Bell and Telus Under Fire as CRTC Questions New Telecom Charges

Canada's telecom regulator is investigating Bell and Telus over newly introduced wireless charges that could breach federal rules designed to eliminate activation and cancellation fees. The dispute may become an early test of how aggressively the CRTC enforces its consumer protection measures against major telecom providers.

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Telecom giants of Canada now find themselves under close scrutiny by the Canadian communications regulator for imposing wireless charges that seem to violate consumer-protection laws that were introduced very recently.

This comes following a regulatory move to make life easy for Canadians in switching to another telecom service provider so that they may avail cheaper rates. As per the law passed on Friday via the Canadian Radio-television and Telecommunications Commission (CRTC), telecom service providers in the country will be forbidden from imposing extra charges on customers for activating, amending or canceling their cellphone services. This means that no extra charges such as activation fee and early termination penalties will now apply to consumers of wireless services offered by telecom companies.

But what brought the attention of the communications regulator on Bell and Telus is that right before implementing this regulation, both telecom giants introduced new charges that are attracting its attention. While Telus has imposed a $15 charge for physical as well as electronic SIM cards, Bell began charging an additional $40 'device handling' fee upon buying phones with wireless services. Timing is hard to miss, according to consumer advocates.

"The fees seem to be nothing more than activation fees, rebranded under a new name in order to try and recoup money that they cannot get now under the new regime," said Matt Hatfield, Executive Director of advocacy organization OpenMedia.

"It's not good corporate citizenship, is it? It's kind of a shifty used car salesman-type approach to things."

According to an earlier report by CBC News, the CRTC was concerned about the fee when Bell first introduced it back in May.

Bell says that the fee is meant to compensate for the cost associated with "fulfillment" services for those customers buying handsets along with their service. The new regulations do permit telecoms to charge for optional products and services. Additional costs like Wi-Fi installation at the customer's home, for instance, are not prohibited. But the device handling charge appears to be out of bounds, based on the regulator's letter to Bell.

However, Bell defended itself on June 10, asserting that such a charge is acceptable since people do not need to buy a gadget when signing up for its services. With no need to purchase a phone, this type of product would be considered one that users can decide to acquire. The regulator was not convinced, however.

Following this incident, on Friday, the CRTC asked Bell to inform the commission whether it ceased applying the charge as of June 17. Although Bell's representative, Elise von Scheel, noted that the company was reviewing the latest letter from the regulatory body, it was clear that Bell still believed that the charge should not be considered a problem since the acquisition of the device was optional. A similar situation arose between the regulatory body and Telus.

According to the CRTC, on June 11, Telus added a $15 charge on both physical and virtual SIM cards those gadgets that provide customers' phones with access to the network and are necessary for using wireless service. Initially, the CRTC warned that the SIM charge did not qualify as an exception either.

Friday, and once again, the regulator demanded that Telus clarify whether it withdrew the charge or explain why it was going to continue enforcing it.

Telus justified the charge by claiming that it should not be regarded as an administrative one prohibited by the new regulation but rather as tangible or digital product that clients buy.

This position raises more questions since on Bell's own website, there is an explicit statement that clients get SIM card in physical or digital form free of charge along with the monthly wireless subscription.

It still remains unknown how Rogers, another national telecommunication corporation of Canada, treats this issue. The company refused to comment on any possible charges concerning SIM card acquisition.

For the moment, the outcome is unclear since according to CRTC letters directed to both Telus and Bell, if the companies will not agree upon the dispute soon, then the regulator can enforce its rules through regulatory action.

In Hatfield's view, it appears that the regulator tries to put some pressure on them to make them retreat before starting complex legal actions.

"I appreciate them trying to move more at the speed" that would benefit telecom customers, he said. "CRTC decisions take a very long time."

The CRTC said its reviews of both matters are ongoing, setting the stage for what could become an early test of how aggressively Canada's telecom watchdog intends to enforce its new consumer-first rules.