‘Millions’ of contracts affected by retrospective wireless code: carriers

The CRTC lacks the statutory authority to interfere with wireless carriers’ “vested rights” by applying its wireless code of conduct to pre-existing contracts, some of Canada’s largest wireless providers said. In a Federal Court of Appeal challenge launched in July, mobile providers BCE Inc., Rogers Communications Inc., Telus Corp., Manitoba Telecom Services Inc. and SaskTel said the CRTC over-stepped its jurisdiction when it said consumer protections contained in its wireless code would apply to all wireless service contracts in June 2015, regardless of when those contracts were signed. In a memorandum of fact and law filed with the court Friday, the companies said the law under which the commission regulates the telecommunications industry — the Telecommunications Act — does not give the commission the ability to “impair” carriers’ “pre-existing contractual rights.” “Where an enabling statute is silent, as is the case here, the rule-maker is presumed not to have the power to interfere with vested rights or to engage in retrospective rule-making,” the carriers said, citing previous Federal Court and Supreme Court of Canada decisions. “The reasons for this important rule are obvious. To interfere with rights that were lawfully acquired is unfair and contrary to the rule of law.” Released by the CRTC last June 3, the wireless code says consumers who enter new wireless service contracts after Dec. 2, 2013 can exit those contracts after two years without being subjected to an early cancellation fee. The code applies to all contracts “no matter when they were entered into” as of June 3, 2015, the commission said. The Wire Report reported last year that the decision could cost wireless carriers up to hundreds of millions of dollars if consumers, as of June 3, 2015, can exit three-year contracts without repaying the device subsidies they received when signing their contract, and which the carriers typically recoup over the course of the service contract. In the memorandum filed Friday, the wireless providers said the “retrospective” application of the wireless code would deprive the carriers of “significant benefits” that they would otherwise receive from “several million” three-year contracts that were signed before June 2013. “To impose the Wireless Code’s requirements on contracts entered into before the Wireless Code comes into force would override and render unenforceable significant terms of contracts validly entered into by contracting parties,” the providers said, adding that an estimated 20 per cent of the country's 27 million wireless subscribers could be affected by the code's retrospective application. “This amounts to an interference with the vested rights that wireless service providers have under those contracts.” The carriers said Section 24 of the Telecommunications Act — which allows the CRTC to impose “conditions” on telecom providers, and on which the commission relied to create its wireless code regulations — does not give the commission the authority to interfere with companies’ vested rights, or to apply conditions retrospectively. “No other provision in the Act authorizes the CRTC to interfere with vested rights or to engage in retrospective rule-making with respect to the conditions applicable to contracts entered into between wireless carriers and their customers,” the carriers said. “On the contrary, section 61 of the Act, which addresses the coming into force of the CRTC’s decisions, is silent as to whether the CRTC’s decisions may have retrospective effect.” CRTC spokeswoman Patricia Valladao told The Wire Report last summer that the commission weighed the carriers’ costs when considering whether to apply the code retrospectively in June 2015. She said the regulator sought to protect “a large proportion” of wireless customers by mid-2015 and balance the impacts on consumers and wireless providers. Valladao said in an email that “the commission’s decision was based on the need to consider not only the benefit to consumers, but also the burden on service providers. This decision was proportionate to that burden and deemed necessary to ensure coverage for all Canadian wireless consumers in an equitable and expedient manner.” The CRTC declined to comment for this story Monday, noting that the matter is currently before the court. The case is listed in the Federal Court of Appeal under file number A-337-13. The deadline for the commission’s responding memorandum of fact and law is Feb. 24. — With reporting by Nicholas Kyonka at nkyonka@thewirereport.ca and editing by Derek Abma at dabma@thewirereport.ca

‘Millions’ of contracts affected by retrospective wireless code: carriers

News | January 27, 2014

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