Big 3 oppose Wireless Code CRTC intervention for cancellation fees, PIAC supports it

Incumbent telecoms are reacting strongly to a preliminary finding by the CRTC that the regulator will peg the early cancellation fees (ECFs) on certain mobile devices to the price listed by the original equipment manufacturers (OEMs) for those devices. Following a 2021 complaint by Quebecor Inc. claiming that BCE Inc., Telus Corp., and Rogers Communications Inc. “appear to be inflating the retail price of their mobile devices,” the CRTC wrote in an April 5 notice of consultation that it has taken a preliminary view that the regular (non-sale) price "for a wireless mobile device as published by the original equipment manufacturer is to be considered the de facto manufacturer’s suggested retail price for the purpose of Section G. of the Wireless Code." In submissions to the consultation, the big three incumbent wireless service providers object to the regulator's view. If the CRTC "implements its preliminary view, it will not only unnecessarily address a purported ambiguity in the Wireless Code that is not causing any harm, but worse it will cause material harm," Rogers wrote in a Wednesday submission. Rogers wrote that the CRTC has no authority to "re-regulate wireless devices prices without finding fact that the statutory test for forbearance is so longer satisfied;" to delegate rate-setting authority to phone manufacturers; or to mandate rates that "do not satisfy the statutory requirement that rates must be just and reasonable." Any change in the ECF provisions of the Wireless Code, Rogers argued, " should be made in the context of a comprehensive, evidence-based review of the Wireless Code." The company further argued that there is no evidence that a difference between an ECF based on the OEMs' published prices and that based on a telecom's pricing structure "has or will impede switching," adding that consumer switching is increasing alongside the bring-you-own-device market. Bell, for its part, wrote that OEM-advertised prices "are unsuitable proxies for device MSRPs in the Canadian market because such prices, when available, are not intended as pricing suggestions from the OEMs to their distributors." "The Commission's proposed approach will diminish competition and affordability for consumers and incentivize customer behavior that would be at odds with the principles of the Code," Bell wrote, arguing that there is no "demonstrated need" for a CRTC intervention and that switching costs are "already being addressed by consumer options." Should the commission base the MSRP for the purpose of the Wireless Code on the OEMs price in an attempt to clarify the code, Bell continued, the move would create more uncertainty. Original equipment manufacturers don't always publish their direct-to-consumer pricing, and when they do it changes frequently. "Under this scenario, WSPs would become responsible for monitoring OEM prices across their entire device line-ups and need to quickly adjust their advertising and contracting disclosure across all channels, their back-end system inputs, and their competitive strategies to comply with the Commission's interpretation," Bell wrote. What's more, the company added, OEMs set their prices in a way that allows them to recover their costs, at a minimum. "It would be illogical to regulate an outcome that prevents WSPs from doing the same," Bell wrote in its own Wednesday submission. Telus, meanwhile, argued that the CRTC's consultation is "procedurally deficient" because the regulator has "has prejudged the practices of TELUS, Bell and Rogers as having frustrating the objectives of the Wireless Code without first providing any of the parties an opportunity to be heard," and argues that the CRTC should re-issue its notice without the preliminary view. Telus also wrote that since the commission decided to mandate the unlocking of wireless devices in 2017, a given consumer is free to purchase a phone from the manufacturer before purchasing a wireless plan from Telus. "For the Commission to reverse its decades-old forbearance decision and regulate retail device prices, it must first find that there has been a change in the market for the sale, lease, and maintenance of wireless terminals, such that there is no longer competition sufficient to protect the interests of users," Telus wrote. Some consumer groups, however, argued in favor of the CRTC's effort to clarify that code's provisions around pricing and early cancellation fees. The Commission for Complaints for Telecom-television Services wrote that it "agrees with the Commission that the term MSRP is ambiguous. MSRP is not defined in the Wireless Code regulatory policies, nor do the regulatory policies set out the factors to be considered when determining the MSRP for the purposes of the Code." "Greater clarity would allow the CCTS to administer this Code provision more effectively for consumers and the industry," the consumer watchdog wrote, but added that if the CRTC adopts its preliminary finding, that it should also clarify "how and who should make historical MSRP data available to the CCTS, given that the prices published by the OEMs may change over time." The Public Interest Advocacy Centre wrote that it "generally supports the Commission’s preliminary position," but with the caveat that the Wireless Code needs a higher level of clarity than determining that an OEM's retail price is the "de facto" MSRP. "As with all factual determinations, other parties may seek to rebut such a factual presumption with more compelling evidence," PIAC wrote. "We seek certainty in the Code and the elimination of opportunities for WSPs to argue such points and to make each complaint into a mini-trial." — Reporting by Michael Lee-Murphy at mleemurphy@thewirereport.ca and editing by Paul Park at ppark@thewirereport.ca

Big 3 oppose Wireless Code CRTC intervention for cancellation fees, PIAC supports it

News | April 22, 2022

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Big 3 oppose Wireless Code CRTC intervention for cancellation fees, PIAC supports it

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