PIAC Blog: “Buying Speed, Part 2” – Compared to the UK and Australia, Canadian broadband advertising is still in the Dark Ages

In the last post of this series, we looked at the CRTC’s “Measuring Broadband Canada” report, which we branded as a flawed and limited evaluation of the broadband speeds across Canada. We deemed the report a narrow validation of the speeds available to the subset of consumers who enjoy mid- to high-tier plans within (sub)urban areas. Our deep dive into the report raised serious questions about whether Canadians, especially rural and remote consumers, are actually getting the speeds they pay increasingly higher prices for.
Well for one thing, we pay for the speeds that are advertised to us. But from experience, we all know the Internet speeds we actually experience on our devices vary throughout the day, and don’t necessarily meet the speeds promised to us in our service contracts.
This second installment of our Canadian broadband blog series looks at how other jurisdictions like the UK and Australia have recently overhauled their regulations surrounding how ISPs advertise and sell broadband services, and illustrate the informational gap that Canadian consumers face when shopping for broadband services.

Canada: Bill C-299 – A Faint Hope?

This blog post is particularly timely, as in early June, Conservative MP Dan Mazier tabled Bill C-299, a Private Member’s bill that shines a long overdue spotlight in the House of Commons on the continuing mismatch between what consumers expect and receive when shopping for home Internet services. If passed, the bill would require “Canadian carriers” (which includes only the largest ISPs) to advertise the quality and speed of fixed broadband services and any required ancillary matters of what they sell, all according to criteria specified by the CRTC through public consultations. The Bill then lists several factors which it requires the CRTC to include as part of its eventual methodology, including:

(a) the service quality metrics that are to be measured and how they will be measured, as well as the methodology that is to be used to ensure that those metrics are representative of the different fixed broadband services packages offered in different regions across Canada;
(b) the methodology that is to be used to determine what constitutes typical download and upload speeds for different fixed broadband services packages offered in different regions across Canada;
(c) the periods that are to be considered peak periods;
(d) the types of Canadian carriers, if any, that should be excluded, in whole or in part, from the application of [the advertising rules];
(e) the types of transmission systems in respect of which the information referred to in [the advertising rules] is to be provided; and
(f) the form and manner in which the information referred to in [the advertising rules] is to be provided to the public to ensure that it is easily available, accessible and simple to understand.

While this list is good guidance for the CRTC, it is silly to make only the largest ISPs subject to the rules (we think that all ISPs should be able to follow these rules) and the bill allows 3 years until implementation. This is too long: In the UK, the regulators were able to conduct research and a public consultation in 2016/2017, release findings and guidance in 2017, which took effect 6 months later in 2018.

Canadians contend with an advertising free-for-all when shopping for broadband services

Broadband advertising in Canada presently is subject only to laws of general application under the federal Competition Act, provincial consumer protection laws, and the self-regulatory Code of Advertising Standards. For all industries, the Competition Act generally prohibits false or misleading representations promoting the supply or use of a good or service. The Act also prohibits performance claims that are not based on adequate and proper tests – the onus then, if challenged by the Competition Bureau, is on the person making the claim to show the data from these tests.

How about industry standards? The Advertising Standards Canada is a self-regulating body that administers the industry-created Canadian Code of Advertising Standards, which sets criteria for advertising that is truthful, fair and accurate. However, the ASC claims they have received very few complaints about broadband speed advertising and have only ever found one single violation of their standards in relation to broadband.

Measurement Canada, meanwhile, is an agency with its own Act that says it acts “under its core responsibility of providing ‘fair measures for all’” and typically regulates might appear to be a logical place to regulate broadband, however, despite the fact it regulates measurement of other essential services like gas, this agency has assiduously avoided wading into broadband speed measurement and will be unlikely to reconsider without a new legislative mandate.

None of these laws or codes, therefore, help to set any standard of testing or transparency by which retail broadband ads must adhere. There is nothing about how and when advertised speeds are tested, nor any rules that require ISPs to provide consumers with clear, upfront information about how advertised speeds won’t necessarily be the speeds consumers get, which subsequently bars consumers from remedies when they don’t get those speeds. In this respect, Canada is seriously lagging behind other jurisdictions like the UK, Australia, and Germany, who have all in recent years implemented very clear and specific guidelines for advertising retail broadband services.

United Kingdom

In the UK, advertising is primarily regulated through a system of self-regulation, including rules that the ad industry writes and must adhere to. Written by the self-regulatory Committee of Advertising Practice (CAP), one of these codes is called the CAP Code, which regulates non-broadcast advertising, sales promotion, and direct marketing. The Committee itself is administered by the independent Advertising Standards Authority (ASA), which is a self-regulatory trade body that enforces the Advertising Codes written by committees like the CAP. The CAP Code requires that all non-broadcast marketing communications should be legal, decent, honest and truthful; should not cause serious or widespread offence; exploit a consumer’s inexperience; mislead, cause fear or distress; or condone or encourage unsafe practice or violence. According to the CAP Code, all claims must be substantiated before being published or aired, that is, marketers must have evidence to prove claims that consumers would view as objective. Besides the self-regulatory code, advertising is also governed by the Consumer Protection and Unfair Trading Regulations 2008, which dictates that advertisers cannot mislead or harass consumers by including false or deceptive messages, leaving out important information, or using aggressive sales techniques.

While these general rules apply to broadband advertising, the ASA saw the need to impose specific rules in 2018 about advertising residential broadband services. The basis of these specific rules was that, according to the Committees of Advertising Practice, “speed claims should be based on the actual experience of users and therefore marketers should be able to demonstrate that the speeds in their advertising can be achieved by a reasonable proportion of the provider’s customers.” The new 2018 rules came out of a significant consultation process involving major ISPs, Ofcom, and consumer groups. That consultation established, among other principles, the most meaningful metric of advertised speed according to consumers: median peak-time download speed. This means that advertised broadband speeds should represent the average achievable speed for at least 50% of the relevant customer base during the peak period of 8pm to 10 pm. This new benchmark marked a change from the ASA’s previous guidance that advertised speeds can be represented as “up to” a certain speed, measured over a 24-hour period and available to at least 10% of customers.

According to the new guidelines, factors that may affect the consumer’s ability to achieve the advertised speed must also be communicated clearly and prominently in ads. Factors include signal attenuation, congestion/contention, Traffic/network management practices, protocol overheads, users’ distance from the mobile mast, and environmental obstructions between the user and mobile mast (“clutter”). Advertisers must also further qualify the service if a factor may cause a significant proportion of customers to receive a speed so much lower than advertised that it prevents types of online activity that customers might reasonably expect to undertake at the advertised speed.

Regarding point of sale practices, the UK’s communications regulator, Ofcom, revised their Voluntary Codes of Practice on Broadband Speed in 2018. The revised code requires that providers must show a broadband service’s Minimum Guaranteed Access Line Speed (MGALS) at point of sale, rather than upon request as previously required. If the speed received at the customer’s doorstep falls below the MGALS, providers are given 30 days to resolve the problem before the customer must be allowed to exit their contract, penalty-free. The revised code also provides that ISPs must be upfront about what speeds customers can expect during the 8pm to 10pm peak period. Though this code is voluntary and complementary to the ASA advertising guidelines, several major broadband providers in the UK have agreed to support the changes (Virgin Media, Sky Broadband, TalkTalk, and others).

But the question is, did all these new rules make any difference in broadband advertising? Did the ISPs in the UK actually follow these guidelines? Yes, it did, and yes, they did. After these new rules were introduced, nearly every ISP in the UK reduced their advertised broadband speeds. Across all packages up to 100 Mbps, advertised speeds from the 12 biggest providers in the UK dropped by 15%. One company, TalkTalk, completely eliminated speed claims from their advertising. Advertised speeds of the cheapest deals dropped by up to 41%. Reflecting the shift to averaged speed claims, Sky Broadband changed their marketing for a service from “up to 17 Mb” to an “average 10Mb download speed.” BT Superfast Fibre Unlimited went from “up to 52Mb” to “average 50Mb download speed, and TalkTalk went from “up to 76Mb” to “average 63Mb download speed.”

In 2020, Virgin Media formally brought a challenge to the ASA against a BT Broadband ad for FTTP broadband service. The ad in question claimed that BT’s FTTP product in Bristol would provide more reliable speeds than Virgin’s services in the same area. Virgin argued that BT’s claims were not representative of the target audience and area, pointing to the 2018 guidelines which state that campaigns targeting specific areas should use data from tests carried out in that area. The ASA agreed, finding that although recent Ofcom studies showed that nationally, BT’s fibre speeds were indeed more reliable than those of Virgin’s services at the time, the local ad was misleading because it did not qualify that the claim was based on national data. This ruling was a prime example of how specific rules on broadband advertising help ISPs keep each other accountable while competing for customers. If ISPs wanted to splash their ads with lofty claims and comparisons, then the only way to do so is to actually back those claims with evidence, or to improve their services if they cannot. In the end, consumers win.

Australia

In Australia, advertising practices are governed by the Australian Consumer Law (ACL), which was introduced in 2011 and is contained in the Competition and Consumer Act 2010. The ACL prohibits misleading or deceptive conduct, false or misleading representations in the form of consumer guarantees, the nature of goods and services, and bait advertising, etc. The Australian Competition and Consumer Commission (ACCC) and each state/territory’s consumer protection agency administers the ACL. The ACL provides for guarantees that the provision of services, including broadband services, will be with due care and skill, are fit for the purpose and are provided within a reasonable time.

In 2017, the ACCC published its first guide for retail service providers on how to advertise speeds for fixed-line broadband services. The guide sets out 6 key principles that apply to broadband speed and performance ads. In summary, these principles provide that broadband consumers should have accurate information about the typical speeds that a customer can expect to receive during the busy period of 7 pm to 11 pm, and that service providers have systems in place to diagnose and resolve speed issues. Additionally, factors potentially affecting performance, and uses that trigger traffic throttling should be accurately and prominently disclosed at point of sale and throughout the contract.

And the ACCC has not rested on its laurels. In 2020, the ACCC initiated another consultation on proposed improvements to its 2017 guide, in light of the greater prevalence of high-speed plans offering over 100 Mbps in download speeds. The improvements, implemented on October 29, 2020, caution advertisers against creating unrealistic expectations based on ads flaunting “burst speeds” that are available only for short periods of time, and to avoid broad marketing campaigns where high-tier speeds are not necessarily available to certain geographical markets. Another addition to the guide was to limit providers to using the lowest end of speed ranges if providers rely on wholesale specifications for off-peak speed information. Recognizing that higher speeds are attractive to online gamers, the ACCC also added that services advertised as suitable for online gaming should be able to deliver a high quality, low-latency gaming experience.

But again…Did all of this work? Again…yes, it did. After the 2017 guide was published by the ACCC, eight ISPs in Australia came forward in late 2017 and early 2018 with court-enforceable undertakings admitting they likely misled consumers about broadband speeds, and offered to compensate customers. For example, Telstra offered to remedy 42 000 customers for promoting NBN plans with specified max speeds that were actually not achievable in real-world conditions. Telstra admitted that it likely contravened the ACL by engaging in misleading/deceptive conduct, and making false/misleading representations. In its undertaking to the ACCC, Telstra detailed options for affected customers: refunds, changing plans, or exiting the contract without fee. Both UK and Australian experiences show that if regulators take a firm stance on proper advertising requirements, the ISPs will fall in line. Having specific rules in place empowers regulators to actually regulate ISPs. Case in point: The ACCC recently took two ISPs to court for making false claims about the speeds that customers could receive. The court ordered the two ISPs, Dodo and iPrimus, to pay a combined $2.5 million penalty for making the misleading claims, which were based on flawed measurement methodology that used only the fastest observed speeds, ignoring the slower speeds that many customers experienced

Germany

In 2017, the German broadband regulator Bundesnetzagentur changed broadband advertising rules so that ISPs can only advertise three metrics: minimum, normal, and maximum speeds. Under the new German framework, ISPs must ensure customers’ speed never falls below the minimum speed, the normal speed is available 90% of the time, and that customers get 90% of the maximum broadband speed at least once. Additionally, if ISPs in Germany fail for over 48h to deliver the speeds they’ve sold to a customer, the customer is free to switch to another ISP penalty-free.

Evidently, the regulators in other jurisdictions have woken up to the questionable advertising practices of their broadband service providers, and are proactively on the side of the consumers. In comparison, Canada’s regulatory silence speaks volumes about the lack of will from our regulators.
Through it seems difficult to imagine Canada’s ISPs voluntarily fessing up and remedying their past conduct like the ISPs did in Australia, if advertised speeds going forward are at least more accurate to the average experienced speeds, consumers can make more informed and economically relevant choices about their internet services. Currently, there are no real consequences for ISPs in Canada that fail to deliver on their advertised speeds, especially when no ISP is beholden to a standard for setting representative speeds in ads for broadband services.
A comparison of current ads shows that the proof is in the pudding
The informational gap in Canadian ads is best illustrated by comparing the advertised plans of two of Canada’s major ISPs (Bell and Rogers) with those of the top ISPs in the UK (BT and Sky Broadband) and Australia (Tangerine and Telstra). The ads from the latter two jurisdictions, as seen below, also demonstrate how ISPs have closely followed the new broadband advertising rules.
In the UK, both BT and Sky Broadband provide a guaranteed minimum average speed and range of estimated download speeds based on peak-time measurements, as required by Ofcom’s Voluntary Codes of Practice on Broadband Speeds (See Figures 1 – 4). In addition, both UK providers’ guarantee that a customer can sever their contract penalty-free if the customer’s speed falls below the minimum guaranteed speed and cannot be resolved within 30 days. All of this information is visible either on the face of the advertisement, or within a pop-up window that appears when a customer clicks on a link within the ad.
In Australia, even more information is provided to the consumer within the ad itself and in detailed fact sheets linked in the ad. The top broadband providers in Australia advertise their plans in terms of typical busy period speeds, and repeatedly indicate that these speeds may vary based on various factors. This information is ubiquitous and upfront on the websites – it is not hiding in footnotes, nor is it squirreled away further in the purchasing process (See Figures 5 – 11, below). For any remotely diligent customer viewing the available service plans, this information is very hard to miss.
Comparing the information provided in Canadian ads with those of the UK or Australia, it becomes apparent that we Canadian consumers are practically in the dark about the broadband services we buy. Where ISPs in the UK and Australia provide for guaranteed minimum average speeds and ranges based on measured peak period speeds, major Canadian ISPs still primarily advertise their services as “up to” a certain speed, or a range that is not openly substantiated by any measurement method (See Figures 12 – 13). Information about factors affecting download speeds is not presented up front, but rather in a footnote at the very bottom of the webpage, after scrolling past all package listings. Unlike the UK and Australia, there are no laws or codes that require Canadian ISPs to abide by specific standards for broadband ads, and therefore ISPs have no obligation to provide more than the bare minimum of information that is just enough for consumers to differentiate between plans.
Consumers need and deserve more accurate, practical information about their service speeds before they buy into a plan, not an aspirational speed that consumers realize after the fact is unachievable most of the time. Canadian ISPs have thus far escaped, by avoiding accurate speed guarantees, any obligation to allow consumers to exit or switch plans when speed issues persist. In effect, consumers cannot escape their contracts – not without tedious, escalating negotiations and major penalties – even when they realize they are not getting the speeds they paid for. The only other option is for consumers to submit complaints to the Commission for Complaints for Telecom-Television Services (CCTS) or the Competition Bureau, which does not guarantee a favourable resolution, and may take months to resolve. The advice the CRTC themselves gives to consumers is to simply switch providers (pointless where there is no competition), ring up customer service (with frustrating escalations up to a ‘manager’), or to contact the CCTS – a largely unhelpful set of suggestions compared to the remedies that the UK and Australian regulators have implemented. It is long overdue for Canadian regulators to impose standardized guidelines for retail broadband advertising in Canada.
In the last part of this blog series, we will discuss just how this can be done, including the question of whether we should advertise broadband services by speed in the first place. Meanwhile, please compare the broadband speed advertisements in the profiled countries versus those of Canadian ISPs (all ads accessed on 20 July 2021):

UK: BT (plans available in central London, postcode W2 2SZ)

Fig 1. BT Broadband Plans

Figure 1. The UK provider, BT, advertises their plans based on a guaranteed minimum speed and a range of typical download speeds. Clicking on “What these speed estimates mean for you” shows a window that details BT’s minimum speed policy. Though BT does not describe their broadband speed measurement methodology, they have indicated commitment to providing peak time speeds, by reference to their signing onto Ofcom’s Voluntary Codes of Practice on Broadband Speeds.

UK: Sky Broadband (plans available in central London, postcode W2 2SZ)

Fig-2.-Sky-Broadband-Plans

Figure 2. For the popular “Superfast” plan offered by UK’s Sky Broadband, the ad guarantees a minimum download speed, and describes a range of estimated download and upload speeds.

Figure 3. Clicking on the information icon beside “minimum guaranteed download” on BT’s plan ad (as seen in Figure 2) provides more information about the minimum speed policy, including eligibility for contract termination if speed issues are not resolved within 30 days. The info box also details how Sky Broadband calculates the advertised download and upload speeds.

Figure 4. The information box shown in Figure 3 also further details the factors that potentially influence the customer’s speeds, and how Sky Broadband monitors broadband speeds.

Australia: Tangerine Telecom

Figure 5. The advertised National Broadband Network plans offered by Tangerine Telecom in Australia describes the “Typical Evening Speed” expected between 7pm and 11pm. The mouse-over text also lists factors that may affect this speed. Customers can also access further details by clicking on the “Critical Information Summary” and “NBN Key Fact Sheet” links, described in Figures 6 and 7 below. (https://www.tangerinetelecom.com.au/nbn/nbn-broadband)

Figure 6. The “Critical Information Summary” provides extensive details about each plan, including additional account fees, late payment and cancellation policies, and a disclaimer that the advertised speed refers to the speed to the installed technology at the customer’s premises, not necessarily the download/upload speeds achieved in practice. As seen above (in a section taken from the summary sheet), the Summary also describes factors that may limit the customer’s received speeds. Tangerine also explicitly provides that if a customer cannot achieve the typical speeds for their plan, Tangerine will move them to a lower tier and refund any money paid for the higher tier plan.

Figure 7. The “NBN Key Fact Sheet” compares speed and suitable uses between the service tiers offered by Tangerine. The Fact Sheet also details the factors that can affect Internet speed.

Australia: Telstra

Figure 8. Telstra’s plans for broadband Internet, like Tangerine, describes the typical download and upload speeds between 7pm and 11pm, as well as the factors that may lower the experienced speeds. Where typical speeds are not available for FTTN connections, Telstra provides that speeds will be confirmed post-connection. (https://www.telstra.com.au/internet/plans#plans)

Figure 9. Clicking on “More on nbn speeds” within each Telstra plan pulls up a window providing more details on the typical peak speeds and suitable uses specific to the plan.

Figure 10. The Telstra website also includes a detailed info page about the factors that may impact the customer’s speeds, including the quality and location of the modem, as well as the condition of the customer’s in-premises wiring. (https://www.telstra.com.au/internet/nbn/nbn-speeds-explained)

Figure 11. Clicking on the “nbn speeds key facts sheet” link under each plan presents a detailed chart that compares Telstra’s broadband speed tiers and suitable uses depending on the number of people online at the same time.

Canada: Rogers Communications

Figure 12. In Rogers’ “Ignite Internet 50u” plan offering, the advertised download speed is “up to 50 Mbps.” Footnotes qualifying this speed can be found by clicking on “See Full Details” at the very bottom of the page. The 50 Mbps download speed is qualified with: “[a]ssuming optimal network, equipment and customer device conditions”.

Canada: Bell Canada

Canadians to pay more, have less choice, for Internet

OTTAWA, 27 May 2021 – Consumers likely will lose competitive service options and pay more for Internet as a result of today’s CRTC reconsideration of wholesale Internet rates, the Public Interest Advocacy Centre (PIAC) warned.

John Lawford, PIAC Executive Director and General Counsel, decried the decision, saying: “Both the CRTC and the federal government lost their nerve in dealing with the major Internet providers. They backed away from a fair wholesale rate that would have increased consumer choice and lowered internet prices for Canadian consumers.”

The Canadian Radio-television and Telecommunications Commission (CRTC) decision today is a reconsideration of a previous CRTC order that ordered major Internet service providers such as Bell Canada, TELUS and Rogers sell wholesale access to their networks to allow competitors to offer their own services at affordable rates. The CRTC had, in their first decision, set a much lower rate than the rate approved today. The CRTC also had ordered rebates to small Internet providers that had paid more than the first decision’s final rate – but today’s decision largely removed that part of the order.

The major Internet providers launched a three-pronged attack on the CRTC’s original order: appealing to the courts (which dismissed their case); petitioning the government; and asking the CRTC for today’s decision. The Petition to the government was dismissed but accompanied by language that the major Internet providers claimed may have helped direct the CRTC to increase the rate.

Lawford noted that without most of the previously ordered rate repayments and with today’s higher rates, consumers may see some of the smaller Internet providers, who typically offer cheaper Internet service, go out of business in the near future.  “Consumers need affordable Internet more each day” noted Lawford. “But the government and the CRTC clearly were afraid to support competition during a pandemic and ahead of an election. They should fear consumer anger far more.”

For more information, please contact:

John Lawford

Executive Director and General Counsel

Public Interest Advocacy Centre (PIAC)

613-562-4002 ext. 125 (New)

(613) 447-8125 (cell)

jlawford@piac.ca

— 30 —

Applications for Social Justice Articling Year 2022-2023 Now Open at PIAC – Funded by Law Foundation of Ontario

Description for Social Justice Articling Positions Funded by the Law Foundation of Ontario

Name and Location of Organization:

Public Interest Advocacy Centre (PIAC)

2-285 McLeod Street, Ottawa, ON, K2P 1A1

 

For Articling Year: 2022-2023

 

Deadline for Application:     May 25, 2021 at 5:00 p.m. (EDT)

Interviews the weeks of:      31 May and if necessary, 7 June 2021

Offers will be made:             June 18, 2021 at 8:00 a.m. (EDT)

 

Description of Organization and Areas of Law:

 

The Public Interest Advocacy Centre (PIAC) was federally incorporated in 1976 as a non-profit corporation and has charitable status for tax purposes. The organization’s purpose is to provide representation, research and advocacy on behalf of those elements of the public interest that would otherwise be unable to be adequately heard before courts, tribunals, and decision-makers. PIAC has tried to focus its mandate on issues arising from the delivery of important public services including telecommunications, broadcasting, competition law, energy, financial services, and transportation. PIAC seeks to represent and advocate on behalf of ordinary consumers, in particular vulnerable consumers, concerning the rates, policies, rules and regulations associated with the delivery of these services with a view to ensuring principles of access and affordability and fair treatment for the constituencies it tries to serve.

PIAC’s work takes a variety of forms. First, the lawyers of PIAC represent organizations whose membership serves our target constituencies before boards and tribunals where the industries delivering such services are regulated. These organizations include ACORN Canada, the Vulnerable Energy Consumers Coalition, the Consumers Association of Canada, the Ontario Society of Senior Citizens Organizations (OSSCO), National Pensioners Federation (NPF), Option consommateurs (OC), l’Union des consommateurs (UC), and Rural Dignity of Canada among others. PIAC’s most significant commitments for such representation occur before the Canadian Radio-television and Telecommunications Commission (CRTC) and the Ontario Energy Board (OEB) where PIAC lawyers are full participants in administrative proceedings including the presentation of evidence and the making of written and oral submissions.

Because the delivery of the public services touches upon consideration of other important legal and policy matters, PIAC has also developed expertise and is frequently involved in funded and unfunded work (approximately 20% of PIAC’s work is unfunded) representing its constituencies in competition law and practice, electronic commerce, privacy, multilateral agreements, and general issues of consumer protection.

PIAC carries out its work outside the hearing room in numerous ways. Its extensive studies and reports associated with the above are published and distributed to policy makers and the general public through its web site. PIAC staff participates in discussions with government officials, other industry stakeholders, other public interest communities, as well as groups representing its own constituencies to attempt to secure rights, rules, policies or consensus that will advance the interests of the communities that PIAC serves. PIAC frequently attends before parliamentary and legislative committees to pursue these same goals in legislation. Finally, PIAC’s staff are active in traditional and online media to present a coherent defense of those communities’ position when the delivery of important public services is in issue.

Description of Responsibilities:

  • Research and writing on legal and policy issues to support studies and reports of the Centre;
  • Research and writing to support regulatory interventions in tribunals;
  • Assistance and attendance with PIAC counsel for tribunal work, meetings with government officials and presentation before parliamentary committees;
  • Participation in discussions of advocacy strategy and position with Counsel and Centre clients

Salary/benefits: $51,000 for the articling term, Medical and Dental plus paid vacation

Application must include:

  • Resume
  • Cover letter
  • Undergrad transcripts
  • Law school transcripts
  • Letters of reference

Applications should be addressed to:

John Lawford

Executive Director and General Counsel

Public Interest Advocacy Centre

2-285 McLeod Street, Ottawa, ON, K2P 1A1

Email to: dbrady@piac.ca

 **         Please note: We no longer accept faxed applications.

Students will be interviewed during the week of 31 May and, if necessary, the week of 7 June with a view to extending an offer on June 18, 2021 by ZOOM videoconference.

This position has been made available through

The Law Foundation of Ontario Public Interest Articling Fellowship program.  We thank the Law Foundation of Ontario for their support.

Buying Speed? What Canadians Pay for Broadband: Part 1 – The CRTC’s “Measuring Broadband Canada” report does not measure up

How fast is your Internet connection, really? How good is it, anyway? How can you tell?

The Canadian Radio-television and Telecommunications Commission (CRTC) is rightly interested in this question.  So the CRTC contracted with SamKnows, a “global internet measurement and analysis platform”, to collect data in October 2019 on the performance of broadband Internet services sold to Canadian consumers. The results were published in a report, “Measuring Broadband Canada,” released in June 2020, at the tail of the “first wave” of COVID-19 in Canada. The outcome according to the CRTC?:

Canadian consumers are receiving maximum advertised Internet speeds”.  PIAC was suspicious.

The data were collected with “Whiteboxes”, which are hardware installed between a user’s device and their home modem or router to monitor broadband performance when no one in the home is using the Internet. You heard that right.  When no one is using the Internet in the home.

Another important limitation of these Whiteboxes: measurements are only taken from the service provider’s location to the Whitebox, not within the user’s home network. You heard that one right too.  Not accounting for your network setup, devices, or anything that uses or potentially slows down the Internet speed during customers actually “using” the Internet in a normal way.

Let’s give them the limited and “perfect” conditions, however.  Let’s examine what they measured: the “performance indicators”. Those measured were: download and upload speeds; latency; packet loss; and webpage loading time.  These are limited, but useful, indicators.  However, other parameters could have been included – ones like “jitter”: a/k/a “packet delay variation”, (where variation in IP packet arrival at nodes in the Internet can cause packet loss and dropouts and interruptions, especially for a user’s voice and videocall applications – which are essential during the pandemic, whew!).  Oh well.

The test results purported to show that all major Canadian ISPs are providing users with speeds meeting or exceeding the advertised speed, apparently to the point that users often were getting “additional” throughput, with very few instances of service falling below advertised speeds, for all performance indicators.  Wow, this seems great.

The Report also claimed that speeds also did not decrease significantly during peak hours. Really?

Now we are suspiciouser.

We believe a closer examination of this claim reveals that, for a Report that claims to be “designed to provide accurate data on the broadband performance experienced by the majority of Canadian fixed-line broadband users,” the study is actually extremely limited in scope, and the conclusions drawn from the results are tone-deaf to the real-world usage context of Canadians. Perhaps this was made easier by the significant scaling down of the sample size and diversity of the measured connections, compared to a similar SamKnows study conducted in 2016.  (This creates a risk of drawing conclusions from small sample sizes, or in short: the human cognitive bias to give too much credence to statistically insignificant  results, called by behavioural economics scientist Daniel Kahneman the “law of small numbers”.)

However, most of the conclusions in this Report appear to rely upon what was chosen to be studied, and not on what was deliberately excluded, and that these scope reduction choices made by the Report authors were justified on technical bases but not on social or actual real-world use bases – the real world being the point of studying consumers’ experiences of their broadband service (and, we might add, the authors’ choices and limitations were implicitly endorsed by the CRTC, which uncritically announced the Report’s results with an industry-boosting News Release).  We examine these critical limitations, and the sweeping conclusions reached, below.

The sample pool is heavily skewed towards higher tier plans and urban users

The first major limitation is in the service packages and demographics that the 2020 Report chooses to include, or rather, to exclude. The results were based on a pool of measurements from 2035 Whiteboxes deployed to customers of participating Internet Service Providers (ISPs), including the three largest ISPs: Bell; Rogers; and TELUS. Only Internet packages with the highest subscriber counts were included in the study in order to “represent the majority of Canadian fixed-line broadband users”. For comparison, the 2016 study used data from 3056 Whiteboxes, without the “highest subscriber count” condition.

The 2020 Report also excludes advertised download speeds of 10 Mbps or less, and packages that had less than 25 000 total subscribers. With few exceptions, sample sizes of less than 40 Whiteboxes per Internet package were excluded. The 10 Mbps cutoff is particularly concerning, as many rural Canadians only have these lower tier plans available to them. The study does not explain whether the exclusion of lower tier service packages was because of declining number of subscribers or otherwise. The exclusion is especially confounding considering the 2016 study did include Bell Canada’s 7/0.64 Mbps and 5/1 Mbps plans, and TELUS’ 6/1 Mbps plan, which respectively underperformed at 81%, 86%, and 81% of the advertised speeds. The CRTC’s choice to not re-evaluate these plans 3 years later calls into question whether the speed and quality of service has improved for Canadians still relying on these basic plans. 

The lack of evidence for lower-tier plans does a disservice to rural Canadians, who tend to only have access to lower speed broadband Internet. Based on the most recent Communications Monitoring Report (CMR), released by the CRTC earlier this year, the broadband coverage in rural communities in 2018 was only 40.8% for broadband speeds of 50/10 Mbps (31.3% in First Nations reserves), compared to 97.7% coverage for urban areas. 1.5 Mbps broadband was available to rural communities at a much higher coverage rate of 94.0%, and yet the SamKnows study does not address whether these users are getting reliable service at speeds that are already inadequate for modern usage needs even at the advertised benchmark.

Another major difference between the 2016 and 2020 Reports is that the 2016 Report explicitly took measurements that “covered all geographic regions of Canada in a mix of urban and rural settings,” and acknowledged variations in results stemming from rural and remote measurements. The 2020 Report makes no such claims – because it cannot – in fact, it does not mention a rural sample portion at all. We can only assume, based on how the data collection is skewed towards higher-tier services, that effectively only urban and suburban users were included in the study. Furthermore, the study excluded Northwestel from the results for webpage loading times because “their remote location would have an adverse impact on results compared to other ISPs.” This should raise the eyebrows of anyone familiar with selection bias. A fairer presentation would have been to include this information from Northwestel and then to explain those data’s effect on the bottom line number with an explanatory note.  In effect, the study cherry-picks results, limited to urban and suburban users, who typically enjoy greater reliability and more service choice than rural and remote users. 

Collecting data during periods of inactivity only measures speed, not user experience 

As we noted earlier, the “real-world” utility of Whitebox measurements is also limited by the fact that data are only collected when there is no end-user “cross-traffic” on the home network. In other words, the Whitebox only takes measurements when there is no one in the household actually using the Internet, apparently so that the “WhiteBox’s measurements are not “distorted” by end-user activity, and that the Whitebox’s measurement traffic does not interfere with the user’s experience of the Internet. Except, of course, the user’s actual household experience is always filtered by the fact that they must use their Internet connection, and some sort of consumer device, such as a smartphone, laptop, or connected TV to experience speed and to use the product, that is, the Internet.  Therefore the study only measures potentially available speeds on a household network, not how efficiently and reliably those broadband speeds stand up to normal and indeed, human, user activity. The study qualifies that the Whiteboxes only measure speeds to the “doorstep” (Whitebox) because factors like the number of devices in use at the same time, faulty equipment, and poor Wi-Fi connectivity can affect broadband performance inside the home. Well, duh.  We all live in the real world, with some “network overhead”: routers, WiFi, devices.  Why can the study not allocate and take into account a “typical” such level of overhead?

It is precisely the real-world factors that, together with the “to the door” delivered speed and quality, to “make or break” the utility of an Internet service for a household, especially during peak hours. Without more comprehensive research that accounts for these factors, or at the least some allowance for consumers to live in the real world, with a real network and real Internet devices, the study should recognize its results for what they are: merely the potential maximum speeds “available” to a household.

The 2020 Report, however, makes the very much larger, and, in the real world, at least confusing claim that “Canadian ISPs have mostly met or exceeded maximum advertised download and upload speeds across tiers and regions,” despite the Report’s partial and theoretical, rather than real-world, basis. But wait, there’s more: the report extrapolates that “quality of service is consistent across Canada,” and that the results were based on “the broadband performance experienced by the majority of Canadian fixed-line broadband users.” Firstly, the effective exclusions of rural areas by concentration on higher-tier packages completely undermines the assertion that service is consistently up to snuff across Canada. Secondly, the Report, by its own methodology explicitly excludes any “consumer experience” at all – since only the Whiteboxes’ “experience” is measured, not the experience of a real consumer on a real network using a real device – so any claim of “performance experienced by … Canadian … users” is manifestly false.  Lastly, the Report, despite the measurements being conducted prior to the COVID-19 pandemic (but released during it) now is of questionable utility in the real world context of the current pandemic. With more households working and going to school from home, resulting in longer peak periods and heavier traffic, more use of video and audio streaming and communications tools like videoconferencing, the need for faster and more reliable broadband is greater than ever. 

Let’s park our cynicism and assume for a moment, however, that the majority of Canadians do in fact have access to high speed Internet, the issue during the pandemic and well before, for many consumers, is not speed, but affordability of Internet service. In rural communities, household spending for Internet services is increasing despite slow deployment of high speed Internet. From 2013 to 2017, average monthly Internet access spending increased for rural households from $37.42 to $54.83, a whopping 46.5% increase.

The CMR directly acknowledges that rural households spend more than urban households because of “slightly higher prices offered in rural areas, where there are typically fewer service providers.” Instead of a simple Report examining largely the highest service tiers for the most easily-served demographics, the CRTC should at the least supplement this Report with a study that helps resolve the accessibility and affordability issues that have persisted for years, especially for vulnerable and underserved Canadians.

Conclusion: What’s wrong, why it matters, and how it can be fixed

The 2020 Report is flawed.  It presents an artificial “measurement” of selected networks, in selected locations, for selected users at selected speeds, in ideal conditions and a totally artificial context as far from “real world” Internet experience of users as we can imagine.

To then claim that Canadians’ experiences of the Internet are that it is fast is flatly wrong. It smacks of regulatory propaganda.  We are tired of this approach from our telecommunications regulator.

At the very least, the CRTC should rethink its methodological approach to make the next report more comprehensive and reliable. The CRTC should rethink its communications regarding this report and similar reports prepared for the CRTC such as the even more recent “Secret Shopper Project Report” – which has its own limitations, as examined in PIAC’s “We Fight for That” podcast, episode 2.

Next up: Part 2 – Traffic Cops on the Internet – Broadband Speed Advertising in Canada and Abroad

In part 2 of our “Buying Speed? What Canadians Pay for Broadband” series, our next blog post focuses on broadband speed advertising. PIAC notes that other countries view the broadband speed question much more pragmatically than Canada, and require advertised speeds to correspond to lived experiences of average users, at average times under average network loads.  Is Canada’s laissez-faire approach to this facilitating something like false advertising? You be the judge.

Canadian Airlines: No Refund = No Bailout

Canada will soon “bail out” the ailing airline industry in Canada. We are convinced that talks between the federal government and carriers such as Air Canada, WestJet, and possibly smaller carriers are well underway.  Recently, a loan package was announced in the United States for their air carriers measuring over US $25 billion with potential access to more.  Back in Canada, some assistance already has been provided to smaller airlines, however, there is, given the depth of the effect of COVID-19 on air travel, no guarantee that Canada’s air travel landscape will be at all similar post-epidemic.

But consumers have other problems: many thousands hastily booked and rebooked cancelled flights when the Prime Minister asked Canadians abroad to come home.  In the chaos of country-specific flight restrictions, airport and airspace closures, schedule disruptions, health screening measures and growing financial uncertainty, many airlines unilaterally delayed, rerouted, cancelled or changed consumers’ flights, sometimes for multiple flights. Thus, early priority was placed on repatriating Canadians stranded abroad.  There were notable failures and stranded passengers. Other Canadians have complained about high fares for the flights that they had to book to return from abroad. There continue to be many Canadians who cannot get home. The problem is so large that the Minister of External Affairs said he has become Canada’s “travel agent to the world”. We hope the government’s efforts can bring them home soon. Canadians abroad having issues should start by registering with Global Affairs Canada and using their emergency service to get help on their COVID-19 page.  They also should, to the extent they can, document their efforts to return home, so that they can have evidence for any future complaints to their airline or the Canadian Transportation Agency (CTA) – see more below.

Now attention is turning to those Canadians whose flights, including future flights, have been cancelled, delayed or rebooked at higher cost.  More seriously, perhaps, PIAC has received many complaints from consumers about future cancelled flights and the lack of refunds for these flights.

Unfortunately, the measures taken by the federal government and in particular the airline regulator (the CTA) have not provided adequate consumer protection.  The CTA, on Friday the 13th of March, on the application of the Canadian airlines, in paper hearings, without opposing parties, made sweeping (time-limited to 30 June 2020) suspensions of Canadians’ recently acquired rights to compensation for flight cancellations under the new Airline Passenger Protection Regulations. (Please see PIAC’s technical blog, with links, on these determinations). The CTA also stated that it considered that vouchers for future flights, provided they were generally usable for 24 months into the future, would be reasonable compensation for cancelled flights.

We disagree. Consumers deserve compensation for losses due to COVID-19 cancellations that were not their fault. Bailing out airlines without the condition that these customers’ losses be compensated is not acceptable.  When airlines take large sums from consumers for future flights, and do not segregate those funds in trust but instead use them as operating funds, they have effectively taken consumer money for nothing.  CTA also “got played” by the airline industry: they appear to have panicked and provided this extraordinary relief on the allegation of potential bankruptcy of the airlines without evidence (at least without public, transparent evidence) that the airlines truly needed to keep the money and avoid refunding cancelled and modified flights.

At best, shouldn’t CTA at the least have simply delayed such compensation until after we saw the terms of the bailout?  Also, consumers’ situations are also too varied to offer future flight vouchers as if it were fair compensation. Consider, for example, elderly Canadians caught visiting foreign relatives who are now (for health or financial reasons, or simply due to the uncertainty of future air travel) unlikely to use a voucher in the future.

Class actions already have been filed saying consumers deserve monetary compensation.  We urge Canadians to continue to demand refunds from their air carrier and to bring complaints to the CTA if their demands are not met – Canadians should know that the CTA continues to take consumers complaints during the suspension of the Air Passenger Protection Regulations.  That is, file your complaint now and don’t wait until 30 June 2020.

The basic unfairness of not compensating Canadians – who simply cannot afford the monetary losses – often in the thousands of dollars – while potentially providing billions of dollars in corporate financial relief, whether to save an essential industry or not, rightly will raise the ire of Canadians.  The federal government must ensure that cancelled flights and elevated fares for returning Canadians are compensated – or no bailout.  If not, the political effects will rightly fall at their feet.

UPDATE: Consumer group Option consommateurs in Montreal has started a Petition to the House of Commons demanding consumer refunds for canceled flights. Please consider signing their Petition, which is found at:

https://petitions.ourcommons.ca/en/Petition/Details?Petition=e-2604&fbclid=IwAR3d_vQLzK36qjkCawy9Uz-CR8yE4lv55eamdOld-Q8QBH3D8cZIxxYtHI0

CRTC Low Cost Data Only Plans: “Much Ado About Nothing”

The proposed lower-cost data plans outlined in the Canadian Radio-television and Telecommunications Commission decision from today are unlikely to be used and will not help provide more affordable options to Canadians. None of the proposed plans exceed 1 GB of data and only Rogers’ plans offer a voice and text allowance in addition to data for the price of $30. In effect, today’s decision was: “Much ado about nothing.”
If affordable and useful wireless service options are going to be made available to consumers, more competition is going to need to be introduced into the wireless market, not semi-cajoled, likely largely unused plans like those approved today. The best way to facilitate more competition in wireless would be to allow mobile virtual network operator (MVNO) access. That is, reselling of wireless service by new companies that obtain wholesale access to existing wireless networks.
The CRTC launched this consultation on lower-cost data only plans in March as a stop-gap measure after the Commission made a number of determinations regarding wholesale roaming charges by Bell, TELUS and Rogers in Telecom Decision 2017-56 that effectively delayed any meaningful MVNO access in Canada. The Governor in Council sent that decision back for reconsideration by the Commission, expressing concerns regarding choice of innovative and affordable mobile wireless services on offer from those national carriers, particularly for Canadians with low household incomes.  Read: the government wanted the CRTC to move towards MVNOs sooner than later.
Unfortunately, CRTC chose delay on this file by issuing Telecom Decision 2018-97 which re-confirmed its refusal to consider even an indirect route to the real issue of MVNO access. The result was the process that led to the CRTC’s decision of today. In it, the CRTC has approved the suggested “data-only” plans of the national wireless providers.  They have committed to offering lower-cost data-only plans which range from $15 for only 250 MB of data (yes, you read that right: 250 megabytes, not gigabytes) to $30 for only 1 GB of data. There was no reasoning given by the CRTC or the companies for these proposed prices.  But that is because the CRTC did not think the public should see these costs.
Without unlimited data or lower prices for capped data, these “low-cost data only plans” will not help Canadians with low household incomes afford wireless services because they actually are not useful and affordable. They will remain largely unused while Canadians again wait for the CRTC to reconsider wireless services (and MVNOs) in a large upcoming proceeding (and largely avoid discussions of high wireless prices meantime).
Sorry, not much ado about nothing. A comedy of errors.

Whoa there: CRTC Proposes Forcing Telcos to Fund Broadcasting

The CRTC has released “Harnessing Change: The Future of Programming Distribution in Canada” a report regarding the future of programming distribution in Canada. The report proposes:

  1. Dispensing with broadcasting distribution licenses in favor of “voluntary agreements”
  2. Requiring telecommunications service providers to contribute to Canadian media production

PIAC is concerned about these proposals. Moving from licensing to voluntary agreements is not a bad idea in principle, but we feel it will only work if the CRTC is given a strengthened bargaining position beyond existing incentives it says it will use to entice programming distributors to help fund Canadian content. More crucially, requiring telecommunications service providers to contribute to Canadian production is fundamentally unfair because it forces telecom (Internet, wireless and home phone) users to subsidize programming they may not be able to afford. PIAC argued that if a contribution requirement is imposed on telecommunications, it should not apply to basic levels of broadband service which do not support video streaming. Rather, it should apply to revenues in excess of the cost of such a basic level of service (~$55/month). Although we oppose imposing a contribution requirement on telecommunications services, we are glad to see the Commission support this recommendation.
PIAC is, however, disappointed that the CRTC’s report remains focused on supporting Canadian content production rather than bringing Canadian perspectives to broad audiences. There is little mention in the report of the great contributions of Canada’s public broadcasters, CBC/Radio-Canada and the National Film Board. Nor is there any mention of the affordability of broadcasting in Canada, a crucial factor driving consumers to online services and limiting the reach of Canadian content.

“Voluntary Agreements” – Talk loudly and carry no stick?

Although we are not quite sure of what they are, legally, the proposal to rely on “voluntary agreements” in lieu of licensing is not entirely without merit, at least as a policy idea. Licensing is a significant barrier to entry in broadcasting markets, and has been used as a control point to ensure Canadian content funding and exhibition for many years; however, the time appears to have long since come that those markets (such as paid television) would benefit from greater competition. Voluntary agreements would also grant the CRTC, as regulator, greater flexibility to design obligations like exhibition requirements which are meaningful in the context of new service models involving personalized recommendations. The problem with voluntary agreements is that regulatory obligations are, generally, a net burden on broadcasters and a control point for the CRTC. Access to Canadian consumers is a bargaining chip in the game of regulatory poker that the federal government, largely through the CRTC, plays with private programmers, broadcasters and programming distributors. Without a sufficient incentive to offer, many broadcasting distributors may simply choose to give up those incentives and not to contribute to the promotion of Canadian content.
The proposal regarding voluntary agreements also makes a problematic assumption that production and distribution are integrated. The key incentive the Commission is able to offer is production tax credits. The Canadian Film or Video Production Tax Credit gives a tax credit to qualified corporations producing Canadian film or video productions. The program gives a refundable tax credit of 25% of qualified labour expenditures by a qualified corporation for the production of a Canadian film or video production. However, broadcasting distributors which do not do in-house production, like Telus, YouTube or Spotify, do not have production labour costs and therefore would not benefit from production tax credits. Broadcasting distributors which do have in-house production, like Bell or Netflix, would presumably have to produce their content in-house in order to take advantage of the production tax credit. This may negatively impact independent producers, which the Commission has traditionally supported.
Some commitments should not be voluntary. PIAC is particularly concerned that “protecting the privacy of Canadians and their data” is listed as a commitment that might be made in exchange for incentives. The protection of the privacy of Canadians is a legal obligation which is not to be traded for an extra half hour a week of a Canadian variety show.
If “voluntary agreements” are used as a means of regulating broadcasters, they should be used to advance the interests of consumers as well as producers. Commitments should include, for example, offering the broadcasting service: at lower prices; or at a discounted price to low-income Canadians; or offering content free of charge some time after its initial release. There is no point funding Canadian content if it is too expensive to be widely consumed.
If voluntary agreements are to be adopted in lieu of licensing, the Broadcasting Act must substantially strengthen, not weaken, the bargaining position of the regulator. PIAC suggests that a substantial tax – perhaps 20% of revenues – could apply to broadcasters unless they have negotiated out of that tax through a “voluntary agreement”.

Taxing Telecommunications – Robbing Peter to pay Paul (twice)

In contrast with voluntary agreements, which may be a good idea (or not) implemented in a bad way, requiring telecommunications services to contribute to the production of Canadian content is a bad idea implemented in a good (or at least equitable-­seeming) way.
As PIAC’s stated in its second intervention to the CRTC’s inquiry that led to this report:

  1. Proposals to implement an Internet tax may also impact affordability.[1] It would be extremely unfair and counterproductive to low-income consumers if taxes on Internet services priced this group of Canadians out of the Internet market or forced them to sacrifice other necessaries like food in order to afford such service, particularly if funding continues to subsidize the production of content which is distributed on a monopolistic basis.

It is unfair that Canadian content, whose creation was supported by public funding, tax credits, and contribution requirements, is fully owned by private actors who may price the content such that few consumers can afford to access it. This distribution of content on a monopolistic basis (the rights-holder sets a price to maximize profit) is unfair and inefficient. This inequity becomes particularly galling when telecommunications users, who may not be able to afford access to this publicly supported content, are forced to contribute to production costs.
The Commission dismissed PIAC’s concerns surrounding affordability, arguing that their proposal is intended to be revenue-neutral such that any increase in telecommunications prices due to the contribution requirement is offset by reduced contributions from broadcasting distribution undertakings. This would only be true if all customers were both broadband and broadcasting distribution undertaking subscribers. For persons who are only telecommunications users, they will be subject to a contribution requirement where they previously were not.
The Commission also assumes broadcasting distribution undertaking (that is, your TV provider) prices would go down on the initiative of these companies – a thing we find extremely unlikely without a corresponding regulatory requirement to lower prices. In telecommunications, prices are constrained to some extent by competition from resellers supported by the Commission’s wholesale access policies. In broadcasting, which lacks such wholesale access pricing rules, broadcasters are just setting prices to maximize profit, so prices are likely affected to a much smaller extent by contribution requirements. As a result, contribution requirements are almost certain to be passed onto consumers in telecommunications to a greater extent than they are in broadcasting.
Frankly, it is rather shocking that the Commission would deem a 1% levy on telecommunications service provider revenues acceptable to fund the production of content distributed on a monopolistic basis when it was unwilling to impose a similar contribution requirement to support basic broadband affordability as PIAC proposed in the proceeding leading to Telecom Regulatory Policy CRTC 2016-496. And the bottom line for most consumers will simply be that they are now paying for CanCon from two pockets, their TV service and now their Internet service too.
However, one silver lining is that the design of the particular proposal put forward by the Commission appears to be based on PIAC’s proposal for how such a tax, if absolutely necessary, should be implemented:

For instance, contributions from these connectivity services could be based on a fixed percentage of the revenues of BDU and radio services, as well as appropriate telecommunications services earning more than a minimum exempted level of revenues.

In the submissions identified above, PIAC continued:
91… If an Internet tax is imposed, the tax should be based on a percentage of revenues that exceed the cost of a basic Internet service plan, in order to avoid pricing consumers out of the market.

  1. The lowest speed tier sufficient to consume online video is 10-15 Mbps, which is typically associated with a usage allowance of 124 GB,[2] and generates average revenues of $57.43 per month per user.[3] Comparatively, speed tiers from 4-9 Mbps are typically associated with usage allowances of 64 GB[4] and generate average revenues of $53.00 per month per user.[5] If an Internet tax is administered, PIAC submits that the tax should apply as a percentage of average revenue per residential Internet service subscriber in excess of $55 to mitigate its impacts on low-income consumers and consumers without the bandwidth or usage allowance to actually watch videos online.

PIAC is glad to see the Commission appears to have adopted our proposed focus for telecommunications contributions on premium broadband subscriptions over basic broadband subscriptions, so as to not overburden lower-income Canadians trying to be frugal with their internet expenses with new costs.

The Commission’s Errors of Omission

PIAC is disappointed that the CRTC overlooked the important role of public broadcasters and the affordability of content. As we stated in our submissions:

  1. Lowering the costs associated with Canadian programming increases the demand for that programming and increases their consumer surplus from watching that programming. By freely distributing its library across multiple platforms and by creating short form content suitable to online platforms, the National Film Broad has dramatically increased its viewership, from 10.6 million total views in 2006-2007, to 53.9 million views across all platforms in 2016-17.[6] Over the past three years, YouTube has seen a 400% increase in watch time for Canadian broadcaster content, with 90% of that viewership coming from outside of Canada.[7]

  1. The high premium that Canadians place on distinctively Canadian content is reflected in strong consumer support for CBC/Radio-Canada and the National Film Board, which primarily create and distribute distinctively Canadian content. When asked what they believe will be the most effective tools for the creation and discovery of Canadian content in a digital world, most Canadians (54.7%) cited public broadcasters and content creators, with funding agencies coming in second at 45.3%.[8]

PIAC proposed increased support for Canada’s public broadcasters Canada’s public broadcasters produce high-quality, distinctively Canadian content, and much of it is distributed for free.
PIAC also proposed shifting the focus of public funding and mandated contributions. Currently, funding and contributions are used to support the creation of Canadian content which is then fully owned by the creators, who may demand a price for access which is unaffordable to many Canadians. This is unfair and inefficient. PIAC proposed shifting the focus of public funding and mandated contributions to acquiring the rights to compelling Canadian programming, so that it can be distributed for free across all platforms. To help stretch that funding to make more programming available, PIAC proposed that funding and mandated contributions should be used to acquire “second window rights” so that the creator can recover some or all of their costs from the initial release and those customers able to pay for the latest content.
We believe that these measures would help bring Canadian perspectives to broad audience by generating affordable content. We are disappointed these issues were overlooked by the CRTC.
We were however pleased by the Commission’s high quality analysis of broadcasting markets, with its detailed quantitative analysis of trends and interrelations. We hope to see such analysis in future CRTC decisions and hope that this analysis will ground evidence-based policy discussions around this report and any subsequent consultation process. The future of Canadian broadcasting is important enough to merit such rigorous analysis.
[1] See for example the proposal of the Community Media Advocacy Centre at para 4.
[2] CRTC, Communications Monitoring Report (2017) at Table 5.3.9.
[3] CRTC, Communications Monitoring Report (2017) at Table 5.3.8.
[4] CRTC, Communications Monitoring Report (2017) at Table 5.3.9.
[5] CRTC, Communications Monitoring Report (2017) at Table 5.3.8.
[6] National Film Board of Canada, “2016-2017 Departmental Results Report” (2017), online: http://onf-nfb.gc.ca/wp-content/uploads/2018/01/2016-17_DRR_NFB_TBS_Dec1.pdf> at 24; “Section II – Analysis of Program Activities by Strategic Outcome” (1 November 2007), online: <https://www.tbs-sct.gc.ca/dpr-rmr/2006-2007/inst/nfb/nfb02-eng.asp>.
[7] The Hamilton Spectator, “YouTube Channel Encore+ Resurrects Canadian TV Shows, Films” (9 November 2017), online: <https://www.thespec.com/whatson-story/7912952-youtube-channel-encore-resurrects-canadian-tv-shows-films/>.
[8] Government of Canada, “Canadian Content Consultations: Public Results” (26 August 2016), online <https://www.canadiancontentconsultations.ca/public-results> at “Looking ahead, what do you believe will be the most effective tools for ensuring the creation and discovery of great Canadian content in a digital world?”

Banks Solidly Chided by Feckless Regulator

PIAC reacts with bemusement at the high-level whitewash of banks’ aggressive sales practices
Despite it taking a solid year to get into action, investigate and report, despite reviewing 4500 complaints and talking to hundreds of bank managers, front-line employees and bank executives, despite reviewing 100,000 bank documents, despite extensive media stories documenting unfair, unsuitable and misleading sales practices by Canada’s big six banks, the Financial Consumer Agency of Canada (FCAC) today managed not to find widespread mis-selling of bank products, including travel rewards credit cards, personal lines of credit, increased credit limits, loans, mortgages, high-fee bank accounts and credit insurance in Canada.
The FCAC report is notable for detailing the bank sales culture and the extensive incentives to employees and managers to make sales. It also rightly points out that the control mechanisms employed by banks to discourage mis-selling are virtually non-existent. However, nowhere in this discussion is mention of the obvious fact that such a culture and such financial incentives clearly create a conflict of interest with bank customers, who are seen not as clients in their own right but as a means to an end of meeting sales targets, achieving bonuses or other “non-financial incentives” including company-paid trips and even promotions. This mistreatment leads to sales of products consumers don’t need, don’t want, and cannot afford.
The FCAC report also documents what every banking consumer already knows, namely, that the outsourcing of bank product sales to third parties, in particular those compensated by commission only, are a recipe for ignoring consumer needs and turbo-charges mis-selling.
But for all of its documenting of the general practice of bank mis-selling, the FCAC’s slim 24-page report provides no numbers or even quantification of complaints received or verified and absolutely no indication of which banks had more or fewer complaints regarding sales practices.  This assiduous avoidance of any hard facts, or clear accusations directed to any one bank (besides the group as a whole) smacks of protecting the industry and undermines the usefulness and integrity of the entire report. The message from FCAC is: consumers can do nothing about this situation; all of the banks do it and there is utterly no point in switching banks.  Suck it up buttercup.
In fairness, PIAC should mention that the FCAC did say out loud that: “retail banking culture encourages employees to sell products and services, and rewards them for sales success. This sharp focus on sales can increase the risk of mis-selling and breaching market conduct obligations. The controls banks have put in place to monitor, identify and mitigate these risks are insufficient.” That kind of language is unheard of in the cozy world of Canadian banking regulation. It is, in short, a strong chiding indeed.
However, having found that “the banks” nurture a culture of overselling, that that overselling creates a “risk” of breaching obligations to consumers, and that the banks effectively do not monitor or control this risk, the FCAC then confidently proclaims that it: “did not find widespread mis-selling during its review”.  Really? So, although there was a great risk of poor behaviour due to corporate sales culture, misaligned incentives, and virtually no oversight or internal controls, “the banks” were somehow resisting temptation to oversell to customers? While this may be theoretically possible, PIAC believes this conclusion is unlikely.
The hundreds of bank employee and customer stories conveyed to the CBC alone belie this conclusion.
The 4500 complaints from recent years reviewed by FCAC are but a fraction of those that are made directly to the banks each year, yet the FCAC in its report found that the banks were not keeping sufficient records of these internal complaints even to know how many were made, let alone the nature of the complaints – what the FCAC described as a “limited line of sight” to complaints.  What the FCAC has really described is wilful blindness of the banks to the fundamental conflict of interest with their customers.
So, to us, this is a problem.  And only the Minister of Finance can try to fix it. FCAC can’t and won’t.
How can the Minister of Finance fix this and avoid the potential dismantling of the banks as they turn away from their greatest strength and source of revenues, retail customers? By re-introducing his promised Financial Consumer Code – this time with real rules that require that banks act to act fairly, honestly and in good faith towards their clients and to sell products and services that are in the clients’ best interests. Anything less should be mis-selling and prohibited.
PIAC will be demanding a new Financial Consumer Code to make sales and performance of banking services work for consumers and to force banks to mend their ways.

CRTC Television Service Provider Code takes effect from September 1: A Step in the Right Direction

PIAC welcomes the CRTC’s decision to implement the Television Service Provider Code (Code), allowing Canadians to make well-informed choices. CCTS, an independent ombudsman, will now review consumer complaints about TV subscriptions.
The Television Service Provider Code is a mandatory code of conduct for most television service providers (TVSPs).
How would it help Consumers?
From September 1, 2017, TVSPs must give consumers clear information about their products, services and pricing. Specifically, by providing:

  1. A “critical information summary” with a copy of the written agreement in plain language- including a list of channels or packages subscribed to, monthly costs, contract duration, and complaints filing procedure
  2. Information as to the duration and conditions attached to any promotional offers
  3. Information as to the charges and time it would take to do any installations and repairs
  4. Thirty days’ notice for any price changes
  5. A trial period for Canadians with disabilities

Consumers are encouraged to carefully read these agreements. Before signing, get clarification from the TV Service Provider to avoid any confusion. Consumers should note that, unlike the Wireless Code, the TV Service Provider Code provides few substantive rights, and instead focuses on making the TV service provider offers more transparent. Therefore, consumers should be vigilant and carefully compare the services before subscribing. The major benefit of the TVSP Code, outside of improved information, is consumers’ ability to bring complaints about bundled services.  (TV sold with internet and for wireless or wireline telephone) to the CCTS (See below).
What can Consumers do to resolves disputes?
PIAC has actively advocated for an independent ombudsman to handle consumer disputes with their television service providers. We are pleased that now, if consumers are unable to resolve any issue with their TV Service Provider or telecom provider, they can complain to the Commission for complaints for Telecom-Television Services (CCTS).
The CCTS is an independent organization committed to help customers resolve complains about Canadian telecommunications and television services. The CCTS can only take TV complaints on issues arising on and after September 1, 2017. It cannot review TV issues, which arose before this date.
How to complain to the CCTS?
Consumers can complain to the CCTS, free, by completing an online complaint form. Before filing any complaint, they must attempt to resolve the issue with the TV Service Provider, otherwise approach the CCTS. They must also check if and when their TV service provider is required to join the CCTS. This information is available on CCTS’s website.
What will the CCTS do?
The CCTS reviews and accepts any complaint within its mandate, which is subjected to an informal resolution and investigation. After this, the CCTS may make recommendations on what needs to be done, and finally issue a decision.
What can the CCTS help with?
The CCTS can help resolve complaints concerning billing issues, services provided, credit management, and compliance with contracts terms and conditions. Consumers may expect a refund in case of any overbilling.
Useful resources:
Source: CRTC website, “The Television Service Provider Code (Infographic)”, online: http://crtc.gc.ca/eng/television/services/icode.htm.
Canadian Radio-television and Telecommunications Commission, Broadcasting Regulatory Policy CRTC 2016-1, (January 7, 2016).
Canadian Radio-television and Telecommunications Commission, The Television Service Provider Code (Infographic).
Canadian Radio-television and Telecommunications Commission news release, “Canadians will soon be able to file complaints about television service providers with ombudsman for communications services”, (August 30, 2017).
Canadian Radio-television and Telecommunications Commission, “Your Consumer Rights for TV Services”.
Canadian Radio-television and Telecommunications Commission, “Commission for Complaints for Telecom-television Services (CCTS).”
Commission for complaints for Telecom-Television Services resources. See its TV mandate,  complaints form and Complaints process explained.

“The Economist” concludes Canada has “most affordable” Internet– what is wrong with this picture?

The Economist’s Intelligence Unit released a study yesterday concluding that Canada, amongst the countries studied, has the world’s most “affordable internet”. This greatly surprised us at PIAC and we beg to differ.
The Economist study defined affordability as: “the cost of access relative to income and the level of competition in the Internet marketplace.”
However, a closer look at the data shows that the only aspect of internet service where Canada truly leads the pack is “average revenue per user”– a measure of how much Canadians spend on internet service. In other words, the study counterintuitively concluded that Canada’s internet is the world’s most affordable even though Canadian internet companies make more money from Canadian consumers than any other internet providers in any other country. The strange conclusion that our internet is the most affordable appears to stem in part from the study’s measure of income, which is then compared to the access cost. Income is based on average income – meaning that, relatively speaking, access costs may appear affordable relative to Canadians’ average income but it may well not be affordable to Canadians living below the average income threshold.
More importantly, the Public Interest Advocacy Centre defines affordability quite differently than the Economist’s Intelligence Unit.  In our first report on communications affordability in Canada in 2015 we stated that:

a [communications] service can be described to be affordable where its cost does not require a household to cut back its expenditures on other basic necessities such as food, shelter, clothing, transportation and health care. This relative threshold can be quantified as a percentage of household income. We suggest that communications services are “affordable” where, as a guideline, they make up about 4% to 6% of a household’s income.

PIAC also noted:

However, affordability in our view must also incorporate a subjective quality because it is related to control – the ability of an individual or a household to control their expenditures in order to fulfill their needs. Therefore, because affordability concerns a household’s control over their budget, affordability is also about choice which allows a household to access a service offering which meets their needs. An assessment of affordability, therefore, should take into account the choice and preferences of low- income consumers in meeting their needs.

The Economist’s index measure of affordability is an economist’s blunt one that only judges by relative, average, objective measures. PIAC, however, considers the essentiality of these services and understands subjectively how low-income Canadians struggle to afford communications. We surveyed low-income Canadians. They told us that communications is essential to them and what’s more, 17% told us they have gone without essential goods like food, medicine or clothing to pay their communications bills. We published our findings and took those findings to Canada’s telecommunications regulator, the CRTC. The CRTC heard our submissions and called on Canada to take action to address challenges with affordability:

Over the course of the BTS [Basic Telecommunications Services] proceeding, however, the CRTC heard from Canadians forced to make difficult spending decisions due to the cost of broadband Internet access services. Given the economic, socio-cultural and civic importance of broadband, the CRTC concluded that any Canadian left behind in terms of broadband access is profoundly disadvantaged, and that coordinated national action is necessary to address this problem. The risks of non-action are too great: missed opportunities for innovation, creativity and engagement; reduced competitiveness; weakened domestic prosperity; and diminished prospects for Canadians.

PIAC hopes to see such action in the 2017 Federal Budget, as well as in federal and provincial government initiatives going forward. After examining the affordability of communications services in our two reports in 2015 and 2016, PIAC advocated for, in the CRTC hearing noted above, the establishment of a National Affordability Plan to ensure broadband Internet service is both available and affordable for low-income households in Canada. PIAC also suggested the CRTC spearhead affordability initiatives, with federal and provincial political support and coordination. Sadly, the CRTC refused to take responsibility for communications affordability in Canada and instead asked the federal and provincial governments to take the lead.  Nonetheless, PIAC continues to advocate for a flexible end-user subsidy, which we believe would most effectively address the affordability of communications services by allowing low-income Canadians to make telecommunications choices that best suit their needs.