Government Hears Consumers and Orders CRTC to Inquire into Communications Overselling
OTTAWA – The Public Interest Advocacy Centre (PIAC) today welcomed the announcement of a public inquiry into aggressive and inappropriate sales tactics in the telecommunications industry.
The Minister of Innovation, Science and Economic Development (ISED), the Hon. Navdeep Bains, today requested the Canadian Radio-television and Telecommunications Commission (CRTC) to open a public inquiry into how major telecommunications providers sell services such as home internet, cable TV and IPTV, as well as home phone and wireless service to Canadians, from door-to-door sales, to call centres, to retail outlets and online.
John Lawford, Executive Director and General Counsel at PIAC, said in reaction to the inquiry: “The government has heard the groans of Canadian consumers who too often end up with a bad deal for their Internet, TV and phone services,” he noted. “We are pleased that the Minister has reversed the CRTC’s previous refusal to inquire into these shocking sales practices and we hope that public trust in this industry can be restored as a result.”
PIAC had reacted negatively to a previous letter from the Chair of the Canadian Radio-television and Telecommunications Commission (CRTC) rejecting PIAC’s call for the CRTC to pursue a public inquiry into reported inappropriate, aggressive and potentially misleading sales of communications services.
“We hope Canadian consumers and former and current sales representatives of the companies will tell their stories of overselling and underhanded tactics to the CRTC,” further noted Lawford. “We look forward to participating actively and asking tough questions to the major service providers” he added, noting that PIAC would actively participate in the review.
For more information please contact:
John Lawford
Executive Director & General Counsel
Public Interest Advocacy Centre (PIAC)
office: (613) 562-4002 ×25
cellphone: 613-447-8125
lawford@piac.ca
www.piac.ca
Government Internet Affordability Program Helps Some, Ignores Others
FOR IMMEDIATE RELEASE
TORONTO – The Public Interest Advocacy Centre (PIAC) today reacted to Innovation, Science and Economic Development Minister Navdeep Bains’ “Connecting Families” agreement with industry to provide affordable Internet access for low-income families with some hope and much concern.
“Today’s announcement of a voluntary $10 Internet service from major Internet companies for low-income families is helpful for those Canadians and welcome,” noted John Lawford, PIAC’s Executive Director and General Counsel. “However, there are hundreds of thousands of Canadians without children who desperately need affordable broadband internet who are left out of this program for no clear reason, other than cost,” he added.
The participating Internet service providers (ISPs), including Bell Canada, TELUS, Rogers, Shaw, Cogeco, Videotron and Sasktel, have publicly committed to continuing the service until 2022. However, there is no regulatory requirement to do so and no guarantee service will be extended to Canadians without children under 18, nor that any other ISPs will participate.
“This is half a loaf offered to only some low-income Canadians and not to others. While better than nothing, this ‘political solution’ is the direct result of the CRTC refusing to create a fair and equitable subsidy to support affordable Internet for all low-income Canadians,” stated Lawford.
PIAC, along with ACORN Canada and the National Pensioners Federation previously asked the CRTC to reconsider a low-income Internet affordability subsidy but the CRTC recently denied their request.
For more information, please contact:
John Lawford
Executive Director and General Counsel
Public Interest Advocacy Centre
(c) 1-613-447-8125
jlawford@piac.ca
PIAC and NPF File Application Regarding Paper Billing
PIAC-NPF – Part 1 App – Paper Billing by Koodo Mobile FINAL
The Public Interest Advocacy Centre (PIAC) and National Pensioners Federation (NPF) have filed the above application with the CRTC regarding paper billing by Koodo Mobile. According to complaints received by PIAC-NPF from consumers and those posted in online forums, Koodo Mobile has discontinued paper billing.
This application asks the Commission to clarify that wireless service providers must offer paper billing upon request at no charge by virtue of the agreement on paper billing negotiated on 28 August 2014, by virtue of s 27.2 of the Telecommunications Act, or by virtue of s. A.1.(i) of the Revised Wireless Code. In the alternative, PIAC-NPF requests that the Commission impose a condition of service under s 24 of the Telecommunications Act on all telecommunications service providers requiring them to offer paper billing upon request.
We are concerned about the negative effects electronic-only billing will have on vulnerable and low-income consumers. This includes persons with disabilities, senior citizens, consumers living paycheque to paycheque and those who do not have the resources to take advantage of e-billing. According to the 2017 CRTC Communications Monitoring Report, only 64.4% of households in the bottom income quintile and 82.1% of households in the second income quintile use home internet and slightly fewer have home computers. Only 54% of senior women and 59% of senior men have used the internet in the last 12 months. These consumers are profoundly disadvantaged when their carrier discontinues paper billing, or informs the customer after purchase that paper billing is not available, or by having their choice of service provider limited to premium brands which still offer paper billing.
Lexus or Walk: Think tank fails to justify telecom pricing
Every year, the Montreal Economic Institute (MEI) publishes a report seeking to prove that Canada’s telecommunications industry compares favorably with other jurisdictions.
Throughout its analysis, the MEI simply places too great a premium on having the latest and greatest technology. Consumers care far more about getting a fair price and high usage allowance. Allowing telecommunications carriers to exercise their market power sacrifices what consumers care about most for luxury options they would happily do without.
At its core, the MEI argues that even though Canadians pay more for telecommunications services than most other countries’ consumers, we have no cause to complain because we have access to more affordable options through flanker brands and we enjoy higher speeds and investment. It argues that even though Canadian’s bills are going up, the prices for a given service basket is actually declining.
Canadians do pay more for telecommunications services than most other countries. The Nordicity International Price Comparison Report commissioned by Innovation Science and Economic Development Canada shows that Canadian consumers pay dramatically more than our international counterparts for wireless data at the 1GB, 2GB, and 5 GB price levels – around $40-$50/month more than in the UK or about double their prices.
Figure 1: Nordicity, 2017 Price Comparison Study of Telecommunications Services in Canada and Select Foreign Jurisdictions
Flanker brands and resellers do offer slightly lower prices for the services levels covered in the Nordicity Report. Virgin Mobile, for example, currently offers 1GB of data with unlimited minutes for $55/month for Bring-Your-Own-Device customers in Ontario, compared with the $70.70/month price used in the Nordicity report (the Virgin offer includes”bonus data” for a limited time but remains the lowest cost option for that data allowance). The price is still high compared internationally, and moreover it is not fair to compare the lowest-priced offers in Canada to the highest-priced offers internationally. A customer on US MVNO Tello would pay $14 USD/month ($17 CAD/month) for 1 GB of data with unlimited calling and texting. Looking at resellers only further highlights the monopolistic rents being paid by Canadian consumers.
Figure 2: Offer from US Reseller Tello mobile
These price differences do not reflect differences in the cost of service. Based on the costs found in the CRTC’s wholesale roaming rate setting, Bell’s costs to deliver an additional 1 GB data are $9.71 ($0.013281/1.4*1024). Since Canadian wireless customers use an average of 57% of their data allowance, Bell’s capacity cost to offer a plan with a 1 GB data allowance are approximately $5.55/month. Furthermore comparing across provinces the lowest prices are found in Saskatchewan, which has the lowest price in Canada due to competition from SaskTel, despite also having one of the lowest population densities in Canada. Network costs associated with differences in population density and terrain simply do not account for a significant portion of the cost premium paid by Canadian consumers.
Figure 3: Nordicity, 2017 Price Comparison Study of Telecommunications Services in Canada and Select Foreign Jurisdictions
Canadians do not care very much about network speeds. For example, in Public Mobile’s build-your own plan tool, 1 GB of 3G speed data costs $35/month, compared with $42/month for 4G speed data (both options with no calling or texting and Public Mobile’s bargain-basement customer support). Assuming both plans are priced competitively, this suggests consumers are willing to pay about $7/month to move from 3G speeds (~6 Mbps) to 4G-LTE speeds (~30 Mbps), with that willingness to pay exhibiting diminishing returns to higher speeds. The difference between UK average speeds (~25 Mbps) and Canadian average speeds (~45 Mbps) is likely only worth a few dollars per month to consumers at best, and only to high-end consumers with sufficient data allowances to make use of those higher speeds on a regular basis. 5 Mbps is sufficient to stream HD Netflix and would consume 1.8 GB/h. Moreover, the higher speeds on Canadian networks are in part attributable to monopolistic pricing, which forces Canadians to subscribe to plans with lower data allowances, reducing network congestion.
Investment in wireless facilities is, without reference to any corresponding increase in network quality, of no value to consumers. Canada is pursuing a facilities-based competition strategy which is intended to allow competing facilities-based providers to over-build the national carriers’ networks. This necessarily involves redundant investments which do not provide any value to consumers beyond (potentially) contributing to lower prices in future. Average wireless revenues from 2012-2016 were $21.26 billion a year of which reinvestments in plants and facilities were just $2.2 billion, despite 40-45% operating profit margins (earnings before interest, taxes, depreciation and amortization).
Figure 5: Telecommunications revenues and EBITA margins as reported in the CRTC Communications Monitoring Report, showing huge operating profit margins
Wireless prices for a given service basket do appear to be decreasing. The average price of 1200 min and 1 GB of data fell from $69.27/month in 2013 to $58.00/month in 2015, a 16% decrease. Other price brackets have seen smaller decreases. This is to be expected at technological advances continue to decrease the costs of delivering additional data. In the UK, the price of a 5GB plan fell from £195/month in 2012 to £54/month in 2016. Decreasing prices do not demonstrate that existing rates are reasonable, or that those decreases are not due to government intervention. In particular, regional price comparisons suggest that the regional players supported by the CRTC’s facilities based competition policy drive regional price reductions.
The MEI goes on to attack the Commission’s wireline wholesale policies, claiming that mandating reseller access to fibre-to-the home networks will “slow down the deployment of fibre networks by reducing the incentives of telecom providers to invest and preventing them from fully recovering the capital costs associated with their investments.” The CRTC sets wholesale rates which allow telecom providers to recover their costs – and a healthy profit margin beyond them. While different, higher rates or a cross-subsidy regime may be needed to ensure that investments are recovered in higher-cost areas, the CRTC’s wholesale access policy should theoretically have no impact on investment. The MEI entirely overlooks the massive savings and enhanced choice offered to consumers by resellers.
Unlike the MEI, which does not appear to have ever set foot before the CRTC, PIAC fights before the CRTC every day and sees the rationale for every decision it provides. The CRTC has massively deregulated the telecommunications sector – 95% of telecommunications revenues are generated by services which are not subject to retail rate regulation. The CRTC’s remaining wholesale and retail obligations address particular market failures which impact the interests of consumers. The point of wholesale policies is not just to stimulate facilities-based competition. The real value of those policies is that they prevent the exercise of wholesale market power, reducing rates for consumers and giving Canadians a greater choice of retail providers.
The MEI cites the December 2017 bring-your-own-device price war as evidence that competition is sufficient to protect the interests of users. The MEI entirely overlooks the implementation of the Revised Wireless Code on 1 December 2017, which allowed customer to have their devices unlocked for free, suddenly increasing the flexibility with which consumers could switch providers to take advantage of BYOD offers. That competition is attributable to the Commission’s Wireless Code, not a sign that it is unnecessary.
Figure 5: A rather over-enthusiastic CRTC graphic promoting the Revised Wireless Code which made phone unlocking free to facilitate BYOD competition effective December 2017 , immediately prior to the BYOD competition MEI cites as evidence the Code was unnecessary
The CRTC remains a necessary actor in Canada’s telecommunications landscape. Limited spectrum and high fixed costs mean that telecommunications markets will always be characterized by market power. There is a substantial gap between a reasonable return on the first-movers’ investment, and the prices they can get away with charging restrained only by the threat of entry by another facilities’ based provider.
But in discussing the role of general competition authorities, it is worthwhile to note the views of the Competition Bureau regarding Canada’s wireless markets:
- The Commissioner submits that the incumbents possess market power in retail mobile wireless services markets in Canada. […] The evidence put forward in the Brattle Report demonstrates that Canadian retail mobile wireless services markets are characterized by above‑normal profits and comparatively low service penetration levels. These are both indicators of market power. In addition, Canadian retail mobile wireless services markets are characterized by high concentration and very high barriers to entry and expansion. Furthermore, such markets are characterized by other factors that, when combined with high concentration and high barriers to entry and expansion, create a risk of coordinated conduct in these markets. (Source)
- [A]s a result of coordinated behaviour among Bell, TELUS and Rogers, mobile wireless prices in Canada are higher in regions where Bell, TELUS and Rogers do not face competition from a strong regional competitor. Conversely, the Bureau concluded that where Bell, TELUS and Rogers face competition from a strong regional competitor, prices are substantially lower. The Bureau concluded that the lower prices are caused by the presence of a strong regional competitor who can disrupt the effects of coordination among Bell, TELUS and Rogers. (Source)
The difference between the CRTC and Competition Bureau, and the real reason for the MEI’s preference for a general competition authority, is that the Competition Bureau does not have all the tools it needs to effectively control telecommunications carriers’ exercises of market power, nor to fully protect the interests of consumers, rather than just responding to anti-competitive behavior in very specific ways.
PIAC and NPF seek affordable pay-as-you-go plans
When a customer of Tello Mobile (a US wireless service provider) roams in Canada, they pay 3¢/minute for calls and 1¢/SMS. Plus, the customer does not have to top-up their account to keep it from expiring.
That kind of innovative and affordable plan for occasional users just is not available to Canadians. Many wireless service providers do not offer any plan suitable for occasional users, while others charge up to 50¢/minute for local calls, 30¢/SMS, and $2/MB.
The Public Interest Advocacy Centre (PIAC) and National Pensioners Federation (NPF) have filed an application with the Canadian Radio-television and Telecommunications Commission (CRTC) today seeking to address this market gap.
PIAC hopes that this application will lead to innovative and affordable plans for occasional users being introduced into the Canadian market. These plans should lower the entry-level cost of cellphone adoption and make telecommunications more affordable for the occasional users like seniors with landlines and low-income persons who appreciate the control and flexibility provided by pay-as-you-go plans.
PIAC-NPF’s application is available here. You can tell the CRTC what you think of our application here.
Home Internet customers rejoice: CRTC acts to improve installations and repairs for re-sellers’ customers
Home internet consumers will be better protected under today’s changes by the Canadian Radio-television and Telecommunications Commission (CRTC) to the competitor quality of service regime.
The competitor quality of service regime makes sure that incumbent providers, like Bell and Telus, provide a high quality of services to wholesale customers like TekSavvy. The regime makes sure that the incumbent’s technicians schedule installations and repairs in a timely manner, and actually carry them out.
PIAC intervened in this proceeding to argue that the competitor quality of service regime remains necessary and should be extended to the “High-Speed Access” wholesale services used to deliver home internet over cable and fiber. The CRTC listened to our concerns and has adopted a clearer set of quality of service measures which apply to all the mandated wholesale services used to support home internet.
PIAC argued that the service indicators should assure timely installation and repairs, whereas incumbents and cable companies had argued that a complaints based regime was sufficient. The CRTC has started a process to set measures and standards consistent with our proposal. This will ensure that appointments are met, and are met in a timely fashion.
Huge increase in consumer complaints requires CRTC to investigate
FOR IMMEDIATE RELEASE
OTTAWA – Consumer complaints to the Commission for Complaints for Telecom-television Services (CCTS) increased by a whopping 73% compared to the same period last year – an increase that must be investigated and fixed, said the Public Interest Advocacy Centre (PIAC) today.
“Canadian consumers are sending a clear message that they are being poorly treated by, and are suffering from misleading sales practices of, Internet, wireless, home phone and subscription TV services,” said John Lawford, PIAC Executive Director and General Counsel. “Such a dramatic increase must be investigated by the Canadian Radio-television and Telecommunications Commission,” he added.
PIAC also notes that the CCTS Report revealed that the leading complaint issue (each complaint may include more than one issue), at nearly a third of all complaint issues, was “Non-disclosure of terms/Misleading information about terms.” The second most frequent complaint issue was “Incorrect charge”.
“Both of the highest complaint issue categories likely are largely driven by sales practices and other promises made to consumers that consumers do not feel were lived up to,” explained Lawford. “Part of the increase is consumers hearing about poor sales practices who in turn complain; however, the base of this problem is likely those practices themselves and CRTC should no longer duck its responsibility to launch an inquiry into how Canadians are sold their communications services.”
The Report also noted continuing problems with Canadians’ experience with quality of communications services, in particular their Internet services, as well as disconnections, cancellation fees, credit reporting, service outages and contract changes.
For more information, please contact:
John Lawford
Executive Director and General Counsel
Public Interest Advocacy Centre
ONE Nicholas Street, Suite 1204
Ottawa, ON K1N 7B7
(613) 562-4002 x25
(613) 447-8125 (cell)
jlawford@piac.ca
http://www.piac.ca
— 30 –
FCAC confirms banks “mis-selling” products to consumers
Report shows Canada needs a Financial Consumer Code
TORONTO, March 20, 2018 – Two of Canada’s leading consumer groups, FAIR Canada and the Public Interest Advocacy Centre (PIAC), today welcomed a government report that confirmed major Canadian banks incentivize their employees to “mis-sell” unsuitable financial products to Canadians.
However, the report, written after a lengthy investigation by the Financial Consumer Agency of Canada (FCAC), did not detail which banks did what, how many products were involved, how many complaints were involved, or the extent of financial losses to consumers. There is no support for their key finding that they “did not find widespread mis-selling.” Despite the lack of transparency, the report was clear that consumers’ interests were made secondary to those of the bank and their employees and contractors.
“In fact, the FCAC’s central finding from its investigation is that the predominant focus in retail banking is on the selling of products and services rather than appropriately prioritizing the interests of financial consumers”, noted Frank Allen, Executive Director of FAIR Canada.
“This report shows what PIAC has said all along,” said John Lawford, Executive Director and General Counsel of PIAC. “Banking consumers need a Financial Consumer Code to protect the rights of Canadian banking customers.”
Marian Passmore, Director of Policy and COO at FAIR Canada commented: “Mis-selling, according to the report, does not amount to a violation of a market conduct obligation. In other words, the rules are inadequate. There is inadequate protection for Canadians at banks and reform is needed. FAIR Canada calls for a best interest standard so Canadians get the advice they expect and deserve.”
PIAC and FAIR Canada also call for major reform to the consumer complaint handling system. The Minister of Finance should work towards having one, national, statutory ombudservice for financial services complaints that can issue binding decisions.
Please see also our backgrounder on the FCAC Report and needed financial consumer protections.
For more information please contact:
Frank Allen
Executive Director
Canadian Foundation for the Advancement of Investor Rights
(FAIR Canada)
36 King Street E., Suite 400
Toronto, ON M5C 3B2
647-256-6693
Frank.Allen@faircanada.ca
John Lawford
Executive Director & General Counsel
Public Interest Advocacy Centre (PIAC)
613-447-8125 (cell)
613-562-4002 ×25
lawford@piac.ca
www.piac.ca
Marian Passmore
Director of Policy and COO
Canadian Foundation for the Advancement of Investor Rights
(FAIR Canada)
36 King Street East Suite 400
Toronto, ON M5C 3B2
647-256-6691
marian.passmore@faircanada.ca
www.faircanada.ca
CRTC throws consumers to telco sales dogs
“You’re on your own” if you get upsold or oversold while buying communications services
OTTAWA, February 14, 2017 – The Public Interest Advocacy Centre (PIAC) today reacted negatively to a letter from the Chair of the Canadian Radio-television and Telecommunications Commission (CRTC) rejecting PIAC’s call for the CRTC to pursue a public inquiry into reported inappropriate, aggressive and potentially misleading sales of communications services.
John Lawford, Executive Director and General Counsel at PIAC, said in reaction to the letter: “The CRTC refusal to inquire into the shocking sales practices of Canada’s major telecommunications and broadcasting companies says to consumers ‘You’re on your own.’”
The CRTC letter refers Canadians to the Commission for Complaints for Telecom-television Services (CCTS) but neglects to mention that sales practices generally are not covered by the agency, which has only contractual interpretation powers and in fact explicitly refuses to deal with misleading advertising, which it refers to the Competition Bureau. The CRTC letter also says: “Canadians may contact the Competition Bureau with their concerns.”
“Sending Canadians to these bodies to try to extract themselves from poor deals after the fact instead of proactively investigating them and restoring the public trust in the market is a major abdication of responsibility by the CRTC,” further noted Lawford. “Why is this being investigated with banks but not telcos? Do telcos get a special deal from regulators?” he added, referring to two separate investigations of bank sales practices by regulators in that industry.
For more information please contact:
John Lawford
Executive Director & General Counsel
Public Interest Advocacy Centre (PIAC)
(613) 562-4002 ×25
lawford@piac.ca
www.piac.ca
CRTC widens the digital divide
Lower-income Canadians will have to rely upon the market or hope the Federal government helps them to get online
OTTAWA, January 25, 2017 – The Public Interest Advocacy Centre (PIAC), ACORN Canada (ACORN) and National Pensioners Federation (NPF) today reacted negatively to the Canadian Radio-television and Telecommunications Commission’s (CRTC) rejection of their review of the CRTC’s previous decision to deny creating a fund to ensure all Canadians, including lower-income Canadians, have equal access to broadband and other telecommunications services.
John Lawford, Executive Director and General Counsel at PIAC, said “We are once again shocked that the CRTC will do precisely nothing to support affordable internet access. They are widening the digital divide by saying ‘it’s not our problem.’”
The CRTC decision effectively asks provincial governments or the federal government, along with unspecified charitable help from telecommunications companies, to close the affordability gap, which PIAC-ACORN-NPF has shown affects about 10% of Canadians.
Donna Borden, ACORN Canada national board member, noted: “Being poor and online in Canada today can mean having to choose between internet access and enough food, a warm home or decent clothing. Shame on the CRTC.”
For more information please contact:
John Lawford
Executive Director & General Counsel
Public Interest Advocacy Centre (PIAC)
(613) 562-4002 ×25
lawford@piac.ca
www.piac.ca
Judy Duncan
Head Organizer
ACORN Canada (ACORN)
416-461-5322
canadaacorn@acorncanada.org
www.acorncanada.org
