Canada Wireless Watchdog Limits Contract Time, Caps Fees

Canada’s wireless regulator issued a code of conduct for the country’s carriers that will allow users to terminate contracts after two years without cancellation fees and limit extra data and roaming charges.

The guidelines released today by the Canadian Radio-television and Telecommunications Commission will come into effect for new contracts on Dec. 2, the agency said in a statement.

“The wireless code will contribute to a more dynamic marketplace by making it possible for Canadians to discuss their needs with service providers at least every two years,” Jean-Pierre Blais, chairman of the CRTC, said in the release.

Blais is reacting to Canadian consumer demands for more clarity on mobile-phone bills and relief from three-year contracts the three largest providers typically insist on. In the U.S., most contracts last two years and T-Mobile US Inc. (TMUS) recently introduced a plan that allows customers to pay for a smartphone over time but not be committed to two years of monthly service fees.

In addition to the contract-length changes, wireless operators won’t be able to charge cancellation fees that exceed the “device subsidy” for users who end contracts before two years. The regulator also is capping extra data charges at C$50 per month and data roaming charges at C$100 per month.

Device Locks

Other changes include limits on device locks so phones can be used on more than one network, and new powers that give users the right to decline changes to key terms of their contracts.

The document was released just as a three-day conference for wireless executives and regulators kicks off in Toronto today. Blais is scheduled to speak at the Canadian Telecom Summit tomorrow at 10 a.m.

Rogers Communications Inc. (RCI/B), Canada’s largest wireless carrier, said it has no plans to challenge the new two-year rule. Rogers can work with the new code, said Ken Engelhart, the Toronto-based carrier’s regulatory chief.

“The decision is good for consumers and will make most Canadians happier with their service,” he told reporters at the Canadian Telecom Summit.

BCE Inc. (BCE), the country’s no. 2 operator, is reviewing the terms of the code and did not have immediate comment, said Jason Laszlo, a spokesman for the Montreal-based company.

Vancouver-based Telus (T) said in an e-mailed statement that it has tried in recent years to incorporate many of the changes enshrined in the code. For example, it already has a cap on international data roaming.

Market Share

Rogers, BCE and Telus Corp. together control about 90 percent of the domestic wireless market, even after four new competitors attempted to win market share with stripped down, prepaid phone plans. One of the new firms, Mobilicity, agreed last month to be bought by Vancouver-based Telus for C$380 million ($369 million). Backers of Wind Mobile, another of the new players, are exploring a sale of the Toronto-based carrier.

Wind today said it welcomes the changes.

“This is a great day for those of us who have fought against long-term contracts,” Toronto-based Wind said in an e-mailed statement.

Tony Clement, president of the Canada’s Treasury Board, told lawmakers today in Ottawa the wireless code addresses some “key issues” for consumers.

“We are happy to see this new wireless code, it puts consumers first,” said Clement, who has also served as industry minister.

To contact the reporters on this story: Theophilos Argitis in Ottawa at targitis@bloomberg.net; Hugo Miller in Toronto at hugomiller@bloomberg.net

To contact the editor responsible for this story: David Scanlan at dscanlan@bloomberg.net

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