Liberal bill seeks to abolish cellphone surcharges
Liberal MP David McGuinty wants to end "fictitious charges" on cellphones.(Tom Hanson/Canadian Press)
Liberal MP David McGuinty has introduced a private member's bill in the House of Commons seeking to abolish the system access fee charged by cellphone providers and enact more rights for customers of telecommunications companies in general.
“System access fees are an obvious frustration for Canadian consumers,” McGuinty said in a release. “We’re talking 21 years and billions of dollars in misleading payments. My bill will end fictitious surcharges on cellphones.”
McGuinty, the MP for Ottawa South and brother of Ontario Premier Dalton McGuinty, introduced bill C-555 in the House on Monday. He is the second MP in a week to introduce legislation that seeks additional regulatory oversight of telecommunications companies. Charlie Angus, the NDP MP for Timmins and James Bay in Ontario, last week introduced his "net neutrality" private member's bill that seeks to limit how much control service providers have over internet traffic.
McGuinty's bill, also called the Telecommunications Clarity and Fairness Act, proposes the conditions of holding cellphone spectrum licences be changed "to include a prohibition against the levying of any additional fee or charge that is not part of the subscriber’s monthly fee or monthly plan rate." Cellphone providers would also be required to make available with each service contract a fact sheet that discloses every service being provided and any associated costs.
Like Angus's bill, McGuinty's proposed legislation also contains net neutrality provisions that would force internet service providers to provide "clear and accurate" information on network management practices that reduce advertised speeds.
The bill would also make it illegal for providers to lock cellphones such that they do not work on other carriers' networks, and would begin an assessment of the effectiveness of the Commissioner for Complaints for Telecommunications Services, the industry-run complaints body set up last year.
Officials at Canada's big three cellphone providers, Rogers Communications Inc., Bell Canada Inc. and Telus Corp., did not immediately return requests for comment.
Peter Barnes, president of the Canadian Wireless Telecommunications Association — the industry's advocacy group — disagreed with McGuinty's talk of "fictitious surcharges." The system access fee was originally a tax collected from consumers by the government as a license for the airwaves their cellphones were using. The fee was handed over to cellphone carriers to collect in the early 1990s, who have since used it to help pay for their spectrum acquisition and licensing costs, Barnes said.
"The impression he's giving is that these are fictitious fees, but they're quite clearly spelled out in contracts," Barnes told CBCNews.ca.
Barnes also said the Canadian Radio-television and Telecommunications Commission examines the cellphone industry annually and has thus far decided to remain hands-off and let competition between carriers sort out any issues that arise.
McGuinty, who is normally the Liberals' environment critic, said he expects the bill to get its second reading in the House of Commons in October. He told CBCNews.ca he discussed the bill with the Liberal industry critic but would not say whether Scott Brison supported it.
$50 in charges
McGuinty said the idea for the act came to him about eight months ago when his daughter got her first cellphone bill, which had more than $50 of extra charges for unsolicited text messages she had received. He found the extra-charge provision buried in the fine print of her contract and tried to end the service, only to encounter stiff cancellation fees and the revelation that his daughter's expensive phone wouldn't work on another carrier's network.
"It was then that I began to understand that this was a huge problem in Canada," he said, adding that such terms affect not only consumers but small businesses, as well. "This is a much, much bigger question than just hidden charges."
McGuinty, who is a former transport critic, compared cellphone surcharges to those charged by the airline industry. The system access fee is like the Canada Border Services Agency telling airports they no longer have to charge a security fee, then the airports "waking up the next morning and leaving the charge intact, calling it a security charge and collecting it for 21 years and pocketing the money without telling Canadians," he said. "That's what's been going on."
Industry analysts said that while neither Angus's nor McGuinty's bill is likely to pass, they are evidence of mounting consumer frustration with telecommunications companies.
"Bill C-555 is a sign of frustration with anti-consumer practices such as unilateral changes of terms and fees outside of contracts," telecommunications consultant Mark Goldberg wrote on his blog.
McGuinty's bill also comes just days after Quebec's consumer watchdog, L'Union des consommateurs, filed a class-action suit over Bell's throttling of internet speeds. The lawsuit, filed in the Quebec Superior Court, alleges that Bell is guilty of false advertising and has broken the terms of its contracts with consumers by slowing down internet speeds. Bell has declined to comment on the lawsuit.
The Quebec consumers group also last year launched a class-action suit against Vidéotron Ltée when the company introduced download limits on its internet plans, which the group alleges is a violation of customer contracts. Vidéotron disputes the claim and says it was within its contractual agreement because it gave customers two months' notice.
The system access fees charged by the big three cellphone companies, as well as regional providers MTS Allstream and SaskTel, are also the subject of a class-action suit brought forward by Tony Merchant. The Regina-based lawyer won certification for his class-action, which is seeking nearly $20 billion, last September. Merchant's lawsuit says the cellphone providers have misrepresented the fee to consumers, an accusation the carriers dispute.
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