The Wireless Industry Code

Blog, Commentary, Information Technology, Regulation, Roland Renner, Role of Government

The CRTC released the Wireless Industry Code on Monday.  The Code itself has 8 pages of rules and 2 pages of definitions and is accompanied by a 1-pager entitled “Your Rights as a Consumer” which has a handy checklist that anyone can use to see if their supplier is fully measuring up.

The Code includes using plain language and other measures to ensure that consumers know what their contract means and what their service includes.  It is rather telling that this is deemed to be necessary.  Other parts of the Code deal with disconnection rules, lost or stolen phones, repairs, unlocking, premium services, security deposits, changes in contracts, expiration of prepaid cards and a few other matters.

The 3-year contract is, in effect, limited to 2 years although suppliers can continue to offer them.  The handset subsidy, however, must be calculated to expire in 24 months and no other early cancellation fee can be charged in addition to the remainder of the handset subsidy.

There are limits to roaming fees in any given month and limits on overage charges in data plans as well as a requirement to notify the customer when international roaming charges are kicking in that includes the rates that will apply.  This is intended to reduce instances of “bill shock”, that occurs when people get a $2000 bill after returning from a trip to the U.S. or overseas.

Some commentators have described the Code as another assault on free markets.  See, for example,

Terence Corcoran: CRTC kills three-year contracts in latest futile attack on the wireless industry

Far from being an attack on the wireless industry, the wireless industry itself requested the CRTC to create a Wireless Industry Code of Conduct, to protect it from a host of provincial legislative initiatives.  The wireless industry has managed to get consumers so upset that provinces were starting to impose legislation.

This came about as a result of genuine grass roots anger over poor treatment, not just cynical manipulation of the system by consumer lobby groups.  The wireless industry has exhibited classic oligopoly behaviour with high prices, lots of advertising and specious product differentiation.  Prices fell dramatically when Wind and Mobilicity were licensed.

Anyone who has ever tried to set up a spreadsheet and do comparative shopping will remember that you cannot do that effectively because the offerings are not comparable and are constantly changing (specious product differentiation).  Some consumers recall getting conflicting information from the same company’s call centres, web sites and retail outlets and misleading promotions when their 3-year contract is about to expire.

Frankly it boggles the mind that large companies in Canada have to be regulated into this at their own request.  Most of it would seem to flow from the concept of treating the customer with respect.  But if the only impact of poor customer services is that every month a number of angry Rogers customers move to Bell that replace their angry customers who moved to Telus that replace their angry customers who moved to Rogers ad infinitum, then it did not really matter.

Many people have a mobile phone through their employer and are thereby protected from these experiences.  Corporate and government administrative service units are paid to figure out the contracts and the larger accounts have more negotiating power.

Reducing the 3-year contract to 2 years is a Solomon-like decision.  I would have preferred them to do away with it entirely.  But at least this reduces the ability of the incumbents to use the 3-year contract and the handset subsidy to prevent customers from moving to new competitors.  It limits their most important anti-competitive tool.

N.B.  The author consults to Ice Wireless, a wireless competitor in Canada’s north.