Common themes emerging in the CRTC wireless code proceeding

Sitting at the CRTC national wireless code hearing all week, I’ve heard some common themes emerging on what the code should and shouldn’t do. Here are some of them.

Prepaid services

  • The diversity of offers available to Canadian wireless consumers has been on display at the hearing all week, with lots of interesting testimony on tab and prepaid business models.
  • Our sense is that prepaid, in particular, was not as familiar to many stakeholders coming in to this process, but the factors that distinguish it from post-paid are much better known now.
  • For example, as Mobilicity noted, carriers often do not have complete identity or contact information for customers. And as Public Mobile noted, text messages sent to the phone itself are often the only way to send “documentation” to those customers. This isn’t a consumer protection concern – it’s precisely how those customers like to be contacted.
  • Our Chief Koodo Officer, Kevin Banderk, also explained how innovative technology and business practices have enabled us to move away from traditional credit management practices in order to get phones and smartphones into the hands of more people, while protecting them from bill shock and us from credit risk with our Spending Limit Program.
  • It has become abundantly clear over the course of the week that the code should not have the effect of curtailing these kinds of options for consumers who value them.

Paper copies of documentation

  • Several carriers have explained how they use electronic documentation instead of paper. Public Mobile explained that it doesn’t use paper at all, and doesn’t want to be forced to start.
  • In our experience, not all consumers want paper copies of documentation, though we believe that those who do should have that option.

Usage notifications

  • TELUS got a rough ride early in the week for saying that while we provide several data-related usage notifications, we can’t do the same for voice and text usage, for a number of reasons. However, since then, every other carrier has said pretty much the same thing.
  • At the same time, consensus appears to be emerging that it’s data usage that can lead to bill shock, and therefore data to which the usage notification rules should apply. The fact is that voice and text usage are intuitive to self-measure (and often provided without usage limits anyway), while Canadians are still getting used to data usage, and many appreciate reminders to help them avoid big bills (albeit not too many reminders).
  • As we said in our appearance, we think the Commission should keep the focus on data notifications, where they address a real consumer need, and avoid mandating voice and text notifications, which would require enormous capital investment with relatively little benefit for consumers.
  • Of course, there comes a point where we would actually prefer that our competitors not be regulated up to the same level as us when it comes to data and roaming notifications, so we hope that the final code leaves room for differentiation in exactly how each carrier meets this requirement. For example, we think a notification at 95% of usage prior to reaching the limit of the data bucket (and then again at several thresholds after 100%) is more helpful than one at 100%, and we’d rather not be forced to switch.

Learning about your new device

  • Something that hasn’t received much attention (but probably would if the device manufacturers were appearing) is that smartphones often include data management functions. Consumers can turn data off or on, and consult on-device bandwidth management tools (such as that in the Android operating system, for example).
  • Some parties have called for a “cooling-off” or trial period at the start of a term contract, something that TELUS believes should be left to competition among carriers, and not mandated. The restocking and depreciation costs of such a program could be significant, such that each carrier should be able to decide whether to offer it. We prefer to help consumers choose the right device other ways.
  • TELUS customers (both new and existing) can book a 45-minute, one-on-one session at one of our Learning Centres (or visit online) to learn how to get the most out of their device (and protect themselves from unwelcome surprises).
    • This addresses the reality that, as SaskTel noted yesterday, customers usually just want to get in and out of the store as quickly as possible with their new device.
    • For customers who are new to smartphones, seniors, or those with special needs, a Learning Centre appointment provides an opportunity for our representatives to spend more time with the customer and help them leverage all of the features of their device and our service to their advantage.
    • We also offer a data calculator to help customers estimate their data needs.

Device financing

  • A lot has been said this week about subsidies and financing of wireless devices. There seems to be an impression that the only place to get these devices is from carriers, but that is not the case. They are consumer electronic products that are available from a variety of retailers and sometimes the manufacturers themselves.
  • At the same time, many consumers prefer to get their device from a carrier, especially if they can get it for less or nothing, which acts as a significant switching incentive. Further, with our Device Balance approach, consumers can effectively choose a term contract of any length they like, and defer the need to pay for some or all of the device until they choose to terminate the contract.
  • Consumers also have a variety of options for financing an up-front device purchase, like other consumer electronics purchases. When it comes to the iPhone, for example, a consumer can buy one unlocked directly from Apple, online or in-store (at least you can a couple months after launch, due to their desire to avoid device arbitrage), and can even finance it through Apple. Future Shop offers financing options including a credit card. One can use their own credit card, too.
  • While some parties suggest otherwise, the reality is that Canadians are free to buy their own device, finance it themselves, and get service from a wide variety of carriers with no term obligation, if that’s what they prefer. Under the code, even those who choose to commit to term contracts and receive subsidized devices under them will be free to terminate their contract whenever they like (as TELUS customers from coast to coast already can). There is simply no reason for anyone to “lock themselves in” to a contract if they don’t want to.

Device locking

  • Every carrier but one that appeared through Thursday noted that their phones are delivered from the manufacturer and to consumers “locked” to their network (often due to the manufacturer’s requirements). Each carrier also explained why. One of the best explanations came in WIND’s December 10 interrogatory responses:
  • “For WIND Mobile, the only reason to lock handsets is to prevent abuse. Our policy has had to strike a balance between giving our customers the right to move to another carrier if they are unhappy with WIND Mobile (an objective we support), on the one hand, and enriching handset resellers on the other hand, who might seek to trade on the global handset buying power of the VimpelCom group of companies or take advantage of promotions designed to attract customers to WIND Mobile (we do not want to subsidize competitors).”
  • While Public Mobile noted that its CDMA phones are not locked, it’s important to note that neither can they easily be transferred to another network.
  • Device unlocking terms are the subject of competition among carriers, and we think that it should stay that way. We certainly think our unlocking policy is competitive.

Implementation challenges

  • We appreciated the Commissioners’ invitation to explain which elements of the code we think could come into force sooner rather than later, as well as which could apply prospectively to existing contracts and which couldn’t. We will do that next Friday (as will many other parties).
  • A staged implementation may be the best way to deliver the benefits of the code to as many consumers as possible, as soon as possible. As we said on Tuesday, to the extent that we already do much of what the code will require, our customers already enjoy those benefits.

Federal jurisdiction

  • A number of intervenors, including the Government of Alberta, have commented that it would be better for consumers and carriers alike for the CRTC to establish the single set of standards that will apply nationwide.
  • We can understand why some consumer advocates – though notably not all – would prefer that consumers have the benefit of more rules, rather than less, but there are constitutional and market reasons why federal regulation should prevail.
  • Under the constitutional division of powers, some services relied upon by consumers, such as air travel, banking, and telecommunications, are subject to exclusively federal jurisdiction. This is often because the firms providing these services, and the underlying infrastructures, are inherently “inter-provincial” in scope.
    • Decades of jurisprudence have established (often at the CRTC’s urging) that the Commission is the single, national, specialized regulator of telecommunications services.
    • It is generally agreed that this unitary model is preferable to that of the U.S., where each state has its own telecom regulator, and the boundaries between them and the Federal Communications Commission (FCC) are often unclear. American consumers and carriers alike have to sort through who does what between the states and the FCC. Even among states, the rules vary, resulting in costly inefficiencies for regional and national operators.
    • The CRTC is the regulatory agency with the specialized expertise in telecommunications required to regulate this fast-moving industry most efficiently and effectively for all involved. Its open consultation processes are superior to the usually closed regulation-making process. For consumer advocates, for example, this means one regulator to persuade, instead of eleven or more, on each issue.
    • In our view, the question of the applicability of provincial legislation to telecommunications services is external to the code and need not be addressed within it.

It has been great to see the lively debate in social media this week and we hope it continues through the subsequent stages of this important proceeding. After the live testimony concludes today, the next step will be for parties to file their responses to undertakings made at the hearing on February 22nd. Then, on March 1st parties can file written comments on the draft code and what they heard at the hearing. Finally, parties can file final reply comments on March 15th.