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Canada’s telecommunications regulator is warning telecom companies not to charge extra fees to customers who pay their bills by credit card.

The Canadian Radio-television and Telecommunications Commission released a decision Thursday that denied an application from Telus Corp. to charge a 1.5-per-cent fee to customers who pay by credit card in some markets.

The application focused narrowly on customers in some mostly rural and remote areas of Alberta and British Columbia that have little or no competition for phone providers, and where these types of fees are regulated by the CRTC. In all its other markets, Telus had already notified customers, in August, that it would charge a 1.5 per cent fee for customers paying by credit card starting on Oct. 17.

In its decision, the CRTC blocked the fee being charged in those regulated markets on the basis that it was bad for consumer affordability and it warned Telus and its competitors that it was prepared to fight the fees more broadly.

“Should this practice continue, or should it become a practice within the telecommunications industry, the Commission is prepared to explore all available regulatory options in the near future,” the decision said.

CRTC chairperson Ian Scott said in an interview he could not discuss what options the commission might explore, but it had many regulatory tools available under the Telecommunications Act.

He said the commission took into account the complaints of nearly 4,000 Canadians who wrote in to oppose Telus’s plans.

“There was a very strong, visceral consumer response to this proposal and we heard it loud and clear,” Mr. Scott said.

Telus did not respond to requests for comment.

In its application to the CRTC, Telus argued that a fee for paying by credit card was not a burden on customers because they had other options to pay their bills, such as pre-authorized payments through a chequing account.

The CRTC dismissed that argument in its decision, saying that customers may have valid reasons for needing to pay by credit card, for example, because they do not currently have the funds in their chequing account.

Consumer advocate John Lawford, executive director of the Public Interest Advocacy Centre, said the CRTC’s decision was a win for consumers and a strong message to other companies that may think about passing credit-card fees to their customers.

“It’s a good lesson to corporate Canada in general that it matters what they do with pricing,” he said.

Telus’s application followed the settlement of a long-running legal fight between businesses, credit card companies and financial institutions. The settlement allowed for businesses to pass on the cost of processing credit card payments to customers. So far Telus is the only major Canadian company that has announced plans to do so.

Laurence Ashworth, a business professor at Queen’s University, said the CRTC decision’s did not consider the wider context of credit card fees and how they function in the financial system. Businesses bear the costs of processing credit card payments, and most of the fees go to banks to fund rewards programs. The federal government said it would begin to regulate the fees if the financial industry did not voluntarily lower them.

Prof. Ashworth said one benefit of surcharges for credit card payments is that it shows customers the true cost of using that payment method.

“That way, consumers can make appropriate independent decisions about what they buy and how they buy it,” he said.

Mr. Scott said he understands that argument and the larger discussion about credit card fees, but that that wasn’t the issue before the CRTC.

“Right now our issue is a narrow one,” Mr. Scott said. “A significant number of customers use their credit to pay their telephone bills ... and we don’t think a blanket surcharge is in the public interest.”

Business groups have said their members are generally reluctant to introduce the surcharges because they are concerned about consumer backlash. An Angus Reid Institute poll released Tuesday suggested most Canadians would either stop using their credit card if confronted with the fees, or switch to a store that did not surcharge.

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