Put limit on cell plan length, fed agency tells CRTC
Competition Bureau says it supports cap on mobile contract length but won’t press CRTC to forbid three-year cellular plans
By: Howard Solomon Computing Canada (07 Feb 2013)
The federal Competition Bureau won't press the Canadian Radio-television and Telecommunications Commission (CRTC ) to forbid wireless carriers from offering three year cellular plans, one of the most criticized aspects of the Canadian industry.
In a written submission Wednesday to the federal telecom regulator, which is drafting a mandatory code of conduct for wireless carriers, the bureau said it supports measures to limit contract length, but doesn't say how long contracts should be.
"The bureau supports measures to limit contract length and to ensure that consumers maintain the ability to move from one service provider to another," the submission says. “But if the mandatory code doesn't forbid three year contracts, then it should ensure that contract terms and termination fees are clear.”
Last week, the CRTC released a draft document laying down its proposed changes to the country’s regulations covering wireless carriers and the services they provide. The draft will be subject to public hearings within the next few weeks and CRTC has asked the public to put in their suggestions. The Competition Bureau’s submission is in response to this request.
The CRTC’s draft code included proposed changes involving: language clarity on mobile phone service contracts and policies; contract cancellation and renewal policies; advertised pricing; notification of fee changes; repairs and warranties; as well as policies around consumers unlocking their devices.
Other recommendations included in the draft were:
• The need for carriers to have specific cancellation fees and to take account of “economic incentives” customers when they signed on for the contract • Fees for unlocking a device need to be disclosed in advance and unlocking to be allowed after 30 days • Carriers need to explain clearly the limits of their “unlimited plans” • Carriers need to inform customers when they have reached 50 per cent, 80 per cent and 100 per cent of their usage limits • Charges should be suspended when a phone is in-repair
The country's three biggest carriers, Bell Mobility, Rogers Communications and Telus, use three-year contracts as a way to subsidize the cost of high-end smart phones -- the longer the contract the more the subsidy.
That's how they are able to sell Apple iPhones for $180 (full price $700 on a month-to-month plan) or the new BlackBerry Z10 for $140 (full price $650).
However, many critics have noted that over a three year period, subscribers end up paying more for the phone (on a $50 a month plan a subscriber ends up paying ($1,800) Canada is one of the few countries in the world where a large proportion of wireless subscribers are still on three-year plans.
In the United States, most carriers offer two year contacts. In Europe contracts can't be longer than 24 months.
Meanwhile on Thursday the Montreal-based SeaBoard Group, a telecommunications consultance, released a report urging the CRTC either to do away with three-year contracts, or, if they are allowed, order carriers to separate the handset subsidy from the service plan and make the subsidy transferable if the owner moves to a different provider.