The claim of success is based mainly on a measurement that is mechanistic and overly restrictive regarding what matters most to Canadians using cellphones today: mobile data. The Government’s measure does not take into account the fact that Canadians use, and expect, more mobile data each year at the same or reduced cost. Likewise, Canadian cellphone companies have for years increased data allowances for roughly the same price every year. In short, a true price cut, let alone one that would drop real prices per contract by 25%, would require a ‘data inflation’ factor. Without allowing for increasing data requirements, one can claim prices have ‘dropped’ if prices stay the same but data allowances rise. This is precisely what has happened, and the normal, expected data inflation dynamic is what the government is claiming as a success and a price drop. It is not a success and prices have not “dropped” in light of data usage growth.

The proof? “Average revenue per user” (ARPU), the industry’s own profitability metric, has remained relatively stable during the past 2 years of COVID-19, with one carrier even reporting an ARPU increase of slightly more than 1% last year. Other cell companies have been attributing 5-10% ARPU reductions to the pandemic cutting into roaming and overage revenues (people are staying home, so they don’t travel and get roaming charges, and many use their cellphones on home WiFi data) as well as the adoption of unlimited data plans. Prior to the pandemic, however, Canadian carriers had the highest ARPU for the least data used in the world in 2017, and probably also in 2019-20. Canadians are actually paying quite a lot for below-average data use.

But what the heck, let’s track the original goal set out in the 2019 mandate letter to the Minister of Innovation, Science and Industry (ISED): “…to reduce the average cost of cellular phone bills in Canada by 25 per cent.” Let’s ignore data inflation. Let’s look then at the remaining sleights of hand the government has used to claim they have achieved even this non-data inflation-adjusted reduction.

First, their pricing data tracks only the average cost of (and note these are all conditions, and if you don’t meet all of them, the data doesn’t go in the data set, thereby vastly decreasing the size of the data set): 1. post-paid; 2. bring your own device (BYOD); 3. unlimited talk and text 4G/LTE plans; 4. in the 2 to 6 GB range; 5. offered by certain ‘flanker brands’ of major wireless providers, namely, FIDO (Rogers), Koodo (TELUS), and Virgin (Bell). [Note, plans from alternative flankers Lucky Mobile (Bell); Chatr (Rogers); and Public Mobile (TELUS) are also generally not included in these flanker plans as they tend to be pre-paid services, operating at 3G speeds.]

Data limits are too low

Canadians’ data consumption is growing each year as networks gain capacity, making tracking 2GB – 6GB plans increasingly irrelevant. As ISED points out “in 2020, the average Canadian used 3.8 GB of mobile wireless data per month.” This is likely much higher in 2021 and 2022. But this 2020 average tells you very little about plan selection. More specific numbers show that in 2020 approximately two-thirds of mobile subscribers had wireless data plans that were 5GB or larger compared to 40% in 2018. If only a third of Canadian mobile users have data plans under 4GB, why are lower prices for small data plans touted as a victory, overall?

5G plans not included

The data tracked does not include 5G service despite its growing availability and demand for the increased speeds and reliable connections it offers. For example, TELUS recently announced that its “blazing fast and reliable 5G network” now reaches 70% of the Canadian population and connects 744 Canadian communities. The absence of this information means a major variable is missing from ISED’s calculations.

Only includes flanker brand plans

The dataset does not include the three premium or ‘flagship’ brands – Rogers, TELUS and Bell and the so-branded plans offered by them. While its often difficult to extract information about flanker brands from the big three, we know that in 2019 and 2020, without the help of their flanker brands, the Big 3 received ~65% of retail mobile revenues (see: CRTC Communications Market Reports, Open Data – Retail Mobile Sector). It is deeply troubling that the providers’ most profitable plans were not tracked.

The data also does not include Shaw’s Freedom Mobile or Shaw Mobile, which collectively had 1,821,514 subscribers in 2020.

You likely won’t get these plans anyway

These plans are offered only to those who “switch” or are new customers. Customers of the same provider (including flagship brands of the same company, as far as we can tell) do not qualify.

In PIAC’s view it is not clear from the government’s materials to what extent existing customers can gain access to the reduced-price plans tracked by ISED. For example, the flanker brands state that select plans (some called ‘starter plans’ or other unattractive names) are available only to new activations, suggesting that the cheaper plans are only accessible to customers who are willing to switch companies (and pay the activation fee, where applicable). ISED does not mention this. In effect, we have Potemkin pricing plans – probably largely maintained by the companies at the target prices to placate the government and give the impression that there are in-market plans with ‘falling’ prices.

And flanker brands are often heavily DIY-service based, meaning unless the customer can navigate the company’s self-serve website, they may have to pay for customer service. Other disadvantages of flanker brands include default to electronic billing, a paucity of unlimited plans, higher data and voice plan overage charges and reduced handset choice (if you are not doing ‘bring your own device’ (BYOD)).

Includes hidden costs and barriers to access

The narrow data selection is further squeezed by the focus on only “bring your own device” plans. Switching during a prior contract where the customer has not yet fully paid out their smartphone, just to do BYOD for this flanker deal, can dissuade many customers from switching if the payout costs to their first, contracted carrier would be high (that is, more than a very few months remain on their initial contract, if it included a ‘subsidized’ smartphone). This further reduces the number of customers likely to use these flanker plans.

Another issue is that companies are able to charge for data overages on these plans. The frequency and quantity of these overage charges are not tracked, meaning ISED has not captured what Canadians with these plans are actually paying. Data overage charges on flanker brands are typically very high.

StatsCan data is misleadingly called in aid

The ISED media release also trumpets: “Wireless prices in general have declined across the board. The Statistics Canada cellular services price index showed a 26.9% decline from February 2020 to December 2021. The government has also observed decreases generally in the range of 22 to 26% for plans 10 GB and larger, which builds on past reductions of 31% for 10 GB plans in 2019.”

Here are some methodological problems with the StatsCan consumer price index (in relation to wireless):

1. StatsCan dropped the cost of handsets from its costing methodology in 2018. As noted above, most customers also buy handsets on installment plans and don’t BYOD. So, the true baseline cost of the wireless market (most consumers ‘finance’ a smartphone with their carrier) is not measured. We note handset prices have been rising to very high levels in recent years and consumers pay these off, usually monthly, over a 2 year period as per the CRTC Wireless Code.

2. The only measure of ‘price changes’ therefore is the change in service prices. But StatsCan compares “consumer profiles” of static data and texting and voice minutes allowances due to the many, rapidly changing offers and the possibility for individually-tailored contracts meaning StatsCan does not account for expected data use growth or, as we label it, “data inflation.” This creates a false impression of ‘falling prices’ – true only if a consumer does not follow normal consumption trends and does not use or demand more data each year or at least at the end of each contract.

What’s the result after two years?

Canadians are still paying some of the highest rates for cellphone service in the world (see: Rewheel’s “Is Canada the most expensive wireless market in the world?” from April 2021).

What’s likely to happen after the Government’s “price drop” measuring period ends in April 2022? Expect even these limited lower-price flanker plans to disappear from carriers’ offerings. Prices on flagship brands likely will remain high and likely will be heavily marketed with smartphones as part of a payment plan. Lately, these plans have been offered with an optional requirement to return the phone after 2 years in order for the customer to pay a reduced amortization of the phone cost. As a result, if this option is taken, unless the customer pays out a final balloon payment to buy the phone outright at the end of the contract, the customer more likely will trade it in and undertake a new financed smartphone with the same carrier, not take a purchased smartphone to market seeking BYOD rates.

What really needs to be done?

To paraphrase Lenin, “What is to be done [about high cellphone prices in Canada]?” The pat answer is “competition”; more specifically, what other commenters have suggested, is competition delivered by:

1. a forced sale of Shaw’s mobile assets to another wireless carrier as a condition of approval of the Rogers-Shaw deal by the Competition Bureau. But it is hard to anticipate which present competitor in Canada could undertake a nationwide rollout of service as a 4th wireless player; and, doing so as a “pure play” wireless operator would be even more challenging, from a market and regulatory standpoint, and extremely expensive and risky; or

2. entry of mobile virtual network operators (MVNO) into the Canadian market. In simple terms, MVNOs are alternative service providers that buy access to other companies’ network infrastructure and offer services via network software and over other carriers’ spectrum, instead of building physical networks or purchasing spectrum themselves. Unfortunately, last year the CRTC issued a decision that claimed to create an ‘MVNO access regime’ that was nothing of the kind – it effectively excluded non-facilities-based competitors and required carriers who did own some facilities to purchase spectrum, at least eventually. We told the government that this decision is irreconcilable with the aim of reducing wireless pricing in our submission supporting Data On Tap Inc.’s petition to cabinet to reverse this ‘MVNO’ aspect of the CRTC decision.

Neither of these options may happen at all; even if one or both do, based on historical events in the wireless market, Canadian competition law and wireless regulation in Canada, neither is likely to succeed.

Rewheel has recently suggested:

“In order to be effective, remedies must include as a minimum the upfront creation of a new maverick mobile network operator. The creation of a new operator can be realized through the divestment of spectrum and mobile network assets to a domestic or foreign owned interested party, passive site collocation obligations and a time-limited national roaming obligation at competitive data rates. The Canadian Radiotelevision and Telecommunications Commission (CRTC) [actually, ISED manages spectrum, not CRTC] could complement the structural remedy by setting aside 5G spectrum for the new entrant and alleviate the short-term competition concerns by mandating MVNO wholesale access obligations at competitive data rates”.

Maybe, but as noted above, a fourth, independent, quasi-nationwide mobile operator might assist, but would face major regulatory and market challenges and past efforts have failed in Canada.

That said, PIAC agrees with Rewheel’s assessment that “Effective competition in the Canadian wireless market can only be achieved by a set of very significant (bold) structural remedies.”

So, how about thinking more radically? Nationalization of the wireless carriers by the federal government? Structural separation of the backbone operations of the wireless carriers from any retail operations, including their own retail wireless carriers, to which they must sell equally and fairly along with all retail wireless providers? Price regulation of all retail wireless services?

Anything short of these remedies, it seems, will only produce these political shell games.

The post Wireless prices fell by 25%? – Big claims going down. appeared first on Public Interest Advocacy Centre.

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)

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)

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

The post PIAC Blog: “Buying Speed, Part 2” – Compared to the UK and Australia, Canadian broadband advertising is still in the Dark Ages appeared first on Public Interest Advocacy Centre.

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.

The post Buying Speed? What Canadians Pay for Broadband: Part 1 – The CRTC’s “Measuring Broadband Canada” report does not measure up appeared first on Public Interest Advocacy Centre.

On August 13, the Ontario government launched a public consultation to solicit input on “creating a legislative framework for privacy in the province’s private sector,” citing longstanding public concern over data privacy intensified by increased reliance on digital platforms during the COVID-19 pandemic. The consultation and accompanying discussion paper outline key issues in data protection, many of which will be familiar to those following Canadian privacy legislative reform: broadly, the focus will be on increasing transparency around how information is gathered and used, strengthening consent and establishing an opt-in model for secondary uses of information, introducing a right to erasure of personal information (subject to limitations), introducing a right to data portability, increasing the enforcement powers of Ontario’s Privacy Commissioner, introducing requirements and protections for de-identified or derived data, enabling the establishment of data trusts for information sharing, and expanding the scope of the law to non-profit and non-commercial organizations, including political parties. The consultation comes two months after Quebec introduced a bill to update its data protection strategy along the lines of the European Union’s General Data Protection Regulation (GDPR). If a new law is passed, Ontario will join other provinces, namely BC, Alberta, and Quebec, in having its own private sector privacy legislation.

It may superficially appear that better privacy protection for Canadians at any jurisdictional level could only be a positive development. Privacy in Ontario’s private sector is currently governed by the 2000 Personal Information Protection and Electronic Documents Act (PIPEDA), a federal law crafted in the late 1990s that has long been groaning under the weight of various pressures, including paradigm-shifting developments in the media environment and the need to keep pace with international data-sharing norms, most notably the global standard-setting GDPR. Among the most significant gaps in PIPEDA are its lack of real enforcement mechanisms and its grey areas around consent, which have become muddier in the age of big data as increasingly complex information flows undermine people’s ability to fully understand what they’re agreeing to. Under the “substantial similarity” exemption to PIPEDA, provinces are allowed to establish their own private sector privacy law if it offers comparable privacy protection to the federal legislation.

While there have been rumblings of reform at the federal level, including the government’s May 2019 release of an aspirational “Digital Charter” and accompanying proposals for modernizing PIPEDA, it’s not clear how extensive the changes will be, or when Canadians can expect them, especially with the parliamentary schedule having been disrupted by the pandemic. The introduction of an Ontario data protection strategy might thus come as a welcome development to those eager for reform who are understandably frustrated being at the mercy of a slow-moving federal process.

But there are more reasons to be wary of further fragmenting privacy legislation along provincial or territorial lines. Without highly coordinated pan-provincial consistency and cooperation, a province-by-province enactment of privacy laws risks providing uneven protection to Canadians, whose personal information may be treated differently based on territorial factors like the residency of the consumer, the storage location of the data, or the locus of incorporation of the company that offers the service. There’s also a risk that the move will encourage legal gamesmanship, with companies simply transferring operations to weaker privacy jurisdictions.

A patchwork of provincial laws will also complicate the business environment and potentially exacerbate internal trade barriers. The movement of personal data across both national and international borders is essential to the internet economy, and some Ontario business leaders are already balking at the increased compliance burden posed by multiple, potentially inconsistent layers of regulation. These kinds of challenges are already playing out in the US, which has begun its own state-by-state introduction of consumer privacy laws in the void of a comprehensive national regime. Companies are seeing that even slight inconsistencies between laws—and even between rules that appear on the surface to grant the same rights, such as data portability—can lead to huge compliance costs, which may be passed onto consumers in the form of both higher prices and a shrunken market.

Some analysts have pointed to an emerging irony in the global privacy crackdown: rules that are outwardly pro-consumer may end up empowering the very tech monoliths whose abusive data practices they’re meant to target, since these companies have the deep pockets to absorb rising compliance costs and increased legal risk. While poll after poll shows that Canadians do have an interest in strong privacy protections, a robust federal law can avoid the unnecessary compliance burden posed by a proliferation of regional frameworks.

While promising to protect citizens within each province, a piecemeal approach to privacy may also pose challenges for federal and provincial regulators. Again, we can look for guidance to the international context, where traditional notions of territoriality and jurisdictional authority are being challenged by the nature of electronic data. Even as the EU’s equivalency requirement has put increasing pressure on countries to update their privacy laws, data privacy rights vary considerably across national borders, and the speed, ease, and complexity of global data circulation often severs the factual link between the location of data and the location of its user. This tension between bordered privacy regimes and borderless data has led to serious conflicts between countries seeking control over online information, including efforts by governments to set global privacy standards via their own domestic regulation. The result is that businesses, regulators, and consumers increasingly operate in an environment of uncertainty in which it’s unclear which country’s or region’s laws govern online data at any given time. A patchwork of provincial laws risks reproducing this uncertainty within Canada.

Managing these complexities will likely be pricey for provinces. As former federal privacy commissioner Jennifer Stoddart notes, Quebec’s recently tabled Bill 64, which proposes amendments to the province’s public and private sector privacy laws, intends to deal with the issue of cross-border transfers via a GDPR-style adequacy condition that requires assessment of the destination’s privacy regulations, but this process has proved cumbersome to even the EU’s large, experienced bureaucracy. In the EU, regulators are finding that the GDPR requires enormous investment and staffing resources in order to give it teeth. And in the US, state privacy laws are under near-constant amendment to close ambiguities and catch up to other jurisdictions. Even if Ontario’s rules would apply only to commercial activities within the province and not to interprovincial or international transfers, there are costs involved in reviewing and assessing compliance with any new regulatory regime.

Those impatient for change might be reassured by the rising urgency of federal privacy reform. Federal privacy commissioner Daniel Therrien has warned the federal government that the growing discrepancy between Canadian and European privacy law is increasingly threatening our trade relationship with the EU. Under the GDPR, EU citizens’ personal data can be transferred only to jurisdictions that have been determined by the European Commission (EC) to provide “adequate” privacy protection, unless the data subject’s valid consent has been obtained. With Canada’s adequacy status scheduled for review by 2022, privacy experts are calling for “serious, rather than cosmetic, reform to PIPEDA” to maintain the free flow of data Canada and European countries. A single, robust federal privacy regime is a more realistic road to adequacy and to ensuring that the EU is confident exchanging data with Canada.

PIAC’s preliminary view is that Canadians will be better protected by a robust, modernized federal data protection regime than by increasing province-by-province legislation. A regulatory patchwork risks putting Canadians in a worse position when it comes to understanding their privacy rights, increasing uncertainty around how data is handled and potentially enabling inconsistent treatment of personal information depending on the residency of the consumer. As digital surveillance has become more pervasive and intrusive and the risks to both individual and society more profound, it’s clear that PIPEDA has failed to keep up, but it’s unlikely that a proliferation of regional frameworks will be more effective in protecting consumers against the power of the multi-billion-dollar personal data industry. Federal lawmakers need to step in to protect Canadians’ interests as consumers and rights as citizens.

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In these times of uncertainty, the Public Interest Advocacy Centre encourages you to exercise extreme caution to avoid falling for these scams and protect your finances. Reportedly, scammers are using various techniques such as phone calls, text messages, emails and door-to-door tactics to exploit consumers’ fears and target potential victims. We also strongly urge you to be wary of the misinformation surrounding COVID-19 and consider relying on official federal and provincial resources. We look at some common examples of COVID-19 related scams and the tips and tools available on how you can protect yourself from fraud.

Here are a few common examples of COVID-19 scams that we came across. Please note this is not meant to be an exhaustive list of scams:

Phishing emails

Phishing emails related to the coronavirus often feature eye-catching yet misleading   information. The aim of these emails is to get vulnerable consumers to disclose information or to download or click on malware. If you receive an email about COVID-19 with a link to get help or find cures, do not click the URL. If it appears to be from a source you trust, visit that source’s website directly.

Fake government websites

Scammers are sending messages via email and texts while pretending to be from government sources. They are also mimicking government websites that are filled with misleading links used to commit financial fraud. Do not click on links in emails or text messages, always verify government sources before giving any sensitive information.

Advertising scams

Additionally, scammers are luring consumers by posing as various companies and organizations claiming they are offering fake products and services meant to combat COVID-19. After clicking on these links, consumers are requested to input their financial information. Only a medical professional can give you proper medical advice for COVID-19, consult your doctor or provincial telemedicine before purchasing anything.

Exploitation calls

This method leverages on fear and involves calling random numbers and telling consumers that they have screened positive for coronavirus and demanding for their health card number along with their bank account information. If anyone calls you directly for personal information, again you should verify the source independently and not give away your information.

How to protect yourself?

Scammers are using consumers’ anxiety regarding COVID-19 to gain unfair advantage. Keep in mind these tips on how you can protect yourself from fraud:

• If you receive suspicious emails, don’t open any links
• Do not give out sensitive personal information by email or over a text message
• Monitor official sources for reliable information
• Regularly keep tabs on your bank accounts to spot suspicious charges and activities
• Be wary of unfamiliar phone numbers

For more information on how to protect yourself from financial fraud, visit:

COVID-19: Warning of potential financial fraud

If you have become a victim of fraud and need to report it, visit Canadian Anti-Fraud Centre’s website and see: What to do if you’re a victim of fraud

To find out how the Public Interest Advocacy Centre (PIAC) continuously fights against spam and financial fraud, visit https://www.piac.ca/ or subscribe to our newsletter. Stay safe and stay aware!

We remind consumers that PIAC is not a law firm and that the information provided here does not constitute legal advice; all information provided and content available is for general informational purposes only.

The post Beware of COVID-19 Scams: Recognize and Protect yourself from COVID-19 Fraud appeared first on Public Interest Advocacy Centre.

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 13^th 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

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Temporary Exemptions – APPR provisions:

• The previously announced exemptions from certain APPR provisions regarding compensation and alternate travel arrangements would now apply from April 30, 2020 to June 30, 2020. Broadly, the air carriers are exempted from the obligation to pay for inconvenience if the flight delay or cancellation is communicated to passengers more than 72 hours before the departure time indicated on the ticket, or if the flight delay or cancellation is communicated within 72 hours of departure time on condition that the carrier pays compensation to passengers, i.e., $400 in the case of large carriers for delay of 6-9 hours, and $700 in case of 9+ hours; and in the case of small carriers, $125 for delay of 6-9 hours and $250 for delays of 9+ hours. (See CTA Determination No. A-2020-42 and CTA Determination No. A-2020-47).

• The CTA has identified a number of situations related to the COVID-19 pandemic that are considered to be outside the airline’s control. These include flight disruptions to locations that are covered by a government advisory against travel or unnecessary travel due to COVID-19; employee quarantine or self-isolation due to COVID-19; and additional hygiene or passenger health screening processes put in place due to COVID-19.

• It further notes that airlines may make decisions to cancel or delay flights for other reasons and whether they are within or outside the airline’s control would have to be assessed on a case-by-case basis. It remains unclear as to what these other reasons could be and how will they be assessed to fall within the airlines’ control or not.

• We remind consumers that certain APPR protections do not apply to flight disruptions which are deemed to be outside the airlines’ control but passengers retain a right to rebooking.  By flight disruptions here we mean flight delays and cancellation, and denied boarding that generally result in a right to monetary compensation, a set standard of treatment and rebooking or a refund for disruptions within the airlines’ control and not related to safety and if it is within the airlines’ control but required for safety, then only specific standard of treatment and rebooking or refund would apply.

• Notably, in the current situation, the CTA states that for disruptions between March 13, 2020 and June 30, 2020 that are outside the airlines’ control, they do not have to meet the APPR requirements to rebook passengers using an airline with which they have no commercial agreement.

• For situations within an airline’s control, the standards of treatment under the APPR must be met, namely, rebooking of passengers on the next available flight operated by the airline or its partner, or a refund if rebooking does not meet the passenger’s needs. However, as noted above, for disruptions between March 13, 2020 and June 30, 2020, airlines do not have to meet the APPR requirements on rebooking passengers using an airline with which they have no commercial agreement. Also as noted, the compensation levels for flight disruptions between these dates would vary as well, with some specifics as follows:

• Large airline:
• 6-9 hours: $400
• 9+ hours: $700

• Small airline:
• 6-9 hours: $125
• 9+ hours: $250

• For situations within an airline’s control but required for safety, standards of treatment under the APPR must be met: rebooking of passengers on the next available flight operated by the airline or its partner, or a refund if rebooking does not meet the passenger’s needs. Again, for disruptions between March 13, 2020 and June 30, 2020, airlines do not have to meet the APPR requirements on rebooking passengers using an airline with which they have no commercial agreement. Also, the rebooking obligation will not apply if the air carriers have already completed their booked trip.

What it means for filing claims?

• All air carriers are temporarily exempted from the APPR deadline for responding to passenger claims for compensation. The responses are to be provided within 120 days of the end of the exemption with respect to certain APPR provisions. (See CTA Determination No. A-2020-47).

• That said, air passengers can continue to file claims with the CTA as before, but there might be longer response times. We encourage consumers to continue to file claims as before but be prepared to wait for long to get any form of redress, as applicable.

• Passengers can also continue to file claims for compensation with air carriers, but notably, the carriers are temporarily exempt from the 30-day deadline to respond. This exemption is applicable to June 30, 2020. It may be extended to a later date as decided by the CTA. At the end of this exemption, the carriers will have 120 days to respond to claims that were filed during or before the exemption.

Statement on Vouchers:

• The CTA has issued a statement to respond to current flight cancellations where it notes that would be generally appropriate for airlines to provide affected passengers with vouchers or credits for future travel, provided that these vouchers or credits do not expire in an unreasonably short period of time. It notes that a period of 24 months would be considered reasonable in most cases. With many cases to be considered at their merits by the CTA.  

• We remain extremely vary of supporting the provision of vouchers instead of full refunds as the ability of consumers to take advantage of these vouchers remains uncertain and unpredictable. Also, considering the current situation, it is quite likely that many consumers could be facing financial challenges that makes receiving vouchers instead of money back as an unfair alternative. Likewise, many air passengers have expressed their concerns regarding this. At the very least, if the airlines get a bailout, so passengers should be compensated.

Pausing of Dispute Resolution Activities:

• The CTA has temporarily halted all dispute resolution activities involving air carriers until June 30. This includes applications already filed with them and those made during the stay period. This is extended from April 30, 2020 to June 30, 2020.  (See CTA Order 2020-A-37).

Other Temporary Changes and Suspensions:

• Air Carriers holding a domestic licence are temporarily exempted from the 120 days’ notice and consultation requirements of section 64 of the Canada Transportation Act before temporarily suspending air services within Canada. The requirements continue to apply for permanent discontinuation of service. (See CTA Order 2020-A-36).

Useful Links:

Important Information for Travellers During COVID-19

Statement on Vouchers

Determination No. A-2020-42

Determination No. A-2020-47

Order No. 2020-A-36

Order No. 2020-A-37

Canadian Transportation Agency issues temporary exemptions to certain Air Passenger Protection Regulations provisions to address the COVID-19 pandemic

Know your rights

*** End of Document ***

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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:

91. 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.

92. 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:

14. 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]

…

17. 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?”

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