A three-year contract seems like an eternity considering how quickly the latest and greatest smartphones hit the market. The CTRC (Canadian Radio-television and Telecommunications Commission), Canada’s telecommunications regulator, introduced the new wireless code of conduct to much fanfare that mobile phone carriers will have to abide by. The biggest change is the outright ban of three-year contracts; mobile agreements will now be capped at two years. Before you throw out the confetti to celebrate, though, let’s consider: will the CRTC new wireless code actually lead to lower prices for consumers?
The Wireless Code of Conduct
The wireless code of conduct is packed full of goodies for consumers sick of paying through the nose for their mobile phone. As mentioned, contracts are being capped at two years. Even if you’ve already signed a three-year contract, you can cancel after two years without paying a hefty cancellation penalty. The other big change is the cap on roaming charges. You’ve probably heard the mobile phone horror stories of Canadians who travel abroad and use their mobile phone, only to return and find out they’ve racked up thousands of dollars on their phone bill. Under the new code of conduct, roaming charges will be capped at $100 per month.
A New Return Policy
Similar to when you purchase a newly built condo in Ontario, there’s now a cooling off period for phone contracts – you can return your phone within 15 days if you’re unhappy with your provider. You’ll no longer need to stop by Chinatown for an unlocked phone either: phones must now be unlocked within 90 days if you’ve signed a contract or right away if you’ve paid for the device.
Do Consumers Really Come Out Ahead?
At first glance you probably think the new rules are a slam dunk for consumers – but there’s sure to be a catch. Since carriers are now limited to two-year contacts, they’ll have to come up with a new way to charge consumers for the certainty they’re giving up. As it stands now, unless you buy a phone outright and pay the full price, your mobile phone carrier is subsidizing you when you sign a contract in exchange for a cheaper phone.
Could the new rules lead to higher up-front costs and monthly fees for consumers? Right now the big three – Bell, Rogers and Telus – own the market. If one of the carriers raises their monthly rates, consumers will naturally flock to competitors, but if all three increase their price, consumers will yet again be stuck paying higher rates.
Telus Takeover of Mobilicity in Doubt
Speaking of competition between carriers, the federal government is laying down the law when it comes to policy. As we reported last week, Telus wanted to acquire struggling new entrant Mobilicity for its spectrum. However, the government is putting its food down and enforcing its five-year rule, saying the spectrum can’t be transferred until at least 2014. The Industry Minister Christian Paradis claimed he blocked the transfer because it would have decreased competition and lead to higher prices for consumers. The minister said he would like to see a fourth major competitor in every market in Canada.
With the future of Mobilicity up in the air, fellow new entrant Wind Mobile is keen to acquire the company. Minister Paradis mentioned he will closely monitor the market, and that the 10 per cent foreign ownership rule was just the first step to foster competition. It’s anyone’s guess if we could eventually see the foreign ownership rules totally scrapped with U.S. carriers like AT&T allowed to enter our market. One thing remains certain though: the mobile phone market will definitely be very interesting over the next few months.
This post is also available in: French