How your cellphone contract could change for the better

The vast majority of Canadians own a cellphone, and judging by the ubiquitous sight of people constantly fiddling with their touchscreens, the technological devices have become an integral part of daily life.

Nearly 80 per cent of Canadian households have a cellphone, according to a 2010 survey conducted by Statistics Canada.

But one thing Canadians would gladly do without is the phenomenon of "cellphone shock" — being hit with unexpected charges and large bills, in part due to confusing and complicated cellphone contracts.

Well, here's some good news: a remedy might be in the works.

'Canadians haven't had the benefit of any type of wireless regulation... This is the first time that we're seeing the regulator step up.' — Janet Lo, of the Public Interest Advocacy Centre in Ottawa

The Canadian Radio-television and Telecommunications Commission on Monday released a draft "wireless code" that would establish rules for cellphone contracts across the country. Proposals in the draft code include allowing customers to cap their monthly bill and giving them tools to monitor their usage and avoid incurring extra fees before it's too late.

"Canadians haven't had the benefit of any type of wireless regulation, really, in memorable history," said Janet Lo, of the Public Interest Advocacy Centre in Ottawa. "This is the first time that we're seeing the regulator step up and try to level the playing field by providing clearer contracts and clarity around any number of issues that, clearly, consumers are frustrated about."

Here are five things you need to know about the proposed regulation:

What exactly is the 'wireless code'?

It is a set of mandatory guidelines that wireless providers will need to follow when providing services to customers in Canada. In general, these are national regulations aimed at making cellphone contracts straightforward and easy for Canadians to understand. The new rules will apply to cellphone customers on a fixed-term contract as well as to those who purchase cellphone services on a month-by-month basis.

The CRTC released a set of draft regulations on Jan. 29, 2013, based on thousands of comments submitted by Canadians to the commission in writing and online and is seeking public feedback on the draft proposal before finalizing the rules.

What are some of the proposed changes in the code?

The draft regulations address a wide range of issues, including how much wireless companies can charge to unlock customer's wireless devices and tools to help consumers monitor and control the fees and charges they incur.

Here are a few highlights from the proposed rules:

• 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.
• 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.
• 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.
• 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.
• 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.
• 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.

What other legislation is already in place to regulate cellphone contracts?

Several provinces already have regulations governing cellphone contracts or are working to implement them. 

In 2009, Quebec was the first province to roll out legislation to better protect customers when they sign up for cellphone contracts. As part of Bill 60, which amended the province's Consumer Protection Act, wireless service providers are prohibited from renewing contracts without a customer's written approval. Quebec providers are also required to disclose the total cost of goods and services offered to ensure that customers aren't caught off guard by expensive text messaging fees or charges for services they don't want.

In Manitoba, new rules governing cellphone contracts came into effect in September 2012. The provincial legislation is similar to that of Quebec and to the rules the CRTC has proposed. For example, companies are required to fully disclose and explain all fees, charges and terms and must allow customers to cancel their contracts at any time for a "reasonable cancellation fee." As well, the minimum monthly cost on a cellphone contract must be included in all advertisements.

Newfoundland and Labrador passed legislation governing cellphone contracts in April 2012. Under the new law, service providers must outline the terms and conditions of cellphone contracts in plain language and disclose the total monthly cost in all advertising. 

Nova Scotia introduced plans in April 2012 to regulate cellphone contracts with legislation that would cap cancellation fees at $50 and force wireless providers to seek a customer's permission before changing fees or service options. The bill, amending the provincial Consumer Protection Act, received royal assent in May 2012.

In Ontario, the provincial government in April 2012 committed to introducing legislation governing cellphone contracts. A private member's bill proposed new regulations that would oblige wireless providers to use all-inclusive pricing in their advertisements and notify consumers of any change to their contract. However, when the Ontario government was prorogued on Oct. 15, 2012, progress of the bill stalled. The legislature is expected to be recalled by Feb. 19, but the bill will have to be reintroduced if the government wants to pursue the regulation. "It's actually, effectively, dead in the water," said Lo of the Public Interest Advocacy Centre.

In New Brunswick, a private member's bill regulating cellphone contracts with clauses similar to those in Quebec and Manitoba has been tabled. 

The multitude of rules in different provinces has been complicated and costly for wireless service providers, which is what prompted the companies to seek clarity from the CRTC.

Bell Canada said it and other providers would welcome a national code of conduct.

"We believe a uniform national code will put all Canadian consumers on an equal footing with wireless choices while allowing the industry to adhere to one set of national rules rather than implementing different regulations in different provinces," the company said in a statement.

The CRTC's proposed regulations would not supersede existing rules governing cellphone contracts, meaning that a consumer could either use the national code or the provincial rules — whichever is more favourable to the customer.

What regulations do other countries have?

It is difficult to compare Canada's telecommunications market with that of other countries, many of which have much more competitive environments with a greater number of wireless providers.  

Regulation of wireless services varies around the world. The European Union, for example, recently capped roaming charges to reduce the cost of data and calls for those travelling throughout Europe.

Australia has national regulations in place that include several provisions that are similar to those proposed by the CRTC, said Lo.  It requires wireless providers to give customers the option of capping usage, provide a clear summary of contract terms and use all-inclusive pricing when advertising expected monthly costs.

In the U.K., a fixed-term contract cannot exceed 24 months, compared to Canada where cellphone contracts can last as long as 36 months.

When will the 'wireless code' come into effect?

It is unclear when, or in what form, the proposed wireless code will come into effect. The CRTC says it plans to have a final version of the regulations by this spring.

'The code needs to apply to everybody, not just new contracts. Otherwise, consumers who just signed their contract the day before the code comes into force will need to wait another three years.' — Janet Lo, Public Interest Advocacy Centre

Based on what it has indicated in the draft version of the code, the commission would likely start enforcing the rules six months after the code is published, said Lo. But it is unclear whether it will apply only to customers with new or renewed contracts or also retroactively to those who are already locked into a plan.

"We think the code needs to apply to everybody, not just new contracts," Lo said. "Otherwise, consumers who just signed their contract the day before the code comes into force will need to wait another three years before they can benefit from the content of the code."

Lo says she hopes the legislation is put in place as soon as possible.