Here in Canada you can pretty much guarantee that you will never hear this statement:
“I love my cell phone provider. They give me fair rates and great service. My favourite thing about them is that if I do ever have a problem, I call in and they solve it for me the first time, every time. Also, my bill is always exactly what I expected it to be and prices are fair, especially compared to the U.S.”
Well this week CRTC announced something they referred to as a draft code of conduct for wireless providers in Canada. I would like the final document to be named the CRTC’s Canadian Cellphone Company Code of Conduct, or CCCCCC. You can see it here.
Sighs of relief went up around the country as people felt there was finally something being done about the evil cell phone companies that had been screwing us all over since the dawn of time. Today we will look at the suggestions that have been outlined in the draft and how they might affect you as an individual.
Let me start by stating that I am no fan of cell phone companies. People that know me have heard me rant about them in the past. However, I think this draft code of conduct is not the correct solution to the problems we face as consumers. Also, I should mention that I used to work in the call centre for one of the major cell phone providers in Canada and so I have a pretty good understanding of what people are upset about when they talk about their cell phones. Let us begin.
We will use the nice summarized list of the new suggestions from the CBC.
- Monitoring usage: Customers must be given tools to monitor their usage compared to the limits of their plan in order to be aware of extra fees they might incur if they go above the limits.
A great recommendation. Rogers thought it was so good they travelled back in time and implemented this years ago. You can see usage details on their website or directly on a smart phone app that is free to download and comes installed on most phones by default. Bell had an even older service so that even before smartphones you could send in a text and it would autoreply with your usage and overage fees.
- Bill caps: Customers must be allowed to restrict features that could incur additional fees and have the ability to cap their monthly bill at a certain amount. Once the user hits the cap, the service provider would suspend services that could result in extra fees.
This is a spending cap on Bell and CLM(Credit Limit Monitoring) on Rogers. These are usually implemented automatically on people with weaker credit scores but you can put them on your account voluntarily as well.
- Personalized summary of terms, conditions: Customers must receive a personalized summary of key terms and conditions in their contract, such as how much they would pay in cancellation charges at different times during their contract and what tools are available to help them monitor their usage of different services.
Yes, a normal cell phone contact could take minutes and minutes to read through and you want your phone now! Now, now. Make them give us bullet point contracts! Also, they already tell you in your quick start guide how to monitor your usage. In case you were wondering, that is the booklet you normally throw in the recycling bin after you take your phone out of the box.
- Unlocking wireless devices: Wireless providers are required to give customers the option to unlock locked wireless devices. The fee that can be charged for this option and the time frame in which devices could be unlocked would vary depending on whether or not the cost of the device is subsidized by the provider.
I agree with this. Locking phones is dumb.
- No fine print: Policies governing the terms or use of service “must be written in clear, easy to understand language” and in an appropriate font size.
Confusing contracts are already against the Consumer Protection Act of 2002. Here is a link to the summary of your rights. So I guess now they can be fined $250,000 as a corporation AND it will be against the CCCCCC. Also, I am not sure we need to take the term “fine print” so literally as to regulate the font size.
- Advertised prices: Advertised prices for a contract must include the total monthly amount the customer must pay on a recurring basis and indicate whether the figure includes sales tax and government-mandated fees.
- Cancellation of service before contract is up: Early-termination fees can only include the subsidies the provider has absorbed to lower the price of mobile devices and discounts the customer received for signing a fixed-term contract.
I am fine with this but most people will still think these fees are too high.
The number one thing missing from this list is a statement about the length of contracts. This is a huge complaint from customers in Canada. Most countries have two year contracts, in Canada the contracts are normally three years. Everyone is demanding that the contracts be limited, by law( or CCCCCC rules in this case), to two years. Make three year contracts illegal! The angry internet people type (sometimes in all caps). Of course, right now you could get a two year contract if you like, or no contract at all. You could just go buy a phone and start a plan with a provider. But wait! Phones are expensive, who wants to pay so much for a phone when they are practically giving them away with a contract? In reality people want the fanciest phone at the lowest possible price and so they sign up for three years. There is no reason to legally limit the contracts to two years. You don’t want a three year contract? Don’t sign one. Pay more for your phone. Then other people do that. Then the companies start giving better deals to people on two year plans because everyone wants one. This is a new system where people demand something and then others sup… provide it. I have just invented it.
We should be talking about the real problem with our cell phone market here in Canada; the limitations on foreign investment on the wireless industry and the spectrum auctions.
Not too long ago it was illegal for a wireless provider to be owned by a foreign entity. That is, only Canadians could own Canadian wireless providers. Now we changed the rules so that if you own less than 10% of the market then you are allowed to accept foreign investment. Great. As far as I could tell there is nothing written about what happens when you accept that money and then grow up to 10% of market or beyond. At 9.99% of the market you can have European or US companies investing. 10.01%? I guess you give all the money back or sell your extra share to domestic owners. It really is not clear what happens.
Spectrum Auctions. It may not seem like it but there is only so much air to go around when it comes to cell phone signals. This year sometime there is going to be an auction to see who can take up what parts of the air that has recently become available. You may have heard about how over-the-air TV(antenna, bunny ears, etc) switched from analog to digital in the not so distant past. Well, that freed up some spectrum space that is really nice for wireless companies. It turns out that the signals that travel in this spectrum space are great for high speed data and for going through walls. So you can get faster speeds and your signal will work in more places like parking garages and elevators. Good news right?
The auction process the CRTC came up with is that each major service area will have its spectrum divided up into four blocks. Yes four. You would not want three because that would benefit only Bell, Telus and Rogers. Remember, this is an auction so the highest bidders get the spectrum space. They have basically left one block open for another company to buy in each service area. See, competition. Rejoice. Although not too much competition because if those smaller firms that are supposed to come 4th in these auctions got an influx of money and were able to buy too much of the spectrum then they would go over 10% market share and then they would not be allowed to use the money that allowed them to grow over 10%… I wish I was making this up.
There is only one solution to this. DE-regulation. Rather than trying to get better customer service and lower prices through adding more laws which cost the government money to enforce, we need to remove restrictions on who can buy our spectrums. The idea here is that if the big companies in the U.S. had access to our market some of their deals might start showing up here. Or, they would start moving up here and all of a sudden it becomes cost effective for Canadian companies to decrease their pricing. I am not normally so Fraser Institute on topics but in this case it makes so much sense to just de-regulate the market and watch the benefits roll in.
Although, we should make sure the de-regulation is printed in a nice easy to read font.