Costs of new Quebec law will be passed on to wireless customers, CWTA says

OTTAWA--The Quebec government’s changes to consumer protection laws surrounding cell phone contracts will pass extra fees onto consumers, the Canadian Wireless Telecommunications Association (CWTA) says. On July 1, the province’s Consumer Protection Act, Bill 60, came into force. The bill introduced new consumer protection provisions for contracts “involving sequential performance for a service provided at a distance,” or cell phone, wireline, pay television and Internet services. Under the new law, cancellation fees for mobile phones cannot exceed the discount the customer received when the phone was purchased. In cases where the phone was purchased without subsidization, the fee cannot exceed $50 or 10 per cent of the value of the unpaid services. The law also requires that service providers must inform customers about the manufacturer’s free warranty before selling an extended warranty. Companies must also give customers at least 30 days’ notice before making changes to a contract’s terms or conditions. If the customer does not approve of the changes, they can cancel the contract without penalty. And Bill 60 is binding—if the service provider does not follow the new rules, the government or a consumer advocacy group can seek an injunction to force compliance. The new measures are intended to protect consumers from unfair fees, but Jim Patrick, the CWTA’s vice-president of government affairs, told The Wire Report that he estimates the province-wide cost of implementing the changes at $50 million, and that those costs will be passed on to consumers. “The changes have been made. I think they were expensive and costly, and those costs have to be picked up by somebody. We don’t talk to our members about pricing, but logic would dictate that if you have to spend $50 million in a single province to get your billing system up , those costs have to be passed on to consumers at some level,” he said. “At the end of the day, it may have an impact on prices in Quebec ... There’s only one source of revenue for most of these companies, and that’s the accounts they have with consumers.” But Yannick Labelle, a consumer protection policy and regulatory analyst at the Union des consommateurs in Montreal, said in an interview that she isn’t worried about costs falling in the consumer’s lap. “Are we worried? No. is a constant argument that has always existed,” she said. “If the consumer is better protected and it brings about a few more dollars on his bill, then why not? At least they’ll be able to make better informed decisions.” Labelle said public feedback for the new law has been positive, and that the consumer advocacy group regularly receives calls asking how to enforce it. Labelle added that it’s not clear how the CWTA came up with the $50 million price tag. “We think is an argument that is not always upheld by justifications that are clear to the public. They say $50 million, but how was that measured? It’s never clear or more detailed than that,” she said. “$50 million is an enormous amount to change contracts and to not exercise certain practices. When we say, ‘You can no longer do this,’ we have trouble seeing how that could incur costs, other than training personnel.” Marc Choma, CWTA director of communications, said the $50-million figure is an aggregate total of the costs to individual carriers, including changes to billing systems, employee training, reorganization of staff, and updating websites and marketing materials. “Almost every single aspect of the business would be impacted when you make a change like that,” he said. “Because all the systems are in place on a national basis for national carriers, then you have to re-do a complete system for one particular province. There are going to be massive costs associated with that.” Still, Patrick said the CWTA is content with the enacted version of the bill, which was amended several times since its introduction in June 2009. “There were some things in there frankly that would have made it very difficult for carriers to offer any subsidized phones in Quebec. That obviously would have been a big problem,” he said. “I think the parts that may have caused the most problems for consumers, we were able to fix before the bill came into effect.” Labelle said her organization has not yet examined contracts for the month of July to verify whether they meet the new law’s requirements. Bell Canada spokeswoman Marie-Eve Francoeur told The Wire Report by email that it is complying with the law. “Bell is fully compliant with it since the Bill took effect on June 30. No major changes needed to be done to our existing practices to comply with the new law,” she wrote. Telus Corp. spokesman Jim Johannsson added in an interview that the company is also compliant with the new law, and Rogers Communications Inc. was not available for comment Thursday. Observers note that telecommunications regulations fall under federal jurisdiction, making it possible for wireless providers to challenge the new Quebec law on constitutional grounds. Labelle acknowledged that legal action is always a possibility when provincial governments enact consumer protection legislation. “It’s always one of the first questions asked,” she said. “It’s often the threat companies make: ‘If you enforce too rigid requirements, we will contest them on a constitutional basis.’” Labelle said it could take several years to resolve the matter in court if the Quebec law is challenged. Patrick said the CWTA is not currently engaged in any legal action. kfournier@thewirereport.ca

Costs of new Quebec law will be passed on to wireless customers, CWTA says

News | August 5, 2010

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