Canada’s biggest internet and phone companies’ sales and customer service practices will face scrutiny this week during a public hearing called to examine allegations of aggressive and misleading tactics.
The Canadian Radio-television and Telecommunications Commission (CRTC) is holding a five-day, in-person hearing at its Gatineau headquarters beginning on Monday. The commission published survey results last week that showed 40 per cent of respondents said they experienced aggressive or misleading sales practices by telecom providers, with 60 per cent of those people saying their most recent such experience happened within the past year.
The hearing comes after an order from the federal department of Innovation, Science and Economic Development (ISED) in June, directing the CRTC to conduct an inquiry. The regulator itself had initially turned down calls for a public process, after a series of CBC reports that raised questions about misleading advertising and inappropriate upselling (pushing pricier products than a customer needs). It’s also the first high-profile public hearing for CRTC chairman Ian Scott, who will be joined by all seven of his fellow commissioners on the panel, which is out of the ordinary, but not unheard of.
The first two days of testimony will feature public-interest groups and aggrieved individual customers, followed by three days for the companies themselves to respond. BCE Inc. and Rogers Communications Inc., the subjects of multiple media reports regarding sales-related complaints, are set to appear on Friday.
Yet, concrete action on the issue – if the commission decides it’s needed – could still take many months, says John Lawford, executive director of the Public Interest Advocacy Centre, which is working with other advocacy groups for this hearing under the umbrella name the Fair Communications Sales Coalition.
“In terms of an outcome, the only thing that can come out is a report. … This is step one in a longer process to get rules and ideally a code of sales practices to cover all the services,” Mr. Lawford said. The government has ordered the CRTC to report back on the issue by the end of February, 2019.
Yet, he believes it will be difficult for the CRTC or ISED to ultimately take no action, pointing to last week’s survey results. On top of a new code of conduct, Mr. Lawford would like to see a ban on door-to-door sales and strict limits on describing products such as a tablet or PVR as “free” when there are actually associated charges. "We are pretty confident that public opinion is generally on the side that something has to be done.”
Canada’s major telecom companies, including Bell Canada, Rogers, Telus Corp., Shaw Communications Inc. and Quebecor Inc., argue variously in extensive written filings that the evidence submitted to date does not reveal a widespread problem with sales practices, and that they already have or are putting into place measures to prevent abuse.
The companies also argue there are already existing protections for consumers, such as the Competition Bureau, which can take action with respect to illegal conduct and outright lies, as well as the Commissioner for Complaints for Telecom-television Services (CCTS), an industry ombudsman that also tracks complaints in regular reports.
In a written filing, the Competition Bureau urged the CRTC to consider new regulations only where necessary, but said new rules could be required if the regulator finds techniques used to pressure shoppers are harming customers or other competitors.
The CCTS, in its own filing, said the main sales-related practice it sees in complaints it handles is a “mismatch between what the customer was expecting or informed when they subscribed to the service and their subsequent experience with the service.”
The hearing and high-profile reports of mistreated customers raise serious public-relations issues for the industry, but investment analysts do not expect the process to materially affect the companies' finances.
“As far as financial impact on the stocks goes, I don’t even see this as even being a rounding error,” said Sanford Lee, an analyst with Macquarie Capital Markets. “I think this is a serious issue the CRTC has undertaken. I’m just not convinced it will have as much of an impact on the consumer as desired."
Although it once rebuffed calls for a hearing, the CRTC is now seeking broad input, saying it will include Twitter posts marked #CRTCforum in the public record. Last week, it also posted short videos on Twitter – including one of a dog being groomed and ending up with a bad haircut – asking for stories of whether people got what they “actually” needed from their telecom providers.