The CRTC has asked wireless service providers to stop offering the 36-month device financing option for new rate plans until a review is complete.
The Canadian Radio-television and Telecommunications Commission (CRTC) said in a news release that the option is not compliant with the Wireless Code “since many customers may have to pay fees to switch service providers, even after 24 months.”
“The CRTC 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,” the CRTC said.
It added that it intends to publish a Notice of Consultation to examine the issue in more detail.
“At the conclusion of this process the commission will determine what regulatory action should be taken if these plans are not compliant with the Wireless Code,” the CRTC said.
“Canadian customers have the right to make informed choices based on clarity. 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,” CRTC’s chairman Ian Scott said.
“The Wireless Code protects consumers and gives them the ability to take advantage of competitive offers at least every two years. The CRTC is concerned by these financing plans as they appear to make it difficult for a customer to switch service providers even after 24 months.”
Bell, Rogers and Telus all introduced their versions of device financing options. Bell’s device financing plan currently gives customers the option to pay their smartphone off in 24-monthly payments with zero per cent interest.
Rogers’ device financing option allows customers to pay off their phone in 24 or 36 equal payments, an option that Telus began to offer shortly after as well. Bell’s CEO George Cope said the company intended to launch a similar option soon.
The CRTC had sent a letter to carriers to seek more information about the 36-month option; responses from the carriers were received on July 30th.
The new financing options would essentially let customers pay off their phone over a period of three years instead of two.
The CRTC had not evaluated the device financing options, particularly the 36-month version, when carriers launched them for customers.
According to the Wireless Code, wireless service providers that sell phones with an upfront subsidy have to make up the cost of the device in equal payments over 24 months.
Companies are also not allowed to charge a cancellation fee. This rule allowed customers to have more options and for it to be more affordable for customers.
A three-year financing option could have customers facing a financial burden of paying off their phone even if they switch over to another carrier after two years.
A Telus spokesperson said the company was “very diligent in ensuring that our 36-month device financing plan would satisfy the CRTC’s Wireless Code requirements, while also providing our customers with more choice, transparency and affordable ways to manage their device costs.”
“We continue to believe that we are compliant with the Code’s requirements, but will be suspending these offers until the CRTC completes its review. These offers required significant changes to our systems that took several weeks to implement, and will take time to reverse course,” the spokesperson said.
A Bell spokesperson said: “Considering the increasing prices smartphone manufacturers are charging, we’re looking at new ways to make premium phones more accessible to consumers. The CRTC shouldn’t be looking at restricting options that make high-end phones more affordable for more people.”
A Rogers spokesperson said: “Consumer response to our 36-month financing has been very positive — it offers consumers more choice and affordability with zero dollars down and zero interest. While we believe this is the right thing to do for our customers and it is compliant with the code, we respect the directive of the commission and will remove this option from the market during the review.”
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This article was previously published on MobileSyrup.com