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CRTC kicks off week-long public hearings into proposed wireless code for Canada's wireless industry

Three-year wireless contracts routinely raise the ire of Canadian consumers, and the notion of a limit to term lengths came into focus Monday as a week of public hearings into a proposed national code for the industry got underway

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Three-year wireless contracts routinely raise the ire of Canadian consumers, and the notion of a limit to term lengths came into focus Monday as a week of public hearings into a proposed national code for the industry got underway.

The Canadian Radio-Television and Telecommunications Commission did not include such a provision in its draft national code for the industry published on Jan. 28, which came as a surprise to many consumers who left feedback on the telecom regulator’s website.

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However, Bernard Lord, president and CEO of wireless industry lobby group the Canadian Wireless Telecommunications Association, argued Monday that simple early termination fees proposed in the draft code obviate the need for a limit on term lengths.

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“[Consumers] can cancel, pay off the handset subsidy and move on,” Mr. Lord said of what he presumes the code will eventually mandate. “If a customer can decide after two years, ‘I’m out of here,’ does it really matter whether they sign up for two, three or one? They can leave at any time.”

In his submissions to a panel headed by CRTC chairman Jean-Pierre Blais in Gatineau, Que., Mr. Lord said banning three-year contracts would simply “eliminate one of the most popular choices out there.”

John Lawford, general counsel at the Public Interest Advocacy Centre, agreed that the ability to get out of a three-year contract with almost no penalty, “takes a lot of the sting out of a three-year contract.”

He acknowledged the argument that some people want to subsidize the cost of the latest smartphone and choose to do so through a three-year contract.

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“But they [the carriers] never offer two-year contracts. The markets are not working so how do you fix that?” Mr. Lawford said in an interview after making submissions to the panel. “We wanted to really tell them that consumers are very concerned about not having any two-year options. The people just want to make sure that they get two-year options.”

The CRTC began seeking input into a mandatory national code for the $19.1-billion wireless industry last fall and after hearing from consumers online and through written submissions, developed the draft document it published two weeks ago.

Last week the Competition Bureau published a submission in response to the draft code arguing in favour of a provision limiting the duration of wireless service contracts.

“Canada is one of the only jurisdictions worldwide where a large proportion of wireless contracts are three years in duration,” the competition watchdog said, noting that U.S. contracts are regularly only two years and European service providers are limited to two-year contracts by law.

“If contract lengths are not limited by the wireless code, then it is particularly important that contract terms and termination fees are clear and not unnecessarily restrictive so that customers are not tied to these contracts in a manner that will harm competition,” the bureau said.

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Telus Corp. was the first of the country’s three largest wireless carriers to make submissions to the CRTC panel on Monday (Rogers Communications Inc. will appear before the panel Tuesday and Bell Canada Enterprises Inc. will appear Thursday).

David Fuller, chief marketing officer for the Vancouver-based company said Telus was the first national carrier to do away with early termination fees based on a set amount such as $20 multiplied by the number of months remaining in the term.

After making that switch, he said, the company also did away with one- and two-year contracts because customers could simply make their three-year terms into shorter contracts by deciding to pay off the device subsidy at any time.

Telus executives told the panel they agreed with much of the proposed code but had concerns about certain elements, in particular the CRTC’s proposed tools to help users monitor their monthly usage and even cap the amount of additional fees they incur in a billing cycle at $50 or an amount set by the consumer.

“We feel this proposal is unnecessarily prescriptive and would turn out to be more of a negative for consumers than a positive,” said Brent Johnston, Telus’s vice-president of mobility solutions.

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The draft code also proposed reasonable terms for unlocking phones so they can be used on competitors’ networks, which could promote greater competition as it gives consumers the ability to switch carriers with greater ease.

“Locking is something that consumers are really starting to get a handle on and they want to have it changed in a big way,” said PIAC’s Mr. Lawford.

One option in the proposed code would require carriers to allow consumers to unlock their phones after no more than 30 days of service.

Other issues likely to be contentious as the hearings continue this week include the timeline for implementation of the code and whether it should apply to current contracts.

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