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Telecom Decision CRTC 2018-194

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Ottawa, 1 June 2018

Public record: 8638-T66-201607433

TELUS Communications Inc. - Request to review and vary Telecom Decision 2016-171

The Commission determines that TCI’s application is properly considered a request to review and vary Telecom Decision 2016-171. Given that TCI has not raised a substantial doubt as to the correctness of that decision, the Commission denies TCI’s request. TCI shall have four months from the date of this decision to implement the requirements of Telecom Decision 2016-171 for all contracts.

Background

  1. In Telecom Regulatory Policy 2013-271, the Commission set out the Wireless Code, a mandatory code of conduct for providers of retail mobile wireless voice and data services (wireless services). In the Wireless Code, the Commission prohibited contractual terms that require customers to provide at least 30 days’ notice to their wireless service providers prior to cancelling postpaid wireless services.
  2. In Broadcasting and Telecom Regulatory Policy 2014-576 (the 30-day cancellation policy), the Commission extended this prohibition of 30-day cancellation policies to retail local voice services and Internet services.Footnote 1
  3. As a result, customers of all such services can cancel their contracts at any time by notifying their service provider, with cancellation taking effect on the day that the service provider receives notice of the cancellation.
  4. In Telecom Decision 2016-171, the Commission determined that, in line with its prohibition of 30-day cancellation policies, service providers must not charge for a service that is not, and cannot be, provided following cancellation. In practice, this means that all service providers must provide refunds for retail wireless, local voice, and Internet services following cancellation of such services when some or all of the monthly service fees are billed in advance. The refunds must be pro-rated, based on the number of days left in the last monthly billing cycle after cancellation.
  5. In Telecom Regulatory Policy 2017-200 (the Review of the Wireless Code), the Commission reiterated the pro-rated refund requirement that had been set out in Telecom Decision 2016-171.Footnote 2

Application

  1. The Commission received an application from TELUS Communications Inc. (TCI),Footnote 3 dated 4 July 2016, in which TCI requested that the Commission issue an order providing (i) guidance and advice on whether Telecom Decision 2016-171 requires the company to make pro-rated refunds of monthly service fees billed in advance in the event of certain customer cancellation scenarios, and (ii) for an extension of time to facilitate the implementation of Telecom Decision 2016-171.
  2. More specifically, TCI requested that the Commission determine that pro-rated refunds are not required for the following services:
    • the component of wireless services’ charges attributable to device subsidy;
    • what TCI referred to as usage-based services; and
    • local voice services governed by the Terms of Service in the company’s General Tariff.
  3. TCI also requested that the Commission determine that, prior to the release of Telecom Decision 2016-171, there was no obligation on TCI to provide pro-rated refunds. Finally, it requested an extension of six months from the Commission’s decision resulting from its current application to implement the pro-rated refund requirement and a determination that the requirement only apply to new contracts signed as of that extension date.
  4. In filing its application, TCI argued that Telecom Decision 2016-171 (i) is inconsistent with the Wireless Code, (ii) failed to consider several arguments raised in the proceeding leading to that decision, including an argument that the concept of pro-rated refunds should be inapplicable to “usage-based services” and was made with insufficient evidence, and (iii) conflicts with the company’s approved tariff for local voice services.
  5. The Commission received interventions regarding TCI’s application from Bell Canada; the Canadian Network Operators Consortium Inc. (CNOC); the Public Interest Advocacy Centre (PIAC); Quebecor Media Inc., on behalf of Videotron Ltd.;Footnote 4 and three individuals.
  6. The current proceeding included a round of Commission staff requests for information, as well as a supplementary round of comments on whether or not the application should be considered a request to review and vary Telecom Decision 2016-171 and, if so, whether TCI had successfully raised substantial doubt as to the correctness of that decision.

Issues

  1. The Commission has identified the following issues to be addressed in this decision:
    • Should TCI’s application be considered a request to review and vary Telecom Decision 2016-171?
    • If so, has TCI demonstrated that there is substantial doubt as to the correctness of Telecom Decision 2016-171 such that it would be appropriate to grant the request to review and vary?
    • What is the appropriate remedy or relief stemming from TCI’s application, if any?

Should TCI’s application be considered a request to review and vary Telecom Decision 2016-171?

Positions of parties

  1. TCI argued that its application was filed pursuant to section 58 of the Telecommunications Act (the Act), which grants the Commission the power to issue non-binding guidelines on any matter within its jurisdiction, rather than under section 62 of the Act, which grants the Commission the power to review and vary its decisions. However, TCI argued that if the Commission were to consider its application as a request to review and vary Telecom Decision 2016-171, there was substantial doubt as to the correctness of that decision.
  2. PIAC and Videotron submitted that TCI’s application is properly characterized as a request to review and vary, arguing that the application challenges the correctness of Telecom Decision 2016-171 by alleging errors and the failure to consider basic principles raised in the original proceeding. Bell Canada submitted that the Commission could be justified in considering the application either as a review and vary or as a request for the issuance of further guidance.

Commission’s analysis and determinations

  1. Section 62 of the Act provides that the Commission may, on application or on its own motion, review and rescind or vary any decision made by it. In Telecom Information Bulletin 2011-214, the Commission provided general guidelines for distinguishing whether an application constitutes a new application or a review and vary application.
  2. In that Information Bulletin, the Commission stated that, if an application seeks to raise substantial doubt as to the correctness of the original decision at the time that decision was made, it will generally be considered a review and vary application.  However, where the application essentially relates to the continuing correctness of a decision, it will generally be treated as a new application. The Commission then listed five non-exhaustive factors that it will generally consider in making the distinction and noted that the weight to be given to any specific factor will depend on the circumstances of the case. These factors are
    • whether the application raises an error of law, jurisdiction, or fact;
    • the extent to which the issues raised in the application were central to the original decision;
    • the extent to which the facts or circumstances relied upon in the application were relied upon in the original decision;
    • the length of time since the original decision; and
    • whether the resulting decision would supersede the original decision in a prospective manner as opposed to curing an error on a retrospective basis.
  3. TCI consistently argued that its application is not a review and vary application, yet it alleged multiple errors on the part of the Commission related to Telecom Decision 2016-171. Firstly, TCI argued, among other things, that Telecom Decision 2016-171 directly conflicts with the Wireless Code and with the company’s Commission-approved tariffs. If borne out by the evidence, these claims would constitute errors of law.
  4. Other arguments raised by TCI in the context of this proceeding include the supposed fundamental incompatibility between pro-rated refunds based on days in a billing cycle and services billed on the basis of usage. TCI also refers to correspondence predating the Telecom Decision 2016-171 process between itself and a senior Commission staff member regarding pro-rated refunds.
  5. Given that both of these issues were raised by TCI in the proceeding leading to Telecom Decision 2016-171, the company is, in effect, arguing that Telecom Decision 2016-171 did not adequately address these issues. Again, if this allegation were ultimately to be borne out, this would constitute an error of law, as the Commission is required to consider the record before it in a proceeding and to provide reasons that justify its determinations in light of that record. Further, it demonstrates that TCI has, in part, relied upon circumstances in its new application that it also relied upon in the proceeding leading to Telecom Decision 2016-171.
  6. The issues raised in TCI’s application, namely whether pro-rated refunds must be given for a very significant portion of their services (including wireless, local voice, and usage-based wireline Internet), were central to Telecom Decision 2016-171. The principal purpose of that decision was to explicitly enunciate the pro-rated refund requirement.
  7. In terms of whether the relief requested by TCI would have retrospective or only prospective effect, the Commission considers that the company is seeking a determination that would not have a solely prospective effect. TCI is asking, in part, that its requested relief apply only to new contracts after a transition period. However, this would necessarily affect, in a retrospective manner, existing and expired contracts for the period since Telecom Decision 2016-171 was issued. The determination sought by TCI would mean that no such contracts would be eligible for pro-rated refunds.
  8. The Commission notes that TCI’s application was filed within sixty days of the issuance of Telecom Decision 2016-171. In general, the greater the time period that has passed since the original decision, the more likely that an application will raise a substantial doubt as to the continuing correctness of that decision, rather than its original correctness.
  9. Having assessed all of these factors, the Commission considers that TCI, through its application, seeks to raise substantial doubt as to the correctness of Telecom Decision 2016-171 at the time it was made.
  10. In arguing that its application should not be considered a review and vary, TCI submitted that it should rather be considered a request for the issuance of guidelines under section 58 of the Act. However, that provision specifically states that guidelines issued under it are not binding on the Commission.
  11. Given the company’s purported goal of achieving greater certainty and clarity related to its regulatory obligations, the Commission considers that simply issuing non-binding guidance on these requirements would be an insufficient response. If, as TCI has alleged, the Commission has committed errors related to Telecom Decision 2016-171, then they should be addressed by a binding decision made as a result of a review and vary analysis.
  12. In light of all the above, the Commission finds that it would be more appropriate to consider TCI’s application a request to review and vary Telecom Decision 2016-171.

Has TCI demonstrated that there is substantial doubt as to the correctness of Telecom Decision 2016-171 such that it would be appropriate to grant the request to review and vary?

Introduction

  1. The Commission’s authority to review and rescind or vary its prior determinations is discretionary. In Telecom Information Bulletin 2011-214, the Commission has provided guidance regarding how it will generally exercise this discretion.
  2. In general, the Commission requires an applicant to demonstrate that there is substantial doubt as to the correctness of the original decision. This can be established, for instance, by demonstrating
    • an error in law or in fact;
    • a fundamental change in circumstances or facts since the decision;
    • a failure to consider a basic principle which had been raised in the original proceeding; or
    • a new principle which has arisen as a result of the decision.
  3. The grounds on which TCI seeks to establish substantial doubt as to the correctness of Telecom Decision 2016-171, which are set out in paragraph 9 above, are discussed in detail below.

Is Telecom Decision 2016-171 inconsistent with the Wireless Code?

Positions of parties
  1. TCI argued that, under the Wireless Code, wireless service providers are entitled to recover the entire subsidy amount of any wireless device provided as part of a wireless contract. In its view, Telecom Decision 2016-171, which requires pro-rated refunds in the month of cancellation, would preclude the company from being able to recover the part of the subsidy otherwise payable during the month of cancellation. Given that Telecom Decision 2016-171 does not address this apparent inconsistency or attempt to resolve it, TCI argued this results in a legal error.
  2. The service providers who intervened on this point generally agreed with TCI that wireless device subsidy amounts should not be subject to the pro-rated refund. PIAC argued that TCI has not demonstrated the alleged error.
Commission’s analysis and determinations
  1. TCI’s interpretation in this matter is not supported even by a plain reading of the Wireless Code. The Wireless Code specifically addresses the issue of Early Cancellation Fees (ECFs), which wireless service providers are permitted to recover upon customer cancellation; ECFs are calculated by reference to the subsidy amount of a wireless device for customers whose contract includes a subsidized device. For such customers, the ECF is equal to the amount of the device subsidy, and is to be reduced by an equal amount each month, over a period of no more than 24 months. Upon cancellation, service providers may require that customers pay any remaining ECF. However, the Wireless Code also requires that, for purposes of calculating a customer’s ECF, “a month that has partially elapsed at the time of cancellation is considered a month completely elapsed.”Footnote 5 Accordingly, a requirement to refund a portion of the device subsidy in the month of cancellation is not inconsistent with the Wireless Code, as there is no requirement under the Wireless Code for the ECF to include this portion of the subsidy in the first place.
  2. In light of the above, the Commission finds that no conflict exists between Telecom Decision 2016-171 and the Wireless Code, and, as such, no error has been demonstrated by TCI in this regard.

Did the Commission fail to consider several arguments raised in the proceeding leading to Telecom Decision 2016-171 and was that decision made with sufficient evidence?

Positions of parties
  1. TCI argued that Telecom Decision 2016-171 sets out a principle concerning customer refunds but does not sufficiently explain how that principle would be applied to what it calls “usage-based services” (services sold with service limits or caps, for instance including almost all wireless and wireline Internet services). Specifically, TCI argued that while it may make sense that “non-usage-based services” (such as services offered on an unlimited basis) be pro-rated and refunded on the basis of days left in a billing cycle, it does not make sense for usage-based services, or in the case of service bundles that include usage-based services and that are offered under a common rate structure.
  2. In support of its position, TCI gave the hypothetical example of a customer being charged $30 for usage of up to 300 gigabytes of data per month. If such a consumer uses their entire data allotment and cancels service midway through their billing cycle, they would still be entitled to a refund, according to Telecom Decision 2016-171. Further, TCI argued that being required to provide refunds for such services may also interfere with accepted principles of network economics and is inconsistent with global industry practices.
  3. TCI also pointed to an exchange of emails in 2014 between a TCI regulatory executive and a senior Commission staff member (the 2014 correspondence), in which it was indicated that Broadcasting and Telecom Regulatory Policy 2014-576 did not require pro-rated refunds. The company argued that it relied on the 2014 correspondence to its detriment.
  4. TCI submitted that, to a significant extent, these same grounds were put before the Commission in the proceeding that led to Telecom Decision 2016-171, but were not addressed by the Commission in its reasons, which constitutes an error in law. Further, the company argued that there was insufficient evidence before the Commission in the proceeding leading to Telecom Decision 2016-171 to justify a determination that pro-rated refunds were necessary.
  5. Bell Canada agreed with TCI that the incompatibility of the pro-rated refund requirement with usage-based services was raised in the proceeding leading to Telecom Decision 2016-171, but was not addressed in that decision.
  6. PIAC and Videotron noted that Telecom Decision 2016-171 did, in fact, refer to the arguments raised by TCI. They disagreed that Telecom Decision 2016-171 is inconsistent with global practices and principles of network economics, and submitted that the decision was supported by sufficient evidence. Videotron further argued that the 2014 correspondence had no bearing on Telecom Decision 2016-171. PIAC argued that, if the Commission decides to reconsider TCI’s arguments in this proceeding, the harms of excluding usage-based services from a pro-rated refund requirement would far outweigh the benefits.
Commission’s analysis and determinations
  1. With respect to TCI’s arguments regarding usage-based services and the 2014 correspondence, these arguments were raised in the proceeding leading to Telecom Decision 2016-171. In fact, as pointed out by some interveners, that decision does make reference to these arguments.Footnote 6
  2. Telecom Decision 2016-171 conveys the circumstances of the case, sets out the key issues being considered, and explicitly notes the relevant policy objectives, consistent with the Commission’s duty under section 47 of the Act to exercise its powers with a view to furthering these objectives. The reasons set out the determination rendered, while explaining how this will further the relevant objectives given the specific circumstances and history of the case.
  3. In Telecom Decision 2016-171, the Commission articulated that the general justification for the determination was the effect of 30-day cancellation policies and the potential double-billing of customers that can result, and how this frustrates the attainment of certain policy objectives set out in the Act.
  4. Although Telecom Decision 2016-171 does not specifically address why TCI’s arguments regarding usage-based services and the 2014 correspondence were rejected, the Commission is not required to enumerate and reply to every argument advanced by every party in its reasons for decision. Rather, the Commission’s reasons must demonstrate justification, transparency, and intelligibility and that the result falls within a reasonable range of outcomes.Footnote 7
  5. The Commission considers that TCI has not demonstrated that the reasons for Telecom Decision 2016-171 were insufficient in the circumstances.
  6. Accordingly, TCI has not established an error of law in this regard. To the extent that Telecom Decision 2016-171 might have further probed the arguments raised by TCI, the present proceeding provides an opportunity to expand upon these considerations.
  7. With respect to the hypothetical customer scenario of misuse put forward by TCI, it has provided no concrete evidence of the scope of this issue. The Commission does not consider that the mere possibility for this type of behaviour is a sufficient consideration to call the pro-rated refund requirement into question.
  8. Further, if services with usage limits were all excluded from the pro-rated refund requirement, it could provide an incentive for providers to maximize the number of usage-limited services in the market. In the same way, this could provide a disincentive to providers who might otherwise be willing to offer services on an unlimited basis.
  9. With respect to the 2014 correspondence, there have been multiple relevant developments in the period since this exchange took place. For instance, as part of the proceeding leading to Telecom Decision 2016-171, TCI was asked to comment on the possibility of being required to provide pro-rated refunds. Accordingly, even if there was a period of time in which TCI experienced confusion as to its obligations, given the time that has passed and the events that have taken place in the interim, any such confusion cannot be considered justified at this time.
  10. With respect to TCI’s arguments about widespread industry practices and network economics, the Commission notes the conflicting evidence on this issue, even among service providers. The Commission is not persuaded that this evidence demonstrates clear or relevant trends among these practices or how a pro-rated refund rule, mostly affecting services that are forborne from rate regulation, would affect network economics. In any event, it has not been established that these grounds would constitute reasons to question the pro-rated refund requirement.
  11. Finally, the Commission considers that TCI has not established that there was an error with respect to the sufficiency of the evidence upon which Telecom Decision 2016-171 was based. As noted by several interveners, that decision relied, in part, on determinations that the Commission had made, in the exercise of its policy expertise, in several recent, similar proceedings. In addition, the record of the proceeding leading to that decision included interventions from a variety of interested entities, as well as responses to pointed requests for information, in which both providers and consumer groups were asked how a potentially revised cancellation rule might affect their interests.
  12. In light of all of the above, the Commission is of the view that TCI has not established an error of law or a failure to consider a principal raised in the original proceeding, on the grounds alleged, that would raise substantial doubt as to the correctness of Telecom Decision 2016-171.

Does Telecom Decision 2016-171 conflict with TCI’s approved tariff for local voice services?

Positions of parties
  1. TCI argued that its General Tariff’s Terms of Service,Footnote 8 which apply to local voice services in regulated exchanges, provide that no refund is payable in the case of a customer service cancellation during the minimum contract period of one month. However, Telecom Decision 2016-171 appears to require pro-rated refunds even in such cases. Further, these Terms of Service were not specifically addressed in Telecom Decision 2016-171. Accordingly, TCI submitted that Telecom Decision 2016-171 purported to require rate changes inconsistent with the company’s Commission-approved tariffs, contrary to subsection 25(1) of the Act. In TCI’s view, this amounts to an error of law.
  2. Bell Canada generally agreed with TCI’s position. PIAC and Videotron argued that, while Telecom Decision 2016-171 did not separately mention regulated services or tariffs, it is to be read consistently with earlier decisions such as Broadcasting and Telecom Regulatory Policy 2014-576, in which the Commission directed Canadian carriers to modify their terms and conditions for regulated services.
Commission’s analysis and determinations
  1. As currently worded, the Commission-approved Terms of Service in TCI’s General Tariff include a general minimum contract period of one month.Footnote 9 However, in Broadcasting and Telecom Regulatory Policy 2014-576, the Commission directed Canadian carriers to modify tariffed terms and conditions of service to prohibit 30-day cancellations for local voice services in non-forborne exchanges. TCI has not indicated on the record of this proceeding that it issued amended tariff pages under that tariff as a result of this direction, and the Commission cannot find any record of TCI having done so.
  2. The Commission expects that any such amendment to the company’s tariff would have noted the non-application of the minimum contract period provision to local voice services, which would in turn have resolved any perceived conflict between the tariff and Telecom Decision 2016-171.
  3. Telecom Decision 2016-171 notes its application to local voice services, though it does not provide separate implementation instructions for forborne and non-forborne exchanges, as did Broadcasting and Telecom Regulatory Policy 2014-576. Accordingly, it does not include an explicit direction to file further tariff amendments related to the pro-rated refund requirement. While Telecom Decision 2016-171 might have been clearer in this regard, this does not constitute an error that necessitates a review and variance of that decision.
  4. In light of the above, the Commission considers that TCI has not raised substantial doubt as to the correctness of Telecom Decision 2016-171 in this regard.
  5. However, in order to avoid any potential ongoing misunderstandings, the Commission directs TCI to file the necessary changes to its General Tariff going forward. This direction is set out in more detail in the following section of this decision.

Conclusion

  1. While TCI has not established substantial doubt as to the correctness of Telecom Decision 2016-171, it has identified certain irregularities surrounding that decision such that the Commission considers that it would be appropriate to exercise its discretion to grant TCI part of its requested relief, as set out in the section below.
  2. As a final note, even if the Commission had determined that it was appropriate to consider TCI’s application under section 58 of the Act, the Commission would not have found that it was appropriate to issue the guidance sought by TCI. In the circumstances, the same reasons for which it is not appropriate to vary Telecom Decision 2016-171 substantially constitute reasons why it would not be appropriate to issue such guidance.

What is the appropriate remedy or relief stemming from TCI’s application, if any?

Positions of parties

  1. TCI requested that, irrespective of how its application is ultimately considered by the Commission, it should be granted a six-month extension of time to implement the pro-rated refund rule (or any modified pro-rated refund requirement that may result from its application). Further, it requested that its existing contracts be grandfathered, such that they would not require pro-rated refunds if cancelled.
  2. TCI argued that implementation of a pro-rated refund rule would necessitate multiple changes to its billing systems, accounting practices, and customer services. The company submitted that at least some of these changes would be required by what it referred to as the “assurances” contained in the 2014 correspondence that the prohibition of 30-day cancellation policies did not entail pro-rated refunds. It also argued that modifying its existing contractual agreements with customers in order to provide pro-rated refunds would create undesirable regulatory uncertainty and that there is no pressing need for this sort of regulatory intervention.
  3. Bell Canada generally agreed with TCI’s position. Both Bell Canada and CNOC requested that any decision flowing from TCI’s application be made applicable to all service providers.
  4. PIAC and Videotron opposed TCI’s requests for an extension of time and for the grandfathering of existing contracts, arguing that this would have an unduly negative effect on consumers. In this regard, Videotron argued that TCI has not supported its view that a six-month extension is necessary and that, far from resulting in uncertainty, it would actually increase regulatory certainty if the requirement applied equally to all of the company’s customers.

Commission’s analysis and determinations

  1. Under section 50 of the Act, the Commission has the discretionary power to extend timelines established, for instance, by regulation or in a Commission decision. Under section 60 of the Act, the Commission may grant any portion of the relief an applicant has applied for, or may grant alternative relief as if the applicant had applied for it.
  2. The Commission considers that it would be appropriate to exercise its discretion in this instance to grant TCI a four-month extension of time, from the date of the present decision, to implement the pro-rated refund rule set out in Telecom Decision 2016-171.
  3. Such an extension would serve as an acknowledgement of the previously identified irregularities associated with Telecom Decision 2016-171 and of the necessity for TCI to introduce certain internal changes to implement this requirement. However, the company has not fully justified the six-month length of the requested extension, especially considering that it ought to have been evident to TCI, as a result of events that have taken place since the 2014 correspondence, that such changes might become necessary. TCI did not explain why it could not at least have begun to take some measures to prepare accordingly.
  4. With respect to TCI’s request that existing contracts be grandfathered, the Commission does not consider that this would be appropriate.
  5. If existing contracts were grandfathered, then customers on such contracts would be placed at a disadvantage, in terms of their ability to take advantage of competitive offers in the market, compared to others with whom they would otherwise be similarly situated. The Commission considers that a uniform requirement for all contracts would result in greater certainty, and serve to reduce confusion in the market. It would also be simpler to administer. Most significantly, grandfathering existing contracts would deprive those customers of a protection that the Commission has already determined to be necessary to fulfill the policy objectives set out in section 7 of the Act.
  6. Based on the above, the Commission denies TCI’s request to grandfather existing contracts. Accordingly, the requirement to provide refunds, pro-rated on the basis of days remaining in a billing cycle, shall apply to all contracts, existing and new, after the expiry of the four-month extension granted above.
  7. Given the circumstances and the record before the Commission in this case, the Commission considers that it would not be appropriate to broaden the scope of the relief beyond the applicant, namely TCI.
  8. In order to ensure that there is no potential for ambiguity going forward with respect to non-forborne services, the Commission directs TCI to file a tariff notice for approval that would amend its General Tariff’s Terms of Service in order to implement the Commission’s 30-day cancellation policy rules, including the pro-rated refund requirement, within 30 days of the date of this decision.
  9. With the above determinations in mind, the Commission reminds other providers of non-forborne local voice services that they are similarly required to implement these rules through the Commission’s well-established tariff procedures, if they have not done so already.
  10. Finally, the Commission reminds all service providers that, as stated in previous determinations, the Commission’s 30-day cancellation policy prohibitions are to be read consistently with one another.

Secretary General

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