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CRTC head Vicky Eatrides appears before the Standing Committee on Finance in Ottawa, on Feb. 9. Ms. Eatrides says the decision ‘will give consumers more flexibility to manage their plans.’Justin Tang/The Canadian Press
Canada’s telecom regulator is ordering companies to stop charging fees that prevent customers from switching to another internet or cell-phone plan, part of its effort to improve competition and affordability.
These fees cost consumers as much as $80 in certain circumstances, and have been on the rise in recent years, though telecoms have started waiving some fees for customers who use online tools instead of in-person service.
As of June 12, the companies will no longer be allowed to charge fees whose main purpose is to discourage customers from switching plans.
These include any fee incurred while activating a new plan, modifying an existing one or cancelling early, the Canadian Radio-television and Telecommunications Commission said in a regulatory document Thursday.
The decision could collectively cost the companies millions of dollars, according to an analyst estimate.
Telecom companies will still be able to charge “reasonable” fees that represent real costs, including those related to physical installation at a customer’s premises and to additional products that a customer has explicitly chosen to purchase. They will also be able to charge early cancellation fees when a customer is subsidizing a device through that plan.
“This will give consumers more flexibility to manage their plans and take advantage of better offers without worrying about unexpected costs,” said Vicky Eatrides, chairperson of the CRTC, in a statement Thursday morning.
The CRTC’s policy decision follows legislative changes to the Telecommunications Act, which it enforces and which required that the regulator prohibit certain activation and modification fees.
The decision was opposed by the Canadian Telecommunications Association, an industry group representing a number of telecom companies, including Rogers Communications Inc. RCI-N and Bell Canada parent company BCE Inc. BCE-T
“Today’s CRTC decision is an unwarranted and self-defeating regulatory intervention in a market that’s already highly competitive and delivering historic price declines,” said Eric Smith, CTA senior vice-president, in a statement Thursday.
He said the fees will shift how those costs are recovered in a market where switching providers is already easy and at record levels.
The CRTC said in its decision it would also update its regulatory framework to help “minimize the burden” of administrative work being placed on those service providers.
The CRTC’s decision follows a public consultation involving consumer groups, service providers and individuals.
Companies have previously said these fees are intended as a cost-recovery mechanism to cover administrative work. However, consumer groups said the fees charged seemed “excessive” beyond those cost recovery functions, and noted they had increased “significantly” in recent years, according to the CRTC.
This decision applies to both large and small telecom companies, for both individual accounts and small business accounts, cell phone accounts and individual internet accounts.
Bell, Rogers and Telus Corp. T-T currently charge $80 activation fees on certain wireless plans.
“These fees can often be avoided by purchasing through online channels or during promotional periods and by negotiating with staff,” said Bank of Montreal analyst Tim Casey in a note to investors Thursday afternoon.
As a reference point, he said, assuming 25 per cent of Bell, Rogers and Telus wireless phone activations in 2025 paid the activation fee, this would result in about $100-million, or about half a percent of wireless service revenues.
