On June 3, 2013, the Canadian Radio and Telecommunications Commission (CRTC) published a new regulation called the Wireless Code, with rules intended to favour consumers over mobile network providers, effective two years hence. I will not go into detail about how the Code came to be; this has already been covered by Jacob Terry in the June 12, 2013 edition of Iron Warrior, which is available online.
The 24-month grace period ended last week; and after a last-ditch effort by Bell, Rogers, and Telus to challenge the Wireless Code in court was dismissed, all Canadian mobile network providers are now required to comply with the Wireless Code.
Background
Traditionally, cell phone manufacturers (OEMs) have chosen not to sell their phones directly to consumers in Canada, preferring to sell them to mobile providers who serve as “middlemen.” The providers then offer steep discounts on phones to any consumer willing to sign up for a three-year contract. For example, Telus might offer a phone with a retail price of $600 for $100 if the consumer commits to purchasing cell phone service from Telus for the next 36 months. Sometimes, providers would go so far as to not sell you a phone unless you agreed to a contract.
Often, a contract would be tied to a particular plan, so that choosing to start or stop using data would require you to cancel the contract. Another issue is that many cell phones reach obsolescence quickly. Commonly, the OEM will simply stop supplying updates to the phone’s software after two to three years. And since consumers were often unaware of how quickly a phone could reach end of support, they might end up in a situation where their phone was past end of service, but they were barred from purchasing a new phone until their 3 years were up. It is questionable whether phones should become obsolete so quickly; indeed Jacob argues they shouldn’t in his article from 2013. However, right or wrong, some phones don’t have a long service life.
The Wireless Code
I summarize a few highlights of the Wireless Code below:
1) All contracts shall be clearly stated in “plain language”. The terms of a contract must make it clear what the monthly cost is, when it expires, which regions the provider has service in, charges for carrier unlocking, and how much of a subsidy/discount has been provided to the consumer for signing it. Also, companies are required to provide a summary of their contract for those who are too busy to read the whole being.
2) Providers cannot arbitrarily change the terms of a contract without the customer’s permission.
3) Providers must warn customers whenever they are roaming (e.g. by text message) what the charges are. Data overage charges within a month must not exceed $50, or $100 if the customer is roaming, unless the customer explicitly consents to being charged more.
4) Providers cannot refuse to unlock a phone once 90 days have passed after the contract was signed.
5) Customers have the right to cancel a contract at any time, with immediate effect. Subsidy tabs must be paid off over 24 months in equal installments. After two years, customers may cancel a contract without penalty. When cancelling, a provider is allowed to charge, at most, the remainder of the tab plus $50.
6) Providers may not disconnect their customers until they’ve either racked up $50 in debt or failed to pay for two months in a row.
The Wireless Code applies retroactively, so if you signed a three-year contract between June 2012 and June 2013, you’re now free to cancel it at no cost. If you signed a three-year contract since June 2013, it has now been converted into a two-year contract, and there will be no penalty to cancel once the two years are up.
If you are with Wind or Bell, the discount on your contract will be paid off in equal installments every month; Rogers and Telus have already had an “equal installments” rule for several years. Cancelling one month before your contract expires will no longer cost a few hundred.
There are quite a lot of advantages to the consumer here. The cap on overage charges will prevent horror stories from happening, like the teenager from BC who racked up $20,000 in fees during a family trip to Mexico, oblivious to the high cost of data when roaming. Also, contracts not being more than two years should reduce the risk of phones prematurely reaching end-of-service (in fact, most providers have already complied with the two-year contract rule for over a year now). If you want to cancel, you can do so right away, instead of the 30 day wait some providers forced you to do before the Code’s implementation. Although Canada’s mobile network industry is still an oligopoly with elevated prices, we, the consumers, are in much better shape under the Wireless Code than without it.
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