New rule lets Canadians cancel wireless contracts after two years

Mon Jun 3, 2013 3:22pm EDT
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By Randall Palmer

OTTAWA (Reuters) - Canadians will be able to cancel their cellphone contracts after two years without penalty, instead of the three years that is the industry standard now, under a mandatory wireless code announced by the country's telecom watchdog on Monday.

Critics have long held that Canada's three providers that have almost the entire market, BCE Inc, Rogers Communications Inc and Telus Corp, impose customer contracts that are too stringent.

The rules from the Canadian Radio-television and Telecommunications Commission (CRTC) seemed likely to improve the ability of the small players to lure customers away, though Rogers said consumers may end up having to pay more up front if they buy phones below the retail cost, under a contract.

"I wonder if they made a mistake getting rid of the three-year contract. There was a lot of evidence at the hearings that this might mean that people make bigger upfront payments because they get smaller subsidies. The CRTC doesn't seem to think that will happen, but time will tell," said Ken Engelhart, head of regulatory affairs at Rogers.

"The Competition Bureau gets mad at me when I make price signals to reporters, but logic would dictate that when you have a smaller period to amortize that subsidy, you're not going to have such a big subsidy."

One of the small challengers to the Big Three wireless providers, Wind Mobile, said the rules would help them compete.

"They're better for competition and for consumers, and therefore as the competitors it's incidentally better for us," said Simon Lockie, chief regulatory officer at Wind Mobile, which launched its mobile service in 2009.

"All we've asked for is a level playing field, and this goes a long way to establishing that."   Continued...