Canada: CRTC Establishes New Internet Code For Consumers

Technology, Media and Telecommunications Bulletin
Last Updated: August 14 2019
Article by Laurence J.E. Dunbar

Less than nine months after initiating a proceeding to establish a mandatory code for Internet services1 , the Canadian Radio-television and Telecommunications Commission (CRTC) has released its decision establishing an Internet Code (the Code) applicable to large facilities-based internet service providers (ISPs).2 This code will provide consumers across Canada with new customer rights. Among other things, it will ensure that consumers benefit from increased clarity in their interactions with ISPs; from clearer prices, including for bundles, promotions and time-limited discounts, and from increased clarity around service calls, outages, security deposits, and disconnections. The Code is designed to make it easier for consumers to understand their Internet services contracts, to prevent bill shock from overage fees and price increases, and to make it easier for consumers to switch ISPs.

The Code will take effect on January 31, 2020, and will apply to the large facilities-based carriers which the CRTC has defined to include Bell Canada (including Bell MTS, NorthernTel and Télébec), Cogeco, Eastlink, Northwestel, Rogers, SaskTel, Shaw, Telus, Vidéotron and Xplornet. It will apply to all new, renewed, amended or extended contracts after January 31, 2020. Certain provisions related to the clarity of communications from ISPs, accessible formats, changes to contract terms and bill management will also apply to existing contracts to assist consumers in making informed decisions. The Commission for Complaints for Telecom-television Services (CCTS) will administer the Code. The rights created by the Code have not been extended to business customers at this time. Resellers and smaller facilities-based carriers are not subject to the Code.

This Code is similar in many respects to the Wireless Code which the Commission first established in 2013, and the Television Service Provider Code established in 2017. These codes addressed the CRTC's perception that further regulatory safeguards were required to address consumer issues in those markets. Although the provision of Internet services has been largely forborne from regulation, the CRTC retained the power under section 24 of the Telecommunications Act to establish conditions of service. As explained by the Chair of the CRTC, Ian Scott, in a news release that accompanied the release of the CRTC's decision:

"During our consultations, many Canadians told us about the challenges they face with their Internet service providers, including unclear agreements, unanticipated price increases and inconsistencies between offers and their bills. With the new Internet Code, we are closing the gap and providing Canadians with protections for the Internet, wireless and TV services in their bundle. The new Code will empower customers and make it easier for them to take advantage of competitive offers.3

The remainder of this bulletin highlights at a high level the contents of the Code.

Clarity

The new Internet Code places the obligation on service providers to communicate with consumers in a way there is clear, easy to understand, timely, accurate and accessible, and that uses plain language. This also applies to service provider contracts. If any part of a contract for Internet services is ambiguous, or if it is unclear how the terms of the Code or contract are to be applied, then they must be interpreted in a manner that is favourable to the customer.

Contracts

Customers must be provided with a copy of their contract within set time periods and are given the right to exit the contract within 45 days without penalty when these rules are not complied with. The Code requires contracts to address some 14 heads of key contract terms that often include a number of sub-terms. These include such items as a description of the services included in the contract, the minimum monthly charge for service (during and after any promotional offer and when that promotion will end), the term of the contract, any installation charges, any early cancellation fee and the amount by which that fee will decrease each month, the suggested retail price of any subsidized equipment, an explanation of any privacy or fair-use policies, all one-time charges listed separately, details of any trial period, the policy for service outages and how rebates will be applied, whether the contract will be extended automatically on a month-to-month basis, the amount of any security deposit and the rules respecting same and where customers can find other useful information respecting their service and their use of it, including tools to help them manage their usage and information on how to make a complaint to the CCTS.

A contract that does not address these key terms is subject to a termination right exercisable by the customer without penalty within 45 days.

Critical Information Summary

ISPs are also required to provide a Critical Information Summary when they provide a copy of the service contract, and at any time such a document is requested during the term of the contract. This document summarizes the most important elements of the contract.

Changes to Contracts and Related Documents

The Code also prevents ISPs from changing key contract terms during the term of the contract without the customer's informed and express consent and gives the customer the right to refuse such a change. Changes to key terms proposed after the agreed term of the contract may be made on 60 days' notice to the customer.

Bill Management

An ISP must notify a customer at least once when the customer reaches 75% of the usage limit and again when they reach 90% and 100% within a single monthly billing cycle. If a service provider applies overage fees, it must offer tools at no charge to the customer to monitor and manage their data and any additional fees incurred during a monthly billing cycle.

Equipment Issues

ISPs are required to provide customers with notice of a time frame when a service call will begin and must specify potential charges in advance. Notice of how to change or cancel the appointment must also be given. In the case of service outages, the service provider must explain in its contract its policy for service outages and how rebates will be applied.

Contract Cancellation and Extension

The Code outlines how early cancellation fees are to be established when the contract contains such a provision. Basically, when a subsidized device is provided as part of a fixed-term contract, the early cancellation fee must not exceed the value of the device subsidy and must be reduced on a straight line basis, month by month, until it reaches zero at the earlier of the end of the contract term and 24 months. Similar rules apply to contracts that do not provide a subsidized device and include a charge for early cancellation.

The Code includes a trial period for contracts that contain an early cancellation fee. Customers must be permitted to use the service for at least 15 days (at least 30 days for persons with a disability) and can cancel the service within that period paying only for half of the monthly charge and returning any equipment in near-new condition.

The Code also requires ISPs to give at least 90 days' notice prior to the end of a contract term giving the customer its options to renew, cancel or change plans. Contracts may also be extended on a month to month basis.

Security Deposits

The Code contains rules respecting security deposits, the payment of interest thereon, their review at least once a year, their application to outstanding balances, and the return of any unused portion together with applicable interest at the end of the contract or the conclusion of the requirement for a deposit. Contracts must provide for all of these contingencies.

Disconnection

Finally, the Code contains rules for the disconnection of customers. Generally, the rules require 14 calendar days' notice of a prospective disconnection and 24 hours' notice prior to an actual disconnection, except when faster action is required to protect the network, prevent fraud or a pre-set spending limit has been reached. The notice must provide, among other things, the reason for the disconnection, the amount owed, the availability of deferred payment plans, the amount of the reconnection charge, if any, and contact information for an ISP service provider representative. A service provider must not disconnect if the customer disputes the reasons for disconnection, pays the amount due, and the service provider does not have reasonable grounds to believe that the purpose of the dispute is to evade or delay payment.

Conclusion

The Internet Code should prove to be a useful tool for consumers of retail Internet services. It incorporates many elements from the Wireless Code that have proved to benefit consumers over the past few years. It should help to limit the number of complaints about retail Internet services and make for a more understandable and predictable retail Internet market in Canada.


1 Telecom Notice of Consultation CRTC 2018-422, Call for comments – Proceeding to establish a mandatory code for Internet services, November 9, 2018.

2 Telecom Regulatory Policy CRTC 2019-269, The Internet Code, July 31, 2019.

3 CRTC Internet Code to offer new customer rights to Canadians, July 31, 2019.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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