Ontario will soon join three other provinces with new rules for wireless contracts that the governing Liberals say will end the “horror stories” consumers report after opening their cellphone bills.
Government legislation aimed at addressing those complaints passed unanimously in the provincial legislature Wednesday and is expected to take effect in the spring.
Cellphone users won’t have to pay more than $50 in cancellation fees and will be able to walk away from their contracts after two years. But they’d still have to pay off or return their phone if it was provided free or at a discount under the deal.
Telecom companies would have to write contracts in plain language, spelling out which services come with the basic fee and which ones would cost more.
They’d also have to obtain explicit consent from cellphone users before altering their contracts.
Consumer Services Minister Tracy MacCharles said even she has a hard time understanding changes in her cellphone contract and those of her teenage children.
“This bill is going to address that,” she said. “It’s going to empower consumers and it’s going to make them more confident.”
They’ll understand their rights, get clearer contracts and know when they have to give consent, she added.
“We really want to get the confidence up, because when the consumers are confident, then that helps the marketplace, that helps the telecoms, that helps our economy.”
Some of the provisions mirror the national telecommunication regulator’s code of conduct, which takes effect in December.
But there are strong differences between the two, MacCharles said.
Ontario’s legislation would add all-in pricing and strong enforcement with penalties of up to $250,000 for corporations who are convicted of violating the rules, she said.
The push by Ontario and other provinces for better laws to protect consumers has spurred the federal government to take notice, said cabinet minister David Orazietti, who’s championed the changes since 2010.
When he introduced his first private members’ bill, “the horror stories, if you will, were rolling in at a considerable rate,” he said.
“It would be fantastic if we had one universal type of code right across the country,” Orazietti said.
“We can’t stand by and allow Ontarians to be exposed to these types of contracts and not do anything while we hope and wait that the federal government will take action.”
Under the new rules, users can’t get charged for services that they can’t access while their phones are being repaired under warranty and they won’t lose their phone numbers if they don’t sign up for another contract right away after the old one expires.
The CRTC’s code limits contracts to two years. However, Canada’s major telecom companies have been given the go-ahead by a federal court to challenge part of the code that would affect three-year cellphone contracts retroactively.
They say mandating that contracts run no more than two years would prematurely apply to three-year contracts signed before the CRTC’s new code comes into effect on Dec. 2.
MacCharles said Ontario’s rules wouldn’t be applied retroactively. But if a consumer changes their contract once those rules take effect, it’s considered a new contract and the new rules apply, including the hard cap on cancellation fees, officials said.
Both MacCharles and Orazietti said they don’t expect any legal challenges from big telecom companies to the legislation.
They’re competing for customers, so they have to make the changes consumers want to see, he said. The provinces have just given them a little push.
“I think those companies that get there more quickly will be the companies that consumers will most align themselves with,” he said.
“So it’s in their interest to be onside with both the CRTC recommendations and also with our legislation.”
List of new rules in Ontario governing cellphone contracts
Provisions of Ontario legislation governing wireless contracts:
- consumers can walk away from fixed-term contracts after two years
- cancellation fees are capped at $50
- telecom companies must provide all-inclusive pricing, including the total cost payable by the consumer over the term of a fixed-term contract
- contracts must be written in plain language
- contracts must clearly outline which services come with the basic fee, and which would result in extra charges
- providers must get customer consent before amending, renewing or extending a fixed-term contract
- penalties include a fine of up to $50,000 for an individual or $250,000 for a corporation