Telus taking Mobilicity to court over ads

December is supposed to be a period of tidings of comfort and joy.

Not apparently in the cellular business, where Telus Communications Co. and Mobilicity are going at it with bare knuckles.

Telus, the Vancouver-based telco, has accused the Toronto-based startup of broadcasting television ads containing “false and misleading” representations about unnamed competitors.

Coincidentally or not, these are Mobilicity’s first TV ads.

Telus will ask a B.C. judge for a temporary injunction on Friday ordering Mobilicity to stop making allegations in ads that wireless competitors make “deceiving offers” to customers.

None of the claims has been proven in court.

For his part Mobilicity president Stewart Lyons on Tuesday accused Telus of being a “bully,” and promising to tell the Canadian Radio-television and Telecommunications Commission (CRTC) at its upcoming hearings on creating a wireless code of conduct that the telco’s going to court is an attempt “to shut down competitive dialogue.”

Mobilicity, which began operations in May, 2010, is one of four new entrants that are challenging the biggest carriers in the country, Telus, Bell Mobility and Rogers Communications.

After more than two years they still have single digit market share nationally.

The newcomers tout two advantages: They don’t force subscribers to sign annual contracts like the big three, and they offer unlimited voice, text or data service.

This fight – one of several over wireless advertising — may turn out to be over the definition of “contract” and “unlimited.””
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Owned by Data and Audio-Visual Entertainment Wireless Inc., Mobilicity offers service in Vancouver, Calgary, Edmonton, Toronto and Ottawa, while Telus’ network extends across most of the country.

The December holiday season is one of the biggest sales periods of the year for cellular sales, with carriers heavily advertising special promotions.

According to Telus’ statement of claim, Mobilicity’s recent TV ads contain three alleged misrepresentations which give the impression Telus and others use deceiving or misleading advertising:

–that unnamed competitors make offers of unlimited plans, when in fact unlimited service is offered only after 6 p.m. weekdays and on weekends.

Telus says no Canadian carrier offers unlimited voice calling that is constrained;

–that Mobilicity offers service with no contracts.

The impression, Telus alleges, is there are no “terms” to the startup’s service. But, it says, all Mobilicity services have conditions;

–that Mobilicity offers customers plans with “unlimited data.”

Telus says in its claim those unlimited data plans do have limits: Mobilicity can use traffic throttling to reduce data speeds if customers exceed certain data usage levels.

In addition to the injunction for violating the Competition Act, Telus wants punitive damages.

The Mobilicity ads misinform potential customers, said Telus’ Hall. “We couldn’t let that go in such a hot market.”

In particular, he said Mobilicity’s conditions of service have “many onerous terms” including a “fair use” policy that can limit wireless service. Mobilicity’s ability to slow data traffic of heavy users shows “that’s not unlimited” service.

Mobilicity’s Lyons refused to go into details about his company’s services because the matter is before the courts.

But he called the attempt to get an injunction “ridiculous.” The statements Mobilicity has made in recent ads it has been making for the past two years, he said. “This is not about customer confusion. It’s about shutting down dialogue (with customers) about contracts because no one’s confused with what we’re saying.”

When asked why shouldn’t Telus be able to go to court if it feels it has been wronged, Lyons said he doesn’t believe anyone is confused when Mobilicity says it doesn’t have contracts.

“What consumers perceive contracts to be, we don’t have those.”

Telus isn’t motivated by a duty to correct alleged misrepresenations, he said, but not wanting a dialogue about contracts.

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