently on an indeterminate or month-to-month contract, they will be covered as of December 2.
Answer from Marc Choma of the Canadian Wireless Telecommunications Association: Most of the elements of the Code deal with contract services, so the impact on no-contract customers that already own their unlocked phone would be minimal.
Do the caps mean the carriers will cut off your data or roaming after a certain point?
Answer from Anderson of OpenMedia.ca: What’s expected is once you hit your limit in data roaming charges, you’ll receive a text message notification asking if you’re okay with that and do you want to continue.
Answer from Choma of CWTA: Most carriers already provide notifications when you are approaching your data limit, or provide you with notification that you are roaming and how to purchase roaming packages. With the new code, a customer's data services will be automatically suspended once the customer has reached $50 of usage, unless the customer expressly consents to override the $50 default limit. In the case of international roaming, a customer's service would be suspended after the customer has reached $100 of usage, again, unless the customer expressly consents to override the $100 default limit.
Answer from Telus: Currently, Telus caps international data roaming at $200. We send customers a free text message when they hit that point letting them know (after a series of usage notifications starting at 2 MBs), and will only reactivate roaming if they ask us to.
Answer from the CRTC: The code doesn’t prescribe how carriers should do it. The way the code is set, there is a maximum amount carriers can charge unless they make specific arrangements with the consumer or the cell user gives consent to continue after a notification is delivered.
Why did the CRTC decide on two-year contracts, rather than one year, the direction the rest of the world is taking?
Answer from the CRTC: The Commission looked at what would be best for Canadians. Many jurisdictions feature two-year contracts – we also heard evidence during the hearing that multi-year contracts with subsidized devices allow Canadians to get new, sophisticated devices at a lower upfront cost.
Answer from Lawford of PIAC: We’re in Canada, so we’re always behind. They could have done that too, but then they would have almost certainly raised everybody’s rates, at least the cost of a handset quite a bit. I hope that as the two-year contract becomes standard the one-year will become a competitive offering.
Are the new rules on three-year contracts retroactive? Can I get out of a three-year contract today?
Answer from CRTC: The rules apply, as of December 2, to all new contracts. In addition, on June 3, 2015, all wireless customers are covered, regardless of when their contract was signed. In practice, that means that if someone signed a contract in May 2013, then on June 3rd 2015, they can cancel without penalty.
Answer from Choma of CWTA: With most carriers right now, there isn’t a cancellation fee. If you want to cancel, you just cancel and pay off your device subsidy.
Can a consumer use the new rules as an argument to fight an "outrageous roaming bill" they receive before they are technically protected?
Answer from CRTC: Consumers are always free to contact their service provider to contest a bill. The service provider is not obligated to lower the bill simply because new rules are on the horizon.
Answer from Choma of CWTA: Yes they could. However, the Commissioner for Complaints for Telecommunications Services (CCTS) is already available for consumers that have billing issues. The CCTS will also be the body responsible for enforcing the new Code.
Answer from Lawford of PIAC: No. In the meantime you can go to the CCTS and say the rate being billed wasn’t made clear. The CCTS has a history of knocking those down unless the company can show the customer was made very aware of what was going on.
If you decide to get out of a three-year contract after 2 years, do you still have to pay fees like the cost of the handset?
Answer from the CRTC: If you currently have a contract and you want to exit, you will likely be charged a cancellation fee, which is determined by your service provider. Some provinces have rules setting out how these fees must be calculated. Once the code is in force, you will be able to exit after two years without any penalty or fee.
Sky high billing is the biggest concern in Canada. Why weren't rates per second and per megabyte addressed?
Answer from CRTC: The CRTC’s wireless code proceeding did not address pricing, as the Commission had previously determined that there is sufficient competition to protect consumer interests with respect to rates. The new rules will enable consumers to make informed decisions and shop around for the best deal that meets their needs. In addition, the rules around bill shock, including caps on data and roaming, will reduce the high bills that some consumers see.
Answer from Lawford of PIAC: The code wasn’t intended to reduce rates or touch rates at all. The whole premise behind us even getting any rules was we’re not talking about rates because the CRTC says, "We’re not rate regulating, all we’re doing is putting in standards so everyone is treated relatively fairly." The Commission could regulate rates, but they don’t. But addressing high rates is the next step, so that [question is] onto something.
Will providers have to show separately the handset cost consumers pay each month?
Answer from CRTC: No. However, the service provider will need to clearly indicate the price of the phone, and any discount, in the contract and on the critical information summary.
So is there any incentive before or after the rules come into effect in December to choose a three-year contract?
Answer from Lawford of PIAC: If the code’s coming out in December a lot of people will be wondering, "Should I lock in now if they offer me three years or wait until to get a two year [contract]?" You could wait and get the benefit of the code or cash in on a sweetheart deal for a three-year plan ahead of the code, which carriers are likely to offer. There will be some pretty nice deals coming even at the end of the summer, trying to get people in on the three-year plan.
Answer from Anderson of OpenMedia.ca: After the rules go into effect, there may be some trinkets that they put into a three-year contract that they won’t put into a two-year contract, but you’ll still be able to leave whenever you want, so I think they might find ways to add value to three-year contracts and get people to sign onto them.