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New Code of Conduct For Wireless Services—Cancel Your Contract After Two Years

Canadian Cell PhonesOn Monday, June 3, 2013, the Federal Telecom Regulator revealed their new rules for wireless contracts. The new rules state that customers will be able to cancel their contracts after two years without penalties, regardless of whether or not they’ve signed up for longer termed-contracts.

Rogers, Telus and Bell haven’t commented on the Canadian Radio-Television and Telecommunications Commission’s  (CRTC) new code of conduct for wireless services.  However, at least one consumer group appreciates the news.  John Lawford, of the Public Interest Advocacy Center reports, “The wireless code has rules to help wireless customers where it counts, and it makes it a lot easier to switch companies because those costs are clear and limited.”

While the CRTC was creating the national code for wireless services, they didn’t put a ban on the three-year contracts that Canadians have been complaining about. CRTC chairman, Jean-Pierre Blais, explains that this is because they weren’t focusing on the length of the contract, but the economic relations. He goes on to say that, “It’s the equivalent of banning three-year contracts, because the amortization period of the contract can only be a maximum of 24 months.”

The CRTC claims to have received many of angry comments regarding three-year contracts, during public hearings held earlier this year. Additionally, The Regulator had a backer in the Federal Competition Bureau as well, which supported the idea of limiting the length of contracts.

“What we were concerned about was ensuring that there was a dynamic marketplace—that is, that people didn’t feel entrapped in their contracts when they want to use the offer of a new entrant or a competitor across the street,” Chairman Blais said. “Essentially, it’s about freeing up Canadians and allowing them to decide whether they want to stay with their current carrier under renegotiated terms, or switch to a competitor.”

Many of the big cellphone companies have remained silent, however, one industry group welcomed the aspects of the new code. Bernard Lord, Head of the Canadian Wireless Telecommunications Association (CRTC), stated that the CRTC has done their best to find a balanced approach for both service providers and consumers. Lord believes that the decision for the new national wireless code to override provincial legislation is a great decision, because every Canadian will have access to the exact same provisions of the new national code.

However, CRTC did raise a few concerns about the ability to walk away from the wireless contract after two years. They say the code’s requirement of a 24-month amortization of wireless devices may be an area of concern. “This requirement does limit consumer choice in the marketplace, and could make a customer’s up front purchase price of a smart phone more expensive than current offerings,” says Lord. In order to implement and comply with the new code, major technology development and costs will be required.

The ability to walk away from a wireless agreement after two years is one of the many provisions in the CRTC’s new set of national standards for the content and clarity of cellphone contracts. To avoid huge phone bills, the CRTC will also cap extra data charges at $50/month, and international data roaming charges at$ 100/month.

As required by the Federal Telecom Regulator, customers will now be allowed to unlock their devices after 90 days, or pay the full amount of the device and unlock it immediately. They will also be allowed to return their cellphones within 15 days, and accept or decline any changes made to a two-year contract.

Companies are also required to provide contracts that are simple to read and understand. The code will apply to new wireless contracts starting Dec 2nd,2013.  All service providers in Canada will be expected to abide by the code.

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