Three-year financing an ‘affront’ to Wireless Code, Shaw says

Shaw Communications Inc. is blasting the move by the wireless industry’s titans to provide customers with a three-year device financing option, claiming the plan locks customers out of the market for longer than the rules allow. Last month, Rogers Communications Inc. said it would allow customers to finance any device for $0 upfront over the course of a two- or three-year period. The wrinkle is that the latter option is beyond what the Wireless Code allows for service contracts. Rogers has justified it by saying that the device financing is completely separate from its service billing. On Thursday, BCE Inc.’s president and CEO George Cope said the company was going to move with the market and implement its own 36-month financing option. Telus Corp. began offering those options after Rogers introduced them. The CRTC asked the telecoms last month to respond to questions about the financing plans, including whether or not customers can alter the terms or their financing plan; whether they can leave the plan before the end of the agreement; if they can switch to a different provider before the financing plan ends; if there is still a subsidy embedded in the financing arrangement; and whether or not — and in what ways — device financing plans are tied to wireless service contracts. Shaw took the opportunity to voice its concern about the longer 36-month financing options that is quickly becoming a fixture in the market and that they say will lock customers out of more competitive offers in the market. In that context, the concern is that customers cannot switch providers and maintain financing at their current carrier; the device must be paid off in full before the customer can move on. Despite the intention of the equipment financing offers allowing a separation of device and service bills, Shaw alleges Rogers is effectively creating “one connected wireless agreement” partly by “applying a substantial cancellation fee payment to consumers beyond the 24-month contract term allowed under the Wireless Code.” In its own submission, Rogers said a customer can cancel their device financing agreement at any time provided they pay the remaining balance on their device, which will also be required if the customer wants to cancel their service. No penalties or additional fees would apply. “Most Canadian consumers will be unable to make such a restrictive and significant payment during the third year of their agreement, thereby barring them from accessing the wireless market during a time period that is critical to maintaining sustainable wireless competition,” Shaw said in the submission. “This affected group of customers will continue to grow substantially within the next few weeks without immediate regulatory intervention,” the Calgary-based telecom added. After the end of a traditional contract term, the customer is ported over to a month-to-month bill for service. Shaw added those customers who can’t pay off the device in that space will be at the whim of the company if it decides to raise prices on their service bill and will just end up paying for “aged devices while rapid technological advances pass them by and device security updates cease.” Shaw’s wireless division, Freedom Mobile, began offering customers select free phones depending on their data plans, which range from $50 to $115 a month. The move was viewed as Freedom staying steadfast on device subsidies by analysts, who said it may force the incumbents to retrain their eyes back on subsidies. Freedom’s latest promotions are intended for the back-to-school season, the most competitive time for the wireless market, it said, in which it said Rogers intends to “capture a significant portion of the uncontracted wireless market before regulatory intervention is mobilized.” Not just Shaw, but Bragg Communications Inc.’s Eastlink also had some words for the long financing term, calling it a “clear violation of the Wireless Code. “The Commission was very clear that its purpose in establishing the requirement that device subsidy plans be reduced to $0 at 24 months in the Wireless Code was to enable consumers to take advantage of competitive offers at least every two years and to reduce switching costs to consumers,” Eastlink said. Eastlink has already gotten in on the hyperactive market by offering its own suite of unlimited data options and last month began offering device switching after just one year. The Commission for Complaints for Telecom-television Services (CCTS) and others have previously raised a possible conflict with the three-year terms and the Wireless Code. The CRTC released its code of conduct for internet service providers (ISPs) on Wednesday. — With reporting by Ahmad Hathout at ahathout@thewirereport.ca and editing by Michael Lee-Murphy at mleemurphy@thewirereport.ca

Three-year financing an ‘affront’ to Wireless Code, Shaw says

News | August 1, 2019

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Three-year financing an ‘affront’ to Wireless Code, Shaw says

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