Wireless code’s retroactive application ‘mandatory,’ Motzney says

The retroactive application of the CRTC’s wireless code on all existing wireless contracts will be “mandatory” on June 3, 2015, allowing customers on the tail end of three-year agreements to exit without paying an early cancellation fee, said Barbara Motzney, the CRTC’s chief consumer officer. “It is clear that the Commission intended the final 3 June 2015 implementation date to be a mandatory date,” Motzney said Tuesday in a letter to the Canadian Wireless Telecommunications Association (CWTA). “Consequently, after 3 June 2015, early cancellation fees for all wireless service contracts will be determined in accordance with the formula set out in the Code.” Under the CRTC’s wireless code released this month, starting Dec. 2, Canada’s wireless subscribers will be permitted to exit new or amended service contracts after two years without paying a cancellation fee. The Wire Report reported this month that the code’s retroactive application to all existing service contracts starting on June 3, 2015, could result in wireless carriers missing out on hundreds of millions of dollars in expected device subsidy repayment fees, which are typically paid out over the life of a service contract. Most Canadian smartphone customers are committed to three-year contracts. The CWTA asked the commission in a June 12 letter for “clarification” on whether, after the June 2015 retroactive application date, the code would allow consumers to exit from three-year contracts signed before Dec. 2. The industry association said it was “unclear” whether the code’s retroactive application was mandatory “as a result of the use of the discretionary word ‘should’ in relation to the 3 June 2015 date.” “Consumers and service providers alike require clarification as to how this important aspect of the Code applies to them,” CWTA president and CEO Bernard Lord wrote. “f the 3 June 2015 application of the Wireless Code is intended to reduce the length of all contracts to 24 months, then the three-year contracts signed between the release of this decision and 2 December 2013 are de facto two-year contracts, which would necessitate significant changes to carriers’ systems and contracts.” In her response, Motzney said the commission attempted to balance the need to protect all consumers under the code—including those with pre-existing contracts—against carriers’ costs of doing so. “he Commission determined that full implementation of the Code in June 2015 would strike a reasonable balance between managing the transition for WSPs and ensuring that there is no undue discrimination against those customers already bound by a wireless contract,” she wrote. “It is essential to make sure that the transition period for the implementation of the Wireless Code is as short as reasonable in order to ensure that all Canadians realize the benefits from the Wireless Code.” Motzney said that carrier data provided to the commission suggests that most wireless consumers will either amend their wireless contract or sign a new one before the June 2015 date, and would be covered under the wireless code when they do so. She said the commission has estimated that 50 per cent of wireless contracts will be covered by the code by December 2014, and that 80 per cent of wireless customers will be covered by June 2015. The CWTA asked the commission whether a customer who has 10 months left on a three-year contract in June 2015 could exit their contract without paying a fee if they still owe $100 on a device subsidy being paid off through $10 per month installments. The group also asked how the code would apply to three-year contracts signed in October, just before the code’s December implementation date. Motzney noted that wireless providers said during a February hearing on the wireless code that they are “unable to separate the value of the device subsidy from the monthly service rate” their customers pay. “Consequently, it would appear that the majority of the market does not operate in the way described in ,” she said. She added that it would be “surprising” if providers still offered three-year service plans by October, which “would be contrary to the spirit of the Code and the development of a more dynamic marketplace.” In its letter, the CWTA asked the commission whether its planned retroactive application of the wireless code could be appealed under the Telecommunications Act, which allows appeals to the Federal Court of Appeal within 30 days of a decision’s release. Motzney’s letter did not address whether that aspect of the code could be appealed. —With reporting by Nicholas Kyonka and nkyonka@thewirereport.ca and editing by Simon Doyle at sdoyle@thewirereport.ca

Wireless code’s retroactive application ‘mandatory,’ Motzney says

News | 06/19/2013 6:38 pm EDT

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