Saskatchewan class action suit may require telcos to reimburse system access fees

A class action suit seeking telecom providers to reimburse clients 20-years worth of system fees is on the verge of being settled after seven years in Saskatchewan’s court system. “Every time you break out something that really should be part of your basic monthly fee, it’s misleading. Customers think it’s a government fee or some sort of CRTC mandated fee, and it’s a problem,” John Lawford, legal counsel for consumer group the Public Interest Advocacy Centre (PIAC), said in an interview. The Regina office of law firm Merchant Law Group LLP began the class action suit in 2004 to try to establish that Canadian consumers were misled to believe that access fees were collected as a government tax or CRTC levy. If the courts rule in favour of the law firm, consumers that have opted-in to the class-action suit would be reimbursed for the fees retroactively to when they began being charged. Wireless service providers can charge customers a “system access fee” that the companies say is normally used to cover administrative overhead. The industry fee is normally about $6.95 per month. Because the fee is labeled as an extra on monthly bills, critics say consumers can mistakenly believe it does not originate with the telecom provider. In 2007, the case proceeded to a certification hearing that allowed the law firm to pursue the suit against numerous wireless service providers, including Bell Canada, Aliant Telecom, MTS Communications, Telus Corp., Sasktel, AT&T Canada and Rogers Communications Inc. The certification order modified Merchant Law Group’s original claims, which led to appeal applications. Last week, the Saskatchewan Court of Appeal heard the case, and reserved its decision. “We consider the case to be without merit,” John Meldrum, Sasktel’s vice-president of corporate council and regulatory affairs, said in an interview. “The system administrative fee is on the front of our contracts. It’s fully and completely visible, so it’s a matter of contract. To somehow say that is unjust is totally contrary to the facts of the case.” Sasktel continues to charge a system administrative fee on many of its plans. According to Sasktel’s list of wireless terms and conditions, its “system administrative fee” is directed towards recovering administrative costs such as those related to wireless spectrum, network management and billing. “Over the course of time, Sasktel has actually run a deficit over the cost of items covered by our system administrative fee, as compared to what we’ve collected,” Meldrum said. Telus spokesman Shawn Hall added in an interview that, “We’re confident that the case is baseless as far as Telus is concerned. The claim of misrepresenting the charge isn’t true because our explanation of the fee to clients has always been clear and accurate.” A year ago, Telus integrated its system access fee into its monthly service charges, meaning the fee is no longer billed as a separate item. “The charges and expenses that the system access fee covered are still there. They’re just wrapped into our plan price,” Hall said. Hall said the change is part of a move towards simplifying bills and plans for Telus customers. Lawford said he supports Telus’ decision to remove its system access fees. “I would hope that Telus’ decision to roll all their fees together would trigger others to do that,” he said. Rogers declined to comment on the case, as it is currently before the courts. Bell said it is awaiting the results of the hearing to comment. A decision is expected in the spring. System access fees originate from a $48 cellular access fee that Industry Canada charged consumers in the early days of cellphone use. “Back then, there was a direct correlation between the amount that was charged and the amount that was paid directly to Industry Canada. At some point, this began to evolve and the marketing folks at one of the big companies decided to create this fee,” Meldrum said. Lawford said telcos shouldn’t charge system access fees because telecom companies now own spectrum, as opposed to the 1980s, when individual customers paid providers to access government spectrum. “It’s just a made-up charge they were used to charging, so they kept on charging it,” Lawford said. But Lawford said he doesn’t see the class action suit in Saskatchewan as the best solution to settling the debate over the fees. “This case will be difficult to win because they have to show that everyone’s system access fee is charged in the same circumstances, as well as show some reason for why the fee should be paid back,” he said. Lawford said the CRTC has stepped away from regulating system access fees because it is waiting for the court’s ruling. “You get a class action that probably won’t work, but it hangs over everybody’s head; you get the CRTC that’s waiting for the class action to finish to do anything; and you get the companies that are continuing to collect the fee and raise the fee. I don’t think that’s very consumer friendly,” he said. “A better way to go about this would be for the CRTC to stiffen their regulatory backbone and tell service providers to stop charging it. The commission needs to have a proceeding on detailed billing and extra charges and whether or not they should be rolled into the basic monthly fee.” The case has already encountered difficulties with Saskatchewan’s laws on class action suits. “There are some basic problems with the case because of the time when they launched it. In 2004, the legislation was opt-in, meaning a customer of one of these service providers is only a plaintiff in the case if they opt to be one,” Meldrum said. The provincial law has since changed to opt-out. If the court action was launched today, all customers would be considered plaintiffs unless they chose to opt out. Merchant Law Group applied in 2009 to change the class action suit to an opt-out basis, but the application was dismissed. “How are you going to get 20 million people to opt-in? It’s not going to be easy. Opt-in makes it harder for the law firm to collect all their plaintiffs,” Muldrum said. “The case may be the same, but the damages will be significantly different because they may only have 20,000 plaintiffs as opposed to 20 million.” If the court rules in favour of the law firm, only customers who have previously opted-in will receive remuneration. Merchant Law Group was not available for comment Tuesday. asmith@thewirereport.ca

Saskatchewan class action suit may require telcos to reimburse system access fees

News | December 22, 2010

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