CRTC reviewing 36-month device financing plans

The CRTC said Friday afternoon that it thinks the 36-month smartphone financing plans that have entered the market in recent weeks may be out of line with the wireless code. In a press release, the regulator is asking all wireless service providers to “stop offering device financing plans on terms longer than 24 months until the Commission completes a full review of this practice,” adding that it will publish a formal notice of consultation soon. “We want customers to have options for financing their device, if they so choose, but we also need to make sure these new 36 month device financing plans are fair for consumers. The Wireless Code protects consumers and gives them the ability to take advantage of competitive offe rs at least every two years,” CRTC chairman Ian Scott said in the release. The announcement follows concern from Shaw Communications Inc. and Bragg Communications Inc.'s Eastlink about the longer-term financing arrangements. Both said that while in theory the device and the service bills are separated under the new plans, the service could not be severed without the customer paying for the rest of the device, effectively linking the two together for those who can't afford it. Just yesterday, BCE Inc. announced it would begin offering 36-month financing plans, following Rogers Communications Inc. and Telus Corp., who launched similar options previously. In July, the Commission for Complaints for Telecom-television Services (CCTS) said the three-year financing plans may run afoul of the code. Tamir Israel of the University of Ottawa’s Canadian Internet Policy and Public Interest Clinic said the three year plans amounted to a “direct” violation of the code. “It raises the same anti-competitive concerns as the three year lock-in plans that were prevalent at the time the two-year contract limit was initially introduced,” he wrote in an email to The Wire Report at the time. After Rogers announced its financing plan, Telus followed suit, despite their president of mobile Jim Senko telling Cartt.ca that he thought the 36-month plans would violate the wireless code. The central question with the three year financing plans is whether or not the customer has to pay what could be considered a "switching fee" at the end of two years. In the plans from Rogers and Telus, a customer would sign up for a phone financing plan separately from a service plan. But should a consumer choose to switch carriers after the completion of a two-year wireless service arrangement, they cannot continue to pay off the phone financing in monthly instalments for the final year — they would have to pay it off outright. In other words, a customer financing a phone over three years with Rogers or Telus with a two-year service contract, could not switch carriers after two years without paying off the full price of the phone. In its release Friday, the CRTC seemed to focus on that practice specifically. "Customers, who may benefit in the immediate term from lower monthly costs related to their devices, appear to be asked to accept terms and conditions that may require them to stay with their current WSP past the end of their wireless service commitment period," the release said. It also pointed out that it can levy penalties of up to $15 million on companies for violations of the code.

CRTC reviewing 36-month device financing plans

Brief | August 2, 2019

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CRTC reviewing 36-month device financing plans

Brief | August 2, 2019

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