Canada's big three mobile carriers have filed a motion with the Federal Court of Appeals to overturn parts of the Canadian Radio-television and Telecommunications Commission's (CRTC) new consumer code for cell phone service in Canada.
BCE Inc., Rogers Communications Inc. and Telus Corp. are among the group of wireless providers poised to file a motion with the Federal Court of Appeal on Wednesday, as they try to appeal some parts of the CRTC's Code of Conduct.
In June, the CRTC announced new measures aimed at helping customers navigate their wireless contracts and costs.
The new code of conduct targets the often high cost of using a cellphone or smartphone by capping additional data and roaming charges as well as the length of cellphone contracts, allowing consumers to cancel their wireless contracts after two years with no fees. It also makes it easier to switch to a new provider and phone contracts easier to read and understand.
Earlier this year, the CRTC held a lengthy public consultation process in which it asked consumers to write in and email their views on cell phone services. Thousands of Canadians wrote in, and such issues were singled out as their biggest problems.
Late last night, OpenMedia.ca, a communications watchdog, responded to the motion, saying Canada's three telecom giants were "out of control."
"It is clear time for serious action to rein Big Telecom in and if need back be separating out their infrastructure so new entrants can provide services on a level playing field," executive director Steve Anderson said.
"After vigilance by Canadians of all walks of life, policy-makers are finally starting to fix our broken telecom market. The old giant telecom providers had a chance to listen, but instead they're taking Canadians to court with hopes to delay safeguards until nearly 2017," Anderson added.
The CRTC said the new code would take effect on Dec. 2, 2013 and that its provisions would apply to all wireless contracts by June 3, 2015.
Subsidies
At the core of the issue is how wireless providers apply subsidies on the devices they sell. When a consumer buys a cellphone today, the carrier typically discounts the upfront cost in exchange for a service contract, which is often three years on the latest devices.
The carrier then recoups the cost of the phone — which can be around $700 on the high end — through the monthly service fee over the term of the agreement.
If a customer wants to get out of the contract before the term ends, he or she usually has to pay a cancellation charge, which can be a combination of the remaining amount owed on the device plus arbitrary penalties.
The new code will require providers to clearly spell out in writing how much of a subsidy is being given, and how much will be deducted from the amount owing for each month of the contract.
Under the new code, subsidies must be divided evenly over a maximum of 24 months and carriers won't be allowed to charge extra cancellation fees beyond recouping those subsidies.
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