Focus: Will CRTC cellphone code usurp provincial rules?

Provincial legislation dealing with consumer protection for cellphone customers could become a casualty of the Canadian Radio-television and Telecommunications Commission’s proposed wireless code despite the regulator’s attempt to coexist with laws already on the books.

Quebec, Manitoba, Newfoundland and Labrador, and Nova Scotia have all passed laws concerning the terms and conditions of cellphone contracts while a bill introduced by the Ontario Liberals died on the order paper when they prorogued the legislature in October.

Phone companies want the CRTC’s code, which suggest new rules for unlocking phones, caps on overage charges, and notifications to consumers reaching data limits, to supersede the existing provincial legislation. But in its draft version, the regulator inserted a clause that would have the code defer to the provinces in cases where the law was “more favourable” to consumers.

“The wireless code is to be interpreted in favour of the consumer and must not be interpreted in a way that prevents a consumer from benefiting from any other federal or provincial law or regulation which is more favourable to the consumer,” reads the clause.

Bernard Lord, the former premier of New Brunswick and current president and chief executive officer of the Canadian Wireless Telecommunications Association, says the CRTC’s proposed approach would be too complex.

“Different provinces have come up with different rules,” says Lord.

“We believe it’s better to be under the same rules from coast to coast. The code can be inspired by what was done by the provinces . . . but every time a province does something differently, it simply adds costs for consumers and carriers.”

Tamir Israel, a staff lawyer at the Canadian Internet Policy and Public Interest Clinic, says he has some sympathy for the providers’ stance but worries consumers could end up worse off if the final version of the code is weak or patchy.

“There’s some benefit to clear rules. There’s a lot of mobility within Canada, so to have several sets of rules could cause confusion. Our position, though, is the more protection, the better for consumers. If they get some extra protection in Nova Scotia, let them benefit from that.
That seems more sensible to us.”

If they can’t get the coexistence clause removed from the code, Israel predicts a constitutional challenge from cellphone providers against the validity of the provincial statutes if they face litigation under them.

That challenge could get a boost from a legal opinion provided to BCE Inc. and the Public Interest Advocacy Centre by former Supreme Court justice Michel Bastarache, now counsel at Heenan Blaikie LLP.

Asked to assess the constitutionality of the provincial legislation touching on cellphone contracts, Bastarache wrote that a court “would likely conclude that the actual and proposed provincial regimes are invalid as ultra vires provincial jurisdiction.”

“Our opinion is that the provincial regimes at issue, in purporting to regulate mobile wireless services contracts, are in pith and substance regulating telecommunications or telecommunications companies, a matter of exclusive federal jurisdiction,” Bastarache explained.

In the opinion, Bastarache also labelled the CRTC’s attempt to defer to more favourable provincial legislation “inadvisable” as it would be “constitutionally ineffective” in his view.

“The commission cannot expand provincial jurisdiction to legislate in an area of exclusive federal competence, and any attempt to accommodate constitutionally invalid legislation would result in significant legal uncertainty,” wrote Bastarache.

Despite the legal opinion, John Lawford, executive director and general counsel at the Public Interest Advocacy Centre, says phone companies still have a strong incentive to make sure the CRTC code works for consumers.

“I’m really hopeful it will effect a real sea change. It had better because if doesn’t, then the provinces will keep coming back. If Ontario brings its bill back, that will really put the cat among the pigeons because then you’re in their backyard. That’s where most of their customers are, so it’ll really make people move.”

Lawford welcomes the draft code’s proposed cap on additional fees over the regular bill. The code suggests a default cap of $50 but with the opportunity for customers to set their own limit before the company suspends service. Under the draft code, providers would also have to notify customers by text message once they’ve reached 50 per cent and then 100 per cent of their monthly limit.

Israel says the measure will help reduce “bill shock,” one of the most common complaints he hears from phone customers.

“We’ve seen so many cases where people are travelling abroad or they think they’re connected to Wi-Fi but it turns out they weren’t. Fees accumulate so fast that you can hit $50 in no time. We get a lot of people coming back with a $1,000 bill,” says Israel.

However, the cap idea took a lot of heat from phone companies during public hearings at the CRTC in February. Lord says mandatory caps will reduce customer choice.

“We want consumers to have choices so they can be well informed and can make the best choice for themselves,” he says.

“It’s going to be easy to forget that you have a cap and then it gets applied and you can’t take any calls. Perhaps you can’t receive something for a presentation you were planning to give out of the country. We want to give people information on how to change packages and how to get a cap in place if that’s what they want. Some carriers provide those options and not all carriers offer the same option, which is what you want in a competitive market.”

The proposed code steers clear of rules on contract length. Israel says Canada stands alone in the developed world with an industry standard of three-year contracts. Companies in most other countries lock in customers for one to two years, he says.

“When you try to cancel, you can end up getting a pretty prohibitive cancellation fee. In fact, it’s often cheaper just to pay for the remainder of the contract without using the phone,” says Israel.

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