(Iain Grant is managing director of SeaBoard Group, a Montreal-based telecommunications consultancy)
Jean-Pierre Blais, the new chairman of the Canadian Radio-television and Telecommunications Commission (CRTC), explained that Canadians have expressed confusion about contracts and that terms and conditions vary between carriers. He has asked Canadians to help the commission to determine what terms and conditions should be defined, to whom the code should apply, how the code should be enforced and how the effectiveness of the code should be determined.
This consultation is not taking place in a vacuum. Several Canadian provinces have already reacted to consumer dissatisfaction with wireless contracts and terms of service and enacted their own consumer-protection legislation. Quebec, Newfoundland, Manitoba and Nova Scotia have all enacted new consumer protection legislation to assist consumers to understand the terms they agree to and to restrict the ability of cell phone providers to apply large penalties for cancellation.
Consumer advocates are happy. Cell phone contracts and practices have long been a significant source of consumer dissatisfaction. Complaints to various consumer ombudsmen have been flooding switchboards and mailrooms for decades.
SeaBoard, however, is less sanguine. We are less enthusiastic about regulation and law as market modulation technique, as a rule, and more keen to use public policy tools to foster a more competitive marketplace. We applauded, as an example, Industry Canada’s bold move to open the Canadian wireless marketplace to new challengers in 2008.
The new wireless competitors have done much to make the wireless marketplace a less expensive, friendlier, and less intimidating place for many Canadians. Confusing consumer contract issues have been countered with policies that do away with wireless contracts entirely. Monstrous malicious termination fees have been replaced by … nothing. You wish to leave Wind? To move on from Mobilicity? To put Public Mobile behind you? Go. Can’t be much more consumer-friendly than that.
Our counsel to government would be to intensify focus on the industry framework and use the policy tools available to buttress the competitive marketplace. Look at mandatory wholesale, proscribe tower-sharing and roaming prices and availability, extend spectrum exclusivity in the new 700 MHz band to the new entrants – these steps will do more to add balance to the marketplace, and more benefit to the consumer, than still more regulation.
That said, there is a case for a national regulatory framework, not as a replacement for a balanced market, merely as an interim step.
Incumbent wireless providers still hold sway over the marketplace, the footholds established by the new entrants are tenuous. The competitive fabric is both fragile and limited: The option of turning to one of the new competitors is not yet available to all Canadians. Moreover, despite the chafe; despite the terms, conditions and penalties; despite the expense, the inconvenience, the complexity and the opacity of incumbent wireless contracts; Canadians still sign them.
So yes, Mr. Blais, your initiative is needed. Bring forth a code. Nail down what you expect. Give teeth to the code. (And don’t be shy — Bite!).
Canadians do not need another watered-down set of meaningless guidelines. Get specific. Need direction? Look to the U.K., at Ofcom. Ban the three-year contract outright as it did.
Our hope, though is that government does not confuse this regulatory move as a panacea. The true goal is a more balanced competitive marketplace where the consumer interest would be safeguarded by the competitive dynamic.
