New wireless code released by CRTC puts an end to the three-year wireless contract, introduces caps on fees and roaming charges

CRTC cuts the three-year contract

Wireless phone consumers and business users may have some reason to smile today with the release of Canadian Radio-television and Telecommunications Commission’s (CRTC) new wireless code.

The code, which will apply to new contracts for cell phone and other personal mobile devices starting December 2, 2013, allows users to terminate their contracts after two years without having to pay any cancellation fees – “even if they have signed on for a longer term,” according to the CRTC. The code also states that contracts should be written in a way that is easy to read and understand by consumers.
 

The code caps extra charges at $50/month and international data roaming charges at $100/month to prevent bill shock which in many cases have resulted in users facing thousands of dollars in fees for using their mobile phones outside Canada.

Users now also have the right to have their phones unlocked after 90 days or immediately if they paid for the device in full.
 
With the new code, users also have the option of returning their devices within 15 days of signing a deal if they are unhappy with their provider’s services.
 
Users can also accept or decline changes to the terms of a fixed term contract.

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“The wireless code is a tool that will empower consumers and help them make informed choices about the service options that best meet their needs,” said Jean-Pierre Blais, CRTC chairman in a statement today. “To make the most of this tool, consumers also have a responsibility to educate themselves.”
 
Canada’s $19 billion wireless industry has more than 27 million subscribers. Customer complaints have always been around the issues of contract clarity, length of contract, fee structures and charges.

Last fall the CRTC received no less than 3,500 comments in writing and more than 600 comments in an online discussion when it sought Canadian’s inputs when it began to work on the wireless code.

At least one wireless industry observer expressed his approval of the new code yesterday.

“The code is a definite improvement over the earlier draft version,” Michael Geist, University of Ottawa law professor and privacy and consumer advocate, wrote in his blog today.

He also said the code has “brought three-year contracts to an end” and represents a “major policy loss” for incumbent wireless service providers.
 
Wind Mobile said the code is just what Canadian consumers need.
 
“This is a great day for those of us who fought against long-term contracts and in favour of greater choice and transparency in the wireless industry,” the alterantive wireless service provider said in a statement. “The code is focused on protecting wireless costumers from confusing terms and hidden fees.”
 
The Canadian Wireless Telecommunications Association said it “welcomed” the code but aired some concerns that a shorter two-year contract could mean higher upfront fees for consumers.

“The CRTC has done its best to find a balanced approach for both consumers and service providers,” Bernard Lord, CWTA president, said in a statement today.”…One area of to the industry is the Code’s requirement of a 24-month amortization of wireless device subsidies.

“This requirement does limit consumer choice in the marketplace, and could make a customer’s upfront purchase of a smart phone more expensive than current offerings,” he said.

Lord said there will be some “major” technology development and costs associated with complying with the code but the “industry will work very hard to have all aspects of the code ready” by December 2.
 
Ken Engelhart, Rogers Communications’ senior vice-president of regulatory affairs, said the carrier’s biggest concern is it will have its IT systems changed in time to meet the CTRC’s required change limiting contracts for small businesses and consumers.

He also wondered if new entrants, who have praised the commission’s ruling, realize that the new rules will impact them. New entrants like Wind and Mobilicity allow their subscribers to run a tab of up to four years to pay off the remainder of the price of a handset (after a deposit has been paid). Starting in December that term will have to fall to two years, Engelhart said, just like other carriers have to stop offering three year plans.

Otherwise, he said, the CRTC policy is good for consumers and small businesses. “It will make them happier with their wireless service.” But, he noted, most carriers have already changed their contracts to comply with Quebec legislation allowing consumers to cancel a contract at any time, pay off the amortized portion of the cost of the handset and have it unlocked.

So he doesn’t think the new CRTC policy will increase the number of Rogers wireless subscribers leaving. “You have to make your customers happy, you have to have good customer service, you have to have a great network, you have to have great devices and if you do all that your customers will stay with you.”
 
(With notes from Howard Solomon)
 
 
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