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ARCHIVED - Telecom Order CRTC 2004-105

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Telecom Order CRTC 2004-105

  Ottawa, 31 March 2004
 

Northwestel Inc.

  Reference: Tariff Notice 779
 

Late payment charges

1.

The Commission received an application by Northwestel Inc. (Northwestel), dated 22 November 2002, to revise item 104 of its General Tariff relating to late payment charges. Northwestel proposed revisions to remove the reference to charging late payment fees only on delinquent accounts that exceed $50.00 and to clarify that the late payment charges apply to charges for telephone services, equipment and facilities.

2.

Northwestel sent a letter to its customers in January 2003 informing them of the application.

3.

The Commission received comments from John Kostiuk dated 23 February 2003, Joy Herman dated 25 February 2003, Melinda Tatty dated 26 February 2003, Carol Currie dated 26 February 2003, Brian Laird dated 27 February 2003, Kalman Strauss dated 3 March 2003, Martin Haefele dated 4 March 2003, Karen Jackman dated 6 March 2003, Marcella Nowatzki dated 2 April 2003, Gilles Paquin dated 3 April 2003, and Dita dated 14 April 2003.

4.

The Commission notes that Northwestel replied to some individual customers and provided a copy of these letters to the Commission.

5.

On 28 October 2003, Commission staff sent interrogatories to Northwestel. Northwestel filed its responses on 14 November 2003.
 

The application

6.

Northwestel submitted that removing the minimum overdue amount for late payment charges might encourage more customers to pay their bills on time or to use automated payment methods, which would reduce administrative costs for the company.

7.

Northwestel noted that over 80% of late payments were incurred in its two largest centres. Northwestel also noted that a significant proportion of existing late payment charges were incurred by customers that paid later than the due date several times during a 12-month period. Northwestel submitted that the administrative, labour and debt-carrying costs it incurred due to late payments should be borne by all customers who failed to make their payments by the prescribed due date, rather than the entire subscriber base.

8.

Northwestel submitted that the general tariffs for other incumbent local exchange carriers had either no minimum amount or had amounts much lower than the current minimum amount for Northwestel.

9.

Northwestel stated that it recognized that there were remote communities in its operating area and that it allowed for 37 days before the applying late payment charges in contrast to the industry standard of 30 days.
 

Comments

10.

A number of the customers raised concerns regarding the amount of time they had to pay their bills. These customers indicated that their telephone bills often arrived only a few days before or after the due date stated on the bill.

11.

Kalman Strauss submitted that he usually received bills just days before the due date, noting that it often took at least two weeks for letters from Whitehorse to reach Iqaluit. Melinda Tatty submitted that on many occasions bills had arrived past the due date. Gilles Paquin submitted that at least once a year he received his monthly bill late or not at all, and that Northwestel should not charge late payment fees until it could consistently deliver bills on a timely basis. Martin Haefele submitted that although he usually paid his bill using telephone banking within one or two days of receiving it in the mail, his payments were received late on a regular basis. John Kostiuk suggested that Northwestel should extend the due date to one month from the date of the bill and that it should mail bills two days after invoicing.
 

Northwestel's response

12.

In response to customer comments, Northwestel stated that the due date was approximately 21 days after the bill date, but late payment charges were not applied until 37 days after the bill date. Northwestel indicated that various payment options were available to customers that could accelerate the payment process. Northwestel stated that if, for any reason, it sent out an invoice later than the scheduled time, it waived the late payment charges.

13.

In response to interrogatories, Northwestel submitted that 37 days from the bill date was a reasonable time to start applying late payment charges given that:
  a) in remote communities mail was normally delivered 14 days after the bill date, which left 23 days before late payment charges were applied. Northwestel submitted that, on average, it mailed bills four days after the bill date and mail to remote areas took approximately 10 days to arrive. Northwestel stated that the Canada Postal Guide indicated that the maximum time between the mailing date for mail from Vancouver and the date that the bill is received in remote areas was 19 days;
  b) a number of payment options were available that could accelerate the payment process, such as online banking, telephone banking, pre-authorized payments, and credit card payments;
  c) customers could get their account balances at any time by calling Northwestel's customer service representatives;
  d) customers remained on the same billing cycle, so their bills always came out at the same time every month, with the exception of holidays and weekends;
  e) applying late payment charges at different times for customers in remote communities and larger communities would be confusing to customers and costly for the company to administer; and
  f) other telephone companies serving remote communities, including MTS Communications Inc., Saskatchewan Telecommunications (SaskTel) and Aliant Telecom Inc., allowed only 30 days before late payment charges applied.

14.

Northwestel stated that even though it did not indicate on its bills the date on which it starts to levy interest charges, customers could find this information in the additional information section of the telephone directory and in its General Tariff.
 

Commission analysis and determination

15.

The Commission notes that the Canada Postal Guide indicates that mail to remote communities in Northwestel's operating territory takes a maximum of 19 days to arrive. The Commission also notes Northwestel's submission that it mails out bills, on average, four days after the bill date.

16.

The Commission is of the view that certain customers in remote areas may encounter situations in which it would be impossible to ensure that payments mailed to Northwestel would be received within 37 days. For example, in situations where the mail takes 19 days to arrive, customers would, on average, receive their bills 23 days after the bill date and would have to ensure that Northwestel receives payment within 14 days in order to avoid late payment charges. Such customers may not be able to avoid late payment charges should they choose to mail their payments to Northwestel, given the maximum 19-day delivery time.

17.

The Commission notes that SaskTel, Bell Canada, and TELUS Communications Inc. do not have a minimum overdue amount for late payment charges. The Commission considers that it would be reasonable to eliminate the minimum overdue amount as requested by Northwestel only if customers are given reasonable time to make payments.

18.

Based on the maximum delivery time of 19 days for rural areas, as set out in the Canada Postal Guide, the Commission considers that 45 days after the bill date would provide sufficient time for customers to receive their bills and return their payments to Northwestel.

19.

In light of the above, the Commission approves Tariff Notice 779 on the condition that Northwestel revise its tariff in order to increase the amount of time before late payment charges apply from 37 days to 45 days from the date of the bill.

20.

Further, the Commission considers that certain customers may be under the impression that late payment charges are applied starting from the due date because Northwestel's bills do not indicate when the late payment charges begin to apply. The Commission is of the view that for clarification, Northwestel should add a statement to its bills indicating when late payment charges start to apply, as well as the amount of such charges.

21.

The Commission directs Northwestel to add the following statement to its bills, changing the amount of the charge as necessary when interest rates fluctuate in order to be consistent with its tariff: "A late payment charge of 1.00% monthly (12.68% per annum) is applied when payment has not been received by the Company within 45 days after the date of the statement of account." The Commission further directs that the reference to 45 days should be changed to 37 days in the event that Northwestel chooses not to meet the condition as determined above.
  Secretary General
  This document is available in alternative format upon request and may also be examined at the following Internet site: http://www.crtc.gc.ca

Date Modified: 2004-03-31

Date modified: