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Consumers win with CRTC’s new wireless code?

CRTC's new code demands a 2-year cap on contracts and unlocked cellphones within three months of purchase

When anger builds over time, it's tough to see the silver lining. But new rules published by Canada's telecom watchdog on Monday should go a long way in making up for what has long been a source of major frustration for wireless consumers.

The Canadian Radio-television and Telecommunications Commission unveiled a wireless code that will let customers cancel their cellphone or smartphone contracts after two years without cancellation penalties, even if a consumer has signed up for longer.

It's a huge move on the part of the CRTC to address the massive "frustrations" by consumers who, during the drafting of the rules earlier this year, weren't afraid to essentially let the watchdog know they felt trapped and ripped off. The regulator heard that the length of contracts was a big bone of contention, while other touchy topics included cancellation fees and roaming charges.

The new wireless code will allow individual and small business consumers to:

  • terminate their wireless contracts after two years without cancellation fees, even if they have signed on for a longer term

  • cap extra data charges at $50/month and international data roaming charges at $100/month to prevent bill shock

  • have their cellphones unlocked after 90 days, or immediately if they paid for the device in full

  • return their cellphones, within 15 days and specific usage limits, if they are unhappy with their service

  • accept or decline changes to the key terms of a fixed-term contract (i.e., 2-year), and

  • receive a contract that is easy to read and understand

Bloody fantastic; cool; freedom was how some readers encapsulated their reaction to the new code on social media platforms on Monday, reflecting a generally wide belief the measures are a win for consumers long kept under tight constraints in a telecom space dominated by giants Bell, Rogers, and Telus.

Did wireless code go far enough?

The CRTC didn't go as far as an outright ban on the three-year contracts, but the watchdog's chairman said the move is pretty much equivalent to that. "We didn't focus on the length of the contract, we focused on the economic relation," Jean-Pierre Blais told the Canadian Press.

"So, in effect, it's equivalent to those asking for a ban of three-year contract without us actually banning three-year contracts, because what we're saying is the contract's amortization period can only be for a maximum period of 24 months."

In this respect, whether two or three years seems a bit of a moot point now that consumers are focusing on the new rules that clearly give Canadians the freedom to walk away and potentially reap the benefits of pricing competition.

The wireless code, which will apply to all service providers in Canada and new wireless contracts effective Dec. 2, benefits "all wireless consumers from coast to coast," says Jonathan Bishop, research and parliamentary affairs analyst at the Public Interest Advocacy Centre.

But some issues of pricing will remain, says Mihkel Tombak, a professor of technology management and strategy at the University of Toronto.

"What the phone companies have done is they've been able to bundle the price of a phone into a contract. They've obscured the pricing and locked people into three-year terms. They could react by spreading out the price of the phone over two years," he says.

In this scenario, that could mean those shiny new phones will come at a higher price if they are paid back in a shorter period, which is an obvious hit to consumers' wallets. It remains to be seen how it will all shake out. But in the grand scheme of things that upfront cost pales in comparison to the potential bigger-picture perks: consumer liberty and a possibly more competitive environment, which in the end if it competition works like it’s supposed to, likely means more “dynamic” prices. Some things are worth paying for.