Canadians to get new consumer code for wireless services

October 11, 2012

In a shift from its largely hands-off approach to the regulation of wireless services, the Canadian Radio-television and Telecommunications Commission (CRTC) has announced that it will develop a mandatory code to address the clarity and content of mobile wireless services contracts and related issues -- but will continue not to regulate the rates for such services.

In its reasons for instituting such a code, the Commission cited consumer concerns and complaints about the terms under which mobile wireless services are offered in Canada, as well as near unanimity from consumer groups and wireless service providers as to the need for such a code.

In fact, the proceeding to develop a uniform national code was actually initiated by requests from the wireless industry itself, provoked by a trend toward provincial consumer protection laws that impact wireless service providers.  A significant majority of wireless carriers argued that such a patchwork of laws, whose requirements and restrictions vary from province to province, creates confusion for consumers and leads to increased operational costs for carriers.

In the public proceeding to develop the new code, which will include a public hearing to be held commencing 28 January 2012, the CRTC is seeking detailed comments with respect to the content of such a code, the service providers to which it should apply, the manner in which its terms should be enforced and promoted and how its effectiveness should be measured.  With respect to the content of the code, the Commission expressed the preliminary view that it should contain provisions respecting the following:

  • Clarity of terms and conditions, including plain language drafting and requirements to provide contracts to customers
  • How and when a service provider may amend the terms
  • How and when a contract may be terminated, including the calculation and application of cancellation fees and conditions for automatic renewal
  • Clarity of advertised pricing and a prohibition on charging for optional services that a consumer has not ordered
  • Equal application to bundled and standalone services
  • Requirements for notification of additional fees, such as where usage caps are exceeded
  • Effect of loss or theft of hardware on contract and service charges
  • Conditions under which security deposits may be requested
  • Conditions for disconnection of service

While the proposed wireless code will mean Canadian consumers may see some changes to the terms of their wireless service contracts, there will be no rate changes required by the regulator.

In the mid-1990s, the CRTC determined that it would exercise its authority under the Telecommunications Act to forbear from regulating most aspects of the wireless industry, including retail rates and most contractual terms, thereby allowing market forces to achieve telecommunications policy objectives, including protecting the interests of consumer. 

Many of the consumers who provided comments in the proceeding to consider whether the CRTC should create a wireless consumer code expressed concern about the competitiveness of the Canadian wireless market, including choice of provider and pricing, and urged the Commission to reregulate in these areas.  However, the CRTC declined to intervene, noting that there is no evidence that the conditions for forbearance have changed sufficiently to warrant regulatory intervention with respect to mobile wireless service rates or competitiveness in the mobile wireless market, and finding that competition continues to be sufficient to protect the interests of users in these areas. 

As a final note, in developing the new consumer code, and attempting to establish a uniform approach to wireless service contracts across the country, the CRTC may face particular challenges trying to line up the terms of the code with the requirements of existing provincial legislation.  In this regard, the Province of Québec, which made changes to its Consumer Protection Act in 2010 that address wireless contracts, indicated in its submission to the CRTC that regardless of what the CRTC decides, it will maintain and enforce its existing legislation, asserting what it sees as its exclusive constitutional jurisdiction over matters of property and civil rights.

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