Telecom Policy - News

  • – 2015-05-20 –

    The Federal Court of Appeal issued its ruling in Bell Canada v. Amtelecom, 2015 FCA 126, which challenged the implementation of the CRTC's wireless consumer protection code. The Code was put in place by the CRTC out of recognition that Canadian customers of mobile services were not adequately protected by the existing regime. It sought to improve the state of affairs by granting customers comprehensive rights, overseen by the CCTS, including an important provision that limited service providers from locking Canadians out of the wireless market for three years at a time and thereby hindering competition. The protections in the Code were to apply to all customers two years from the day the Code was issued, including to those customers who were still locked in to pre-existing three year contracts. However, a number of providers appealed the decision, arguing that the CRTC lacked the power to protect customers until their existing contractual terms expired. Specifically, these Appellants argued that by restricting the length of wireless contracts to two years and limiting the penalties a wireless provider could impose onto customers for switching providers early, the CRTC impermissibly interfered with vested rights retrospectively by preventing them from recovering the cost of subsidized mobile devices.

    In its arguments to the Federal Court of Appeal CIPPIC, representing OpenMedia, argued that the Code was actually future-facing (not retrospective) and that, regardless, the CRTC had the regulatory authority to interfere with past vested rights. The switching costs imposed on customers for moving to another provider early -- out of frustration with the service or because better deals emerged in the market -- were in reality penalties imposed on customers for future actions. This is borne out by the record of the proceeding, where a number of service providers testified that these penalties were a means of minimizing churn (preventing customers from moving to a competitor) not a means of recouping mobile device costs. Many of these penalties exceeded the value of any device, which is the reason the CRTC regulated the amount of early termination fees, forcing providers to tie these to device subsidies. More importantly, the CRTC is entrusted with overseeing a comprehensive regulatory regime that requires the balancing of complex policy objectives in a highly specialized environment. It would be impossible if not impractical for the CRTC to carry out its task without the ability to interfere with vested rights. In a carefully thought out decision, the Federal Court of Appeal found that the Wireless Code did in fact interfere with vested rights retropsectively, but that the CRTC was empowered to do so as long as it acted reasonably which, in this instance, it did. As a result, all Canadians, including those who are currently stuck in three year contracts, will be able to benefit from the Code's protections as of June 3, 2015. This includes the ability to leave a service contract without penalty 24 months from the day the contract began. For more information, see our resource pages on the Wireless Code and on our intervention in Bell v. Amtelecom.

  • – 2015-05-18 –

    CIPPIC has joined over 65 civil society organizations from around the world in an open letter to Mark Zuckerberg regarding its Internet.org initiative. Internet.org is Facebook's portal for mobile Internet access in developing countries. The portal is essentially a mobile app through which individuals can access other Internet sites, after first passing through Facebook's servers. The portal is zero rated, meaning that Facebook has entered into deals with wireless providers around the world that exclude Internet.org usage from data charges. While Facebook presents this as an altruistic initiative designed to get the next 3 billion Internet users connected, many have questioned whether it is truly altruistic or simply an attempt to place Facebook at the centre of the future Internet, establishing it as gatekeeper to downstream content and innovation. Meanwhile, as domestic telcos are forced to shoulder the costs of the initiative, it is not clear what benefit Facebook provides to developing countries at all, while detracting from other initiatives designed to provide true connectivity for all.

    Regardless of its motivation, Facebook's Internet.org leaves much to be desired. Where it is active, individuals already think of Facebook as 'the Internet'. However, the Internet provided by Facebook is a highly curated environment, which only allows sites pre-approved by Facebook that operate on Facebook's terms. In this sense, it threatens the expressive and innovative force of the Internet, which has always relied on the capacity to innovate and express without permission. It is, indeed, this 'innovation without permission' model that allowed Facebook itself to supplant MySpace as the world's leading social networking site - Facebook's ability to reach its audience was not dependent on MySpace's (or anyone else's) permission. Additionally, all Internet.org traffic passes through Facebook's servers, raising concerns it will in time feed into Facebook's broader profiling activities while acting as a one-stop hub for state censorship initiatives. Internet.org simply comes with too many strings attached.

  • – 2015-05-05 –

    The CRTC released its long anticipated vision for the future of wholesale wireless today. The decision is noteworthy for its recognition of the market concentration inherent in Canada's mobile markets. Historically, mobile services were forborne, meaning that the Commission held back several of its most potent regulatory tools. The mobile industry is highly concentrated and susceptible to risk of coordinated activities. As CIPPIC (on behalf of OpenMedia) demonstrated in its submission to the proceeding, this has led to high prices, some of the lowest mobile adoption rates in the developed world and minimal service innovation. Even in their own advertisements, some incumbents are hard pressed to differentiate themselves from their competitors on price and quality! The Commission recognized this, and reapplied its full regulatory powers to mobile wireless.

    However, the CRTC adopted a disappointingly minimalist approach in doing so. It mandated cost-based roaming, a move that will improve the ability of existing new entrants into the mobile market such as WIND to compete more effectively. Historically, these new entrants were prevented from offering their customers compelling services because the moment a customer stepped outside the entrant's service area, they faced extreme roaming rates. The CRTC decision improves on this state of affairs, allowing new entrants to compete far more effectively as they take the time to build out their national networks. The CRTC did not, however, adopt other important measures such as mandating wholesale access in general and MVNO access in particular. Mandating wholesale access is necessary to facilitate a truly competitive landscape that is not bound by finite spectrum availability, and stimulates investment in radio access network equipment. Mandating MVNO access is necessary to facilitate market innovations such as international roaming and to expand highly underdeveloped Canadian niche markets such as pre-paid. While taking some important steps towards fixing Canada's mobile market, it is disappointing that the CRTC did not go further in spite of its recognition that the market is concentrated and in need of more competition.

  • – 2014-11-12 –

    CIPPIC appeared before the Federal Court of Appeal today, on behalf of OpenMedia.ca, arguing for the timely application of a Wireless Consumer Protection Code developed by the CRTC and imposed on providers of mobile services. The appeal, lodged by a number of mobile service providers, seeks to delay the application of the Wireless Code for existing service contracts until the term of those contracts expires (the standard term for wireless service contracts is three years). The argument is that the CRTC does not have the legislative authority to impose the protections in the Wireless Code onto pre-existing consumer contracts because this constitutes an interference with vested rights. CIPPIC argued that, first of all, there is no interference with vested rights as the Wireless Code primarily focuses on mitigating future penalties (by, for example, limiting the penalties a service provider can impose on a customer for leaving a service term early). Moreover, given the important and central objective of preventing 3 year customer lock-out to the proper functioning of the comprehensive regulatory regime entrusted to the CRTC, the regulator has the legislative power to interfere with vested rights if it is reasonable to do so.

    For more information, see our resource page for Bell et al. v. Amtelecom et al.: https://cippic.ca/telecom/Bell_v_Amtelecom_Wireless_Code_Appeal

  • – 2014-02-28 –

    CIPPIC is representing OpenMedia.ca in Bell v. Amtelecom, File No. A-337-13, whereby the Federal Court of Appeal will decide how long customers of wireless services will need to wait before benefitting from the CRTC's recently adopted Wireless Consumer Protection Code. The Code, which includes a comprehensive set of consumer protections designed to address a number of long-standing problems endemic in the wireless market. The Code, which was issued June 3, 2013, was to apply to all service contracts within two years. However, the Appellants in Bell v. Amtelecom argue that the CRTC does not have the authority to impose these obligations to pre-existing contracts due to long-standing common law presumptions against retroactivity. CIPPIC, representing OpenMedia.ca in the matter, argued that the Code does not retrospectively interfere with any vested rights and, as such, does not attract the common law presumptions in question. Moreover, the CRTC is entrusted with a comprehensive regulatory regime and can therefore regulate retroactively. Finally, the CRTC properly decided to ensure that all customers can benefit from the Code's protections within 2 years. As noted in the CRTC's Wireless Code decision, three years is a long time in the dynamic and rapidly evolving wireless market.

  • – 2014-01-20 –

    In preperation for a series of hearings that will reexamine television policy from the ground up, the CRTC has encouraged Canadians to host a series of 'Flash! Conferences', with the intention of gaining views from the general public on television preferences. The Conferences were intended to canvass a range of issues. Foremost amongst these is are challenges posed to Canada's broadcasting policy objectives by the transition to new media platforms such as the Internet and other digital networks. Additional concerns related to the need to secure a level playing field by ensuring fundamental principles such as net neutrality are preserved in the new ecosystem. Finally, the discussions seeked to reconcile complex conflicts relating to maximizing viewer choice in television packaging, reducing out of control cable pricing and securing the ongoing creation of quality Canadian content. CIPPIC co-hosted a Flash! Conference in Ottawa, and helped review a report summarizing results from another series of Flash! conferences facilitated by our friends at OpenMedia.ca.

  • – 2013-06-27 –

    The CRTC issued Broadcasting Decision CRTC 2013-310 today, in which it approved the merger of Canada's largest and most heavily integrated communications company (Bell) and Canada's last significant independent (and non-integrated) broadcaster (Astral). In its submissions to this proceeding, CIPPIC called on the Commission to refuse the merger a second time, pointing to a number of flaws in the current regulatory framework that a merged Bell/Astral could exploit in order to harm competition and innovation in Canadian services. Specifically, CIPPIC was concerned post-merger Bell will drive up costs, limit online innovation by centralizing online distribution and restrict customer choice by constraining program packaging. Averting these harms and preserving the public interest in the face of a highly concentrated Bell/Astral will require a more invasive regulatory approach than provided by the Commission's current vertical integration toolset, which relies heavily on flawed dispute resolution mechanisms.

    While disappointingly approving the merger, the Commission acknowledges the need for some form of "additional oversight" in light of "BCE's increased ability to act in an anti-competitive manner." Further, it expressly states concerns over online innovation:

    that BCE’s market position relating to multiplatform rights could permit it to act as a “gatekeeper,” effectively preventing other distributors from offering services to their customers until BCE has decided to offer such services on its own platforms. The Commission is concerned that this could stifle innovation and limit the growth of digital media in Canada.

    However, the Commission appears to adopt a 'wait and see' approach to many of the challenges in question, noting, for example, that it will explore new dispute resolution mechanisms on a 'case by case' basis and in other instances expressing 'expectations' that Bell will not act in an anti-competitive manner, without specifying how it will monitor or enforce these expectations.

  • – 2013-06-03 –

    The CRTC released Telecom Regulatory Policy CRTC 2013-271 today, its decision in a proceeding which set out to establish a new Code to protect consumers of wireless services. The Code represents a solid first step towards addressing myriad woes that have been plaguing Canadian wireless services. It adopts measures that should alleviate bill shock resulting from excessive charges for data usage by requiring service providers to gain express customer consent before charging them in excess of $50 in data usage charges ($100 for international data roaming). It also takes steps towards limiting the ability of service providers to impose changes onto customers during the course of their contract. The Code also obligates service providers to unlock customer phones -- an important step, which will make it easier for customers to switch providers or use foreign SIM cards when travelling abroad. These are all important steps, which will somewhat address concerns that have plagued customers of Canadian wireless services for years.

    In addition, the Code limits amortization time-lines to two years, a measure that will effectively end the unique 3 year lock-in period that Canadians uniquely enjoy. In its submissions to TNC CRTC 2012-557, CIPPIC argued that the 3 year lock-in period is harmful to customers, in that it denies them access to a rapidly evolving marketplace and locks them into devices that are often not even supported for three years. Moreover, CIPPIC argued that Canadian incumbents are using 3 year contracts as a lock-in mechanism designed to prevent their existing historical customer base from reaching the small number of new market entrants, who started operations in late 2009/2010 after the AWS spectrum auction -- barely three years ago. Finally, CIPPIC conducted an international pricing comparison which demonstrated that Canada's unique 3 year amortization periods do not lead to lower prices for customers, but rather to higher overall costs when one considers the value of a 'free' handset in conjunction with the very high monthly service offerings Canadian customers must endure for three years at a time. Canada's OECD counterparts offer the same phones and services for less, and do so without three year lock-ins. The Code will apply in full to any mobile agreement entered into or amended after December 2, 2013. The 2 year term limit, however, applies to all service contracts as of today (June 3, 2012). For more information see: https://cippic.ca/Wireless_Code.

  • – 2013-02-12 –

    As part of ongoing proceedings set to establish a 'Wireless Bill of Rights' for customers of Canadian wireless services, the CRTC held a hearing seeking input on what protections should be included in such a document. CIPPIC, appearing alongside its client in the proceeding, OpenMedia.ca, called on the CRTC to take strong steps towards alleviating growing customer frustration with a highly concentrated and difficult to navigate mobile service landscape. This requires, CIPPIC argued, simplified and standardized point of sale information on the nature and cost of services. It also requires that mobile service providers deploy real-time usage management tools that help individuals avoid bill shock. This includes handset-based notifications that kick in as individuals approach their usage limits, as well as a customizable 'hard' notification that will temporarily cut off usage as individuals approach excessive usage fees ($50, for example).

    In addition, effective protections will lower switching costs that currently keep customers locked in to their plans long after their smartphone battery expires, long after their frustration with changing fees or inadequate customer service raises their level of frustration to new heights, long after the wireless market has evolved to offer cheaper and more responsive service offerings. Lock-in, which, uniquely in Canada, is typically for three year terms of service, is achieved by a combination of technical measures preventing an individual from using their handset with another service and hefty fees (which can amount to hundreds of dollars depending on how far the individual is into their contract) levied at individuals seeking to leave their contracts early.

  • – 2013-01-18 –

    CIPPIC has signed on to a letter sent by the Public Interest Advocacy Centre to Industry Canada in protest of an announced spectrum transfer that demonstrates the broken nature of Canada's spectrum policy approach. Last week, Shaw announced its intention to provide Rogers the option to purchase its entire stock of AWS spectrum holdings as part of a comprehensive deal that involves a number of broadcast holdings. While the overall deal is salted to go through soon, Rogers will be prevented from exercising its spectrum purchasing option until 2014. The reason for this is that Shaw's $189 million worth of spectrum, acquired during the 2008 AWS spectrum auction, is subject to set-aside limitations aimed at preserving bands of spectrum for new market entrants. The imposition of this set-aside was animated by the need to instil some competition into Canada's highly concentrated mobile wireless market -- a market which, at the time, was exclusively controlled by three providers: TELUS, Bell and Rogers. It was this set-aside that led to the creation of new entrants such as Mobilicity and WIND by reserving a significant chunk of spectrum for new entrants. Absent such restrictions, the concern is that incumbents will pay well above market value for spectrum solely for the purpose of locking competitors out by denying them access to the lifeblood of any wireless network -- spectrum. The set-aside not only shielded spectrum blocks from incumbent bidding during the 2008 auction itself, but also prevented those bands from reverting to any incumbent for five years.

    Now Shaw, who purchased its spectrum holdings in 2008 as a non-incumbent and held onto them for 4 plus years without using any of it, seeks to sell it back to an incumbent, likely at a profit. With the 2014 AWS set-aside expiration looming and limited prospects for significant expansion of new entrant holdings in the upcoming lucrative 700 Mhz auction, there is a tangible risk that more of the AWS spectrum will follow Shaw's lead and make its way back to the incumbent fold. If Industry Canada wishes to preserve the underlying objective of the initial set-aside, it needs to block this transfer.