‘System access fee’ class action suit will probably end in settlement: lawyer

An $18-billion class action lawsuit against some of the country’s largest wireless carriers will probably end in a closed-door settlement after the Supreme Court paved the way for the case to proceed, Tony Merchant, the lawyer representing the defendants, said. “After companies have lost all of their appeals, which is the case here, statistically, 92 per cent of cases are settled,” Merchant told The Wire Report hours after the Supreme Court on Thursday dismissed the carriers’ appeal to overturn a Saskatchewan court’s 2007 decision, which said a class action suit can proceed for damages related to the carriers’ “system access fees.” “It’s common to settle, and that’s part of the two-year process here,” Merchant said. First filed with the Saskatchewan Court of Appeal in November 2011, the appeal, by Rogers Communications Inc., Telus Corp., BCE Inc.'s Bell Mobility and Bell Aliant, SaskTel and MTS Communications Inc., reached the Supreme Court after the provincial court refused to overturn a lower court decision to certify the case as a class action. The original suit, which claimed the carriers benefited from “unjust enrichment” through “improperly imposed ‘system access fees,’” has was most recently estimated in court to be worth $18 billion, Merchant said. He said the figure accounts for about 20 million cellular phone users who paid the companies’ $6.95 access fees on their monthly bills since the early 1990s. Merchant said the next step for his firm is to appear before a Saskatchewan court judge to request an order to compel the companies to produce “millions of documents” that outline how much revenues they received from the system access fees as well as how they trained their employees to explain the fees to subscribers. “We have one internal document from of one of the companies, which in essence says, if someone asks you about system access fees, misrepresent it,” he said. “It says to tell the customers that this is a government charge, and, of course, that’s absolutely not the case.” Merchant said he expects to find similar instructions from other carriers after seeing more documents. “That’s an important stage, and may result in our being able to show widespread, deliberate wrongdoing,” he said. John Lawford, legal counsel for consumer group the Public Interest Advocacy Centre (PIAC), said in an interview that the origins of the carriers’ system access fees trace back to the 1980s, when the federal government charged carriers to use spectrum to transmit subscribers' wireless signals. He said carriers continued to apply the charges under the same name after the government fees were discontinued. “The system access fee is a special one because it’s been around for years and misrepresented for years,” he said. Telus spokesman Shawn Hall said Telus charged a system access fee until recent years to cover “government-related costs,” including federal government licensing charges, spectrum acquisition and licensing fees, mandated services for the hard-of-hearing, and mandated subsidies for rural phone services. He said Telus was always “up front” about the charges and what they were applied for but has since rolled them into its prices for wireless plans as a part of the company’s “clear and simple pricing” initiative. “These expenses exist, and we have to cover them,” he said. “In the past, it made sense to break them out as a separate line item, but we were always upfront about what that charge related to.” Leigh-Ann Popek, a spokeswoman for Rogers, said in an emailed statement that the company supported the appeal because "we think there are compelling issues that are worthy of consideration by the Supreme Court of Canada." Popek added: "We’re confident this claim is unfounded and now look forward to having our day in court on the merits of this claim." Merchant said it matters where or how charges appear on wireless bills. “We want to settle, but I also want to see the societal lift that comes from a recognition that you can’t use, to use a football analogy, misdirection plays on Canadian consumers,” he said. The CRTC opened a consultation in April on whether it should introduce regulations for a national wireless consumer code. Telus, Rogers, Bell, and three consumer interest groups support the proposal. Lawford, whose organization supports the creation of a national consumer code for the wireless industry, said such a code could prevent futuer class action lawsuits against wireless carriers. nkyonka@thewirereport.ca

‘System access fee’ class action suit will probably end in settlement: lawyer

News | June 28, 2012

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