Canada’s new wireless code isn’t all good news

Say goodbye to three-year wireless phone contracts, but don’t stop there.

A day after Canada’s new Wireless Code went live, subscribers could be forgiven for assuming the contract-length term change – the longest contracts realistically available to consumers are now two-year deals – was the only significant change.

Quite the contrary: the new code includes a wide of rule changes that the Canadian Radio-television and Telecommunications Commission (CRTC) says are designed to increase competition and make life easier for consumers. The changes include the following:

• Allow unsatisfied consumers to return their devices within 15 days.

• Updated contract language designed to make them easier to understand.

• Automatic unlocking at purchase if the device has been bought outright. If, like most Canadians, it’s purchased via subsidy, unlocking will be available 90 days after purchase.

• Capped international fees of $100 per month.

• Maximum data overage charges of $50 per month.

• Termination rights after 2 years – with no additional fees – even if the original contract term was longer.

CRTC Chairman Jean-Pierre Blais said in a statement that the new code “marks the beginning of a more dynamic marketplace for wireless services. Rather than feeling trapped by their contracts, Canadians will be able to make informed choices about the wireless services – and service providers – that best meet their needs every two years, if not more often.”

David Christopher, communications manager with OpenMedia.ca, says the new rules won’t bring about the sea change in the competitive landscape that many had hoped for, but they represent a positive start.

“These new rules are a step in the right direction,” he said. “It’s all about customer protection.”

Unintended consequences

With the code now in place, attention now turns to the impact on consumers. Despite the CRTC’s contention that it’s responding to consumer demands for greater competition and fairness, not everyone is convinced it’s a completely good-news story.

“While the CRTC hopes that this makes the sector more competitive, it has resulted in device amortizations over a shorter period, raising the monthly cost in many cases,” Mark Goldberg, a Thornhill, Ont., telecom consultant and founder of the annual Canadian Telecom Summit. “We will need to see what that does to continued adoption - but it appears clear that for some, affordability has taken a hit.”

The rules come into force as Industry Canada gets ready for the 700 MHz wireless spectrum auction next month. Although Industry Canada has been aggressively pushing for greater competition, no foreign investors submitted applications to participate.

“In practice, I am sceptical that it will significantly change the competitive landscape; there are no new players,” Goldberg said. “We will have to see if price competition delivers competitive benefits that outweigh the increases associated with reduced amortization.

On ongoing process

Christopher says while the new code marks a turning point for consumers, the job isn’t done yet.

“The positive changes we’ve seen in the code of conduct didn’t happen by accident,” he told Yahoo! Canada. “Ordinary members of the public worked hard to bring about these changes. “We’ve got to continue working together to hold the government to their word to ensure big 3 [carriers] are reined in and Canadians get access to the lower prices they deserve.”

Christopher says the Canadian government’s More Choices campaign echoes his group’s long-term message, and says now is the time to act.

“We’ve seen a lot of talk from the government, but we’ve yet to see action,” he said. “Canadians will look to [Industry Minister] James Moore to deliver on what he’s been saying.”

Whether talk turns to action, Goldberg says the new rules could have unintended consequences for consumers.

“By effectively eliminating early termination fees, the CRTC also removed incentives for carriers to offer discounts associated with term commitments,” he said. “At the end of the day, that may be increasing costs and reducing choice, in the name of protecting consumers.”

Carmi Levy is a London, Ont.-based independent technology analyst and journalist. The opinions expressed are his own. carmilevy@yahoo.ca