Competition Bureau has its worries, too
GATINEAU – In the summer Rogers Wireless introduced 36-month device financing plans into the Canadian wireless marketplace.
The service providers which introduced these new plans (Telus quickly followed suit, and then Bell and Ice Wireless had begun or where about to launch three-year device plans) were hailed by some as increasing smartphone affordability and generally being pro-consumer. Others hailed in the opposite direction.
On August 2nd, as we reported, the CRTC sent a letter to providers to cease that practice and then on August 30th, launched an official review. Initial submissions were due Tuesday, October 15th.
The Notice of Consultation says: “Bell Canada, Iristel (Ice), RCCI (Rogers), and TCI (Telus) have offered the device financing plans in question. The Commission is therefore initiating a proceeding for each of those companies to show cause why it has not committed a violation by offering device financing plans that may be in contravention of the Wireless Code, and, if the company is found to have committed a violation, why a mandatory order requiring it to cease offering device financing plans that are non-compliant with the Wireless Code should not be issued against it.”
That is a strong and rare statement from the CRTC and should be taken seriously especially that further down it continues by saying :” A preliminary analysis of the information the Commission has received thus far suggests that certain device financing plans, including those with 36-month terms, may not be consistent with the Wireless Code.”
Large providers unsurprisingly defend their positions stating, among other things, that Device Financing Agreements (DFAs) were put in place to allow the client to have access to a device more affordably and because it is untethered from the service, those contracts should not be considered off side by the CRTC Wireless Code.
As Telus wrote in its submission: “Instead of insisting upon an unreasonable interpretation of the Wireless Code that results in higher monthly payments for Canadians, the Commission should use this proceeding to enhance affordability by expressly recognizing the benefits of longer terms, and interpreting the Wireless Code in a purposive manner that permits and supports them.
“In order to be able to offer 0% APR device financing, Telus requires that customers enter into a contract for wireless services.”
Rogers is quite adamant in its submission, offering:
i. A Rogers DFA is not a ‘contract’ within the meaning of the Code.
ii. Devices financed under Rogers’ DFAs are not subsidized devices.
iii. The obligation to pay the remaining balance under a Rogers DFA on termination is not an ‘early cancellation fee’ within the meaning of the Code.
iv. The obligation to pay the remaining balance on termination is not a fee or penalty.
Again unsurprisingly, others disagree.
“This is a pivotal time in the Canadian wireless industry,” reads the Competition Bureau submission. “Smaller facilities-based competitors are expanding their competitive presence, and other CRTC proceedings are focused on improving wireless service competition in Canada. If new competition develops, but consumers must pay hundreds of dollars in order to switch, how will those consumers take advantage of the lower prices, greater choice, and increased levels of innovation that are characteristic of greater competition?”
The Bureau quotes Statistics Canada’s July 2019 Daily: “The widespread introduction of unlimited data plans coincided with a reduction in the subsidies for wireless devices, shifting more of the cost of devices to consumers. Consequently, the multipurpose digital devices index, which includes prices for tablets and smartphones, rose 42.5% month over month.”
It was the Coalition for Cheaper Wireless Service (CCWS) which really came out swinging.
“The CCWS is most dismayed that the Commission has instituted this proceeding at all… The Commission should simply have treated the apparent violations of the Wireless Code (…) with a Notice of Violation under its general AMPs power in the Telecommunications Act,” reads its filing.
“The result is a Frankenstein monster of processes.” – CCWS
“Instead, the Commission has conflated and confused compliance with regulation and policy-making by giving the alleged offenders not only a chance to justify their actions without invoking the proper administrative penalty procedure but also a chance to modify the Wireless Code for the worse, soon after its recent review.
“The result is a Frankenstein monster of processes where several aspects of the Commission’s general decision-making, tariff-like show cause process and policy promulgating functions are stitched together with quasi-compliance and enforcement efforts. This process virtually guarantees that the companies accused of violations of the Wireless Code will either walk free, or be able to raise a credible case of procedural unfairness if fined, or effectively change the law they were openly violating by baldly stating their change benefits consumers after brazenly violating it. This way lies madness.”
The CCWS is comprised of Public Interest Advocacy Centre, ACORN Canada, the National Pensioners Federation and the Canadian Association of Retired Persons.
Besides quoting King Lear, the CCWS submission concludes: “CCWS believes that the Commission should halt and withdraw the present Notice of Consultation and instead proceed formally under the AMPs regime against those WSPs that the Commission has evidence has violated the Wireless Code, providing them with the procedural protections outlined in the AMPs regime of the Telecommunications Act.
“Three years plus device financing will have a deleterious effect upon the wireless market and any superficial ‘gains’ made by consumers will lead to less competition and more ‘lock-in’ of consumers to major WSPs. These new, longer device financing plans violate the Wireless Code which was designed to allow consumers an ability to shop the market unencumbered by high payments, at least every two years.”
The Union des Consommateurs argues, in French, the companies are trying to circumvent rules put in place by the CRTC to favour consumer mobility.
The group also did a study during the week of September 9, and concluded device prices offered by wireless providers are inflated compared to manufacturers’ retail pricing and it warned the Commission to be careful.
All parties may file replies to interventions with the Commission by October 29, 2019.
