The CRTC Wireless Code and Early Cancellation Fees
Par Sarah D. Pinsonnault, avocate
By Sarah D. Pinsonnault
In Bell Canada c. Amtelecom Limited Partnership, 2015 CAF 126, a group of wireless service providers (“WSPs”) launched an appeal before the Federal Court of Appeal in which they contested the coming into force of the provisions of the new Wireless Code (“Code”) issued by the Canadian Radio-Television and Telecommunications Commission (“CRTC”). The Code dealt with a series of consumer concerns regarding wireless services, such as, most notably, early cancellation fees.
The contentious point in this case was the following: although the Code was issued on June 3rd 2013, it was to take effect on December 2nd 2013 and thus apply to all new or amended wireless service contracts offered from that day forward. Furthermore, in order to ensure that all consumers are covered by the Code within a reasonable time frame, it became applicable to all contracts, no matter when they were concluded, on June 3rd 2015 (the drop-dead date). Consequently, consumers whose contracts did not come to term before June 3rd 2015 could nevertheless terminate their contract prematurely without being liable for early cancellation fees (or, depending on the time that has elapsed since the conclusion of the contract, will only have a small penalty to pay).
The WSPs were undoubtedly not happy with the “retrospective” application (i.e. as opposed to being “retroactive”, it operates forward but imposes new consequences on past events) of the Code, given that it interfered with vested rights they acquired prior to its coming into force. These vested rights consist of the revenue stream fixed by the wireless service contracts and the early cancellation fees that ensure the latter.
The Federal Court of Appeal agreed with the WSPs on this point. However, after having applied the reasonableness standard of review to the CRTC’s interpretation of its home statute (the Telecommunications Act, SC 1993, c 38 (“Act)), it found that its implementation of the Code fit squarely within the CRTC’s mandate and within the policy objectives of the Act:
“ At paragraphs 360-367 of the Code, the CRTC set out its analysis with respect to the implementation date for Code. It began by restating the purpose of the Code, namely that consumers be empowered to make informed choices in the competitive market so as to contribute to making that market more competitive. For that reason, the CRTC considered that it was in the best interests of consumers that the Wireless Code be implemented as soon as practicable.
 The CRTC went on to note that if the Wireless Code applied only to contracts entered into after December 2, 2013, (“new contracts”), many consumers who were locked into pre-existing contracts would not fully benefit from the Code until those contracts expired or were amended. The Commission was of the view that it was essential that the transition period for the implementation of the Wireless Code should be as short as possible so as to ensure that all consumers benefit from the Code in a reasonable period. The CRTC noted that unreasonable delays in the implementation of the Code for some customers “could be considered undue discrimination”: Wireless Code at paragraph 365.
 The Code implements several of the policy objective [sic] of the Act […] To that extent, the CRTC’s objectives are grounded in the Act and in the Canadian telecommunications policy […] As a result, the promulgation of the Code as a whole is a matter squarely within the CRTC’s mandate and within the Act’s policy objectives.
 Does it follow from this that the Code should therefore be implemented as soon as practicable? […] Given the CRTC’s intention to put more information into the hands of consumers so as to increase the dynamism of the market, it is reasonable to have all consumers on the same footing as soon as possible. It is perhaps this limited non-technical view of “undue discrimination” which the CRTC had in mind. From the point of view of the regulation of the retail market in voice and data wireless services, the CRTC could reasonably consider that section 24, by necessary implication, gives it the power to impose the Code retrospectively.” (emphasis added)
To read this decision in its entirety and other elements discussed therein, click here.