Canada’s largest mobile service provider is urging the federal telecom regulator to implement a mandatory national consumer protection code in order to diffuse the threat posed by a growing hotchpotch of provincial regulations for wireless services.
Rogers Communications Inc. submitted that proposal to the Canadian Radio-television and Telecommunications Commission in an application late Thursday. It argues that such a code would provide uniform benefits to consumers across the country, while affording carriers more control over their compliance costs.
In doing so, Rogers becomes the second major carrier to ask the CRTC to resume active regulation of the terms and conditions for wireless service contracts, a practice that it largely abandoned during the 1990s. Nonetheless, those regulatory powers, while latent, remain in the Telecommunications Act, meaning the CRTC can still exercise its authority over those matters.
Last month, Telus Corp. , Canada’s third-largest wireless player, asked the CRTC to hold a public consultation and determine what national standards should apply to wireless contracts to improve transparency.
With consumers fuming over impenetrable contract language and cancellation fees, some provinces have looked to fill the regulatory void left by the CRTC by beefing up consumer protection legislation. Carriers, though, are worried that patchwork approach will cause their operating costs to rise as they grapple with a mishmash of rules in different provinces.
“Consumer rules, if sensibly introduced, can make wireless agreements simpler for consumers and make it easier for them to enjoy the benefits of wireless technology,” wrote Kenneth Engelhart, Rogers’ senior vice-president of regulatory affairs, in a letter to the CRTC.
“Rogers is committed to making a legally binding Consumer Code available to all Canadians. The ideal solution is a single comprehensive national consumer code that will protect consumers in a reasonable and consistent manner.”
As part of its application, Rogers provided a draft consumer code that it hopes will serve as a starting point for discussion. In that regard, it has asked the CRTC to establish an “interconnection steering committee” – essentially a working group – to develop and implement a final code for all wireless carriers.
Rogers’ draft document covers a variety of topics including consumer agreements, carrier changes, contract cancellations, hardware repairs, advertising among others. Its proposed code is loosely based on Quebec’s Bill 60, which took effect in 2010. That legislation caps the fees that consumers must pay for early cancellation of their wireless contracts.
Manitoba, meanwhile, is on the brink of proclaiming legislation into law that bans unreasonable cancellation fees among other measures. In Ontario, a private member’s bill, that also proposes to put a ceiling on cancellation fees and make cellphone contracts more understandable, passed second reading in December.
For its part, Rogers argues “the introduction of individual provincial legislation will not only complicate wireless agreements but will also drive up consumer prices,” noting each set of regulation requires individual processes.
“As a result, national carriers may have to implement different IT systems, billing practices, advertising campaigns, storefront design, employee training, etc. in each province,” says the company’s letter.
“Having different rules in each province will result in higher operating costs which will ultimately be passed onto the customer. Again, this is the opposite of what consumers want.”
The Public Interest Advocacy Centre, an Ottawa-based consumer protection group, expressed cautious optimism about Rogers’ proposal for a national code.
“PIAC is pleased a major wireless carrier like Rogers has acknowledged (as also has Telus) the fact that retail wireless consumer contracts and services must be subject to regulation to assure a basic level of consumer protection and satisfaction,” said the centre’s counsel John Lawford in an e-mail on Thursday night.
“It is long overdue. PIAC expects to respond favourably to Rogers’ application to regulate consumer wireless services but to add several additional demands to ensure a level of protection at least equal to or better than that provided in some provincial statutes.”
Telus, meanwhile, has separately asked the CRTC to approve national standards for a variety of contract terms. Although it did not go as far as proposing a draft code, it outlined a number of areas that the regulator could examine including the rules regarding the unlocking of wireless devices and the expiry of prepaid cards. Even so, it wants the CRTC to steer clear of regulating any “price-related aspects” of wireless services.
The wireless industry is a $17-billion sector in Canada. Rogers is the biggest wireless incumbent with more than 9.3 million subscribers. That compares with 7.4 million customers at BCE Inc.’s Bell Mobility and 7.3 million for Telus Corp.
While Rogers stresses that national rules will make wireless contracts simpler for consumers, its interest in the issue comes at a time when its executives are eager to control operating costs and attract more top-end wireless customers.
Its most recent quarterly report showed the company is trailing its key rivals in attracting wireless subscribers, especially lucrative smartphone users. During the fourth-quarter of 2011, Rogers added 42,000 postpaid wireless subscribers, a 7 per cent drop from the same period in 2010.
At the same time, Rogers is having a harder time hanging on to those valuable consumers. Its postpaid churn rate, which reflects the number of customers that leave, rose to 1.49 per cent from 1.35 per cent in the same period last year amid stiffer competition.