Telecom Commission Letter Addressed to Distribution List

Ottawa, 28 October 2016

Our reference: 8638-T66-201607433

BY EMAIL

To: Distribution list

Re: Telus Part 1 Application – Clarification of Decision 2016-171 (Cancellation Policies) – Requests for Information

Dear Mr. Woodhead,

In its part 1 application, Telus requested that the Commission clarify certain aspects of Decision 2016-171, Quebecor Media Inc. - Prohibition of 30-day cancellation policies - Application regarding pro-rated refunds for cancelled services. To assist the Commission in its consideration of the issues raised in Telus’ application, Commission staff requests that Telus respond to the attached questions as set out below in Appendix 1.

Telus’ responses to these questions are to be filed no later than 14 November 2016. Parties may comment on only any new information raised in Telus’ responses no later than 24 November 2016. Telus may reply to these further comments no later than 5 December 2016. All documents must be received, not merely sent, by the dates specified above. To facilitate accessibility and administrative processing, responses should be provided in a single document.

A copy of this letter and all related correspondence will be added to the public record of the proceeding. Parties that wish to designate some or all of their answers as confidential must do so in accordance with the CRTC Rules of Practice and Procedure:

Sincerely,                                                                 

[Original Signed By]

Nanao Kachi
Director
Social and Consumer Policy
Consumer Affairs and Strategic Policy

Enclosures


Distribution List

Telus : ted.woodhead@telus.com
Bell Canada : bell.regulatory@bell.ca
Québecor Media : dennis.beland@quebecor.com
Public Interest Advocacy Centre : gwhite@piac.ca
Canadian Network Operators Consortium: regulatory@cnoc.ca


Appendix 1: Questions for Telus

In Quebecor Media Inc. - Prohibition of 30-day cancellation policies - Application regarding pro-rated refunds for cancelled services (CRTC Telecom Decision 2016-171), the Commission ruled on part 1 application filed by Québecor seeking clarification on how the Commission’s 30-Day Cancellation PoliciesFootnote 1 apply to customer refunds for cancelled services. The Commission made the following determinations in paragraphs 15-17 of that decision:

“15. Under some service providers’ current billing approaches, the bills that a customer receives may be composed of regular monthly charges for the upcoming month and incurred overage charges from the previous month. As a result, a customer who cancels service in the middle of a billing cycle may have already paid the regular monthly charges for that month in their previous monthly bill. If a pro-rated refund is not provided, the customer could end up making a payment to its new service provider and to its former service provider for a period for which only the new provider provided service.
16. Although neither the Wireless Code nor the 30-day cancellation policy explicitly addresses refunds for cancelled services, the practice of consumers paying for both the cancelled service and the new service is counter to the objectives set out in subparagraph 3(1)(t)(ii) of the Broadcasting Act and paragraphs 7(c), (f), and (h) of the Telecommunications Act.
17. Accordingly, the Commission clarifies that, in line with its prohibitions of 30-day cancellation policies, service providers must not charge for a service that is not, and cannot be, provided following cancellation. Moreover, all service providers must provide refunds for retail wireless, local voice (including VoIP), Internet, and broadcasting distribution 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.”

In its application, Telus is seeking various further clarifications on how and when pro-rated refunds must be provided.

Clarify the scope of Telus’ request related to wireless services

Q1 Telus asked the Commission to clarify that Decision 2016-171 does not apply to “the subsidy component of charges payable for wireless services provided with a subsidized device.”Footnote 2

Telus provided an example to illustrate this request: “If the monthly service plan fee is $70 (which equates to $50 for service + $20 for subsidy recovery) and the customer cancels three days into the month, then a literal interpretation of the Decision requires that the service provider reimburse $70 x (27 days ÷ 30 days) = $63. Of the $7 retained by the service provider, $5 relates to service $50 - ($50 x 27 days ÷ 30 days), leaving only $2 to apply to recovery of the subsidy - a shortfall of $18. While $20 per month will be repayable by the client in respect of the device subsidy for any remaining full months of the contract, a literal interpretation of the Decision would mean that $18 of the subsidy for the month of cancellation would not be recoverable.” (Emphasis added).Footnote 3

Telus further explained that “Specifically, TELUS requests that the Commission clarify that, if a subsidized device has been provided to a customer as part of a wireless service contract, when that customer cancels service during a month, the monthly service fee would be reduced by an amount that would be pro-rated to reflect the number of days for which the customer received service during that month but without regard to any outstanding subsidy. Therefore, a customer that cancelled service on the 3rd day of the month would be required to contribute $20, not $2, to subsidy recovery. In other words, a service provider who had billed $70 would retain $5 for the service and $20 for the device for a total of $25.00 and would refund an amount of $45.00.” (Emphasis added)Footnote 4

There is no requirement in the Wireless Code that a service provider indicate in a customer’s contract or bill statements what amount, if any, of their monthly service fee is allocated to “subsidy recovery.”

Certain service providers on the record of the Wireless Code proceeding argued that no amount or percentage of their monthly service fees is allocated specifically to “subsidy recovery.”

Q1 (a)  Do all of Telus’ postpaid wireless contracts and bills – including those for fixed term, indeterminate term, and tab services – clearly indicate what amount or percentage of the customer’s monthly service fee is allocated to “subsidy recovery?” Provide an example of a contract and bill and indicate where a customer would find this information.

Q1 (b)  Under Telus’ proposal, how would a customer with a contract that includes a device subsidy whose bill and contract do not indicate a specific monthly fee for “subsidy recovery” calculate the refund they are entitled to receive pursuant to Decision 2016-171?

Q1 (c)  Explain whether Telus considers that the “amount that the early cancellation fee decreases by each month,” which is a key term of a wireless customer’s contract, is equivalent to the monthly “subsidy recovery” fee.

Q1 (d) Under Telus’ proposal, how should refunds be calculated for customers with tab contracts, given that the amount by which the early cancellation fee decreases by each month may vary? In your answer, provide the formula Telus proposes be used for customers where the tab decreases each month by (i) a percentage of the customer’s bill and (ii) a variable amount exceeding the minimum monthly early cancellation fee reduction.

Q1 (e)  Given that Telus is arguing that, for its customers with contracts that include a subsidized device, a specific portion of the customer’s monthly bill is allocated to subsidy recovery, explain whether Telus automatically reduces the customer’s bill by this amount once the subsidy has been fully recovered (i.e. when the customer is no longer subject to an early cancellation fee). Explain why or why not, with supporting rationale.

Q2 Explain, with supporting rationale, whether Telus considers that to ensure clarity to consumers in determining the amount of the refund they are entitled to for wireless services, the Commission should require all wireless service providers to indicate on a going forward basis what amount or percentage of a customer’s monthly fees are allocated to “subsidy recovery” in the customer’s contracts and monthly billing statements.

Clarify the scope of Telus’ request related to usage-based services

Q3 In Telus’ application, Telus requested that the Commission confirm that the requirement to provide pro-rated refunds do not apply to “usage-based services.” In this regard Telus states that a “pro-rata time-based refund rule has no logical application in a case where the service is being provided on the basis of usage, not time”Footnote 5 and that “usage-based services, which are mainly data-based services, should not be subject to proration.”Footnote 6

Provide an exhaustive list of the services that Telus considers to be “usage-based.” This must include all the services that Telus is requesting the Commission clarify are out of scope of the refund requirement clarified in Decision 2016-171 on the basis that they are “usage-based.”

Q4 Explain, with supporting rationale, what Telus considers to be the essential distinction(s) between “usage-based” and “non-usage based” services. In your answer, explain Telus’ view on whether or not both “usage-based” and “non-usage based” services provide:

Q5 Explain, with supporting rationale, whether Telus considers services sold as unlimited to be “usage-based” or not. In your answer, explain whether Telus considers the following to be “usage-based”:

Q6 Under Telus’ proposal, if a customer who pays $70 a month for a “usage-based” service seeks to cancel mid-month, and had only used 10% of their allotted usage, would they be entitled to a pro-rated refund? If so, explain what refund the customer would receive and how it would be calculated. If not, explain why not.

Q7 Many customers receive bundled bills for multiple communications services. A single bill may include a mix of “usage-based” and “non-usage-based” services, pursuant to Telus’ definition. Explain how a customer would determine what refund they were entitled to if they cancelled mid-month for a mix of “usage-based” and “non-usage-based” services. Provide several concrete examples to demonstrate the approach Telus is proposing.

Clarify the scope of Telus’ request related to the implementation of the refund requirement

Q8 Under Telus’ proposal, when would current customers with pre-existing contracts become eligible for refunds? Explain whether Telus considers that they would only become eligible for refunds when they signed a new contract as of 6 months from the date that the Commission publishes its decision in response to this part 1 application or if there are any other circumstances (e.g. contract amendments following that date) that would make them eligible for refunds.

Q9 Does Telus consider that customers who had received refunds since the publication of Decision 2016-171 should be required to return the amount of the refund to their previous carrier, with which they no longer have a contract?

Q10 Does Telus consider that it is faced with unique barriers, in comparison to other TSPs, that would make it technically impossible or financially unreasonable for it to implement the refund requirement in Decision 2016-171 at this time? If so, provide detailed evidence of these unique barriers and how the burden Telus faces is exceptionally unreasonable.

Q11 If the Commission were to not provide the clarifications requested by Telus, provide the amount that Telus has identified as owing to each of the following categories of customers – local voice services; wireless services; Internet services, and BDU services – in refunds for services not provided following cancellation using the prorated refund model set out in Decision 2016-171.

Footnotes

Footnote 1

The Wireless Code (CRTC Regulatory Policy 2013-271), the 30-Day Cancellation Policy (CRTC Regulatory Policy 2014-576), and the Amendments to the Broadcasting Distribution Regulations Prohibiting 30-Day Cancellation Policies (CRTC Regulatory Policy 2015-495) (Collectively, the CRTC’s 30-Day Cancellation Policies).

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Footnote 2

Paragraph 58 of Telus’ application.

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Footnote 3

Paragraph 16 of Telus’ application.

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Footnote 4

Paragraph 21 of Telus’ application.

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Footnote 5

Paragraph 24 of Telus’ application.

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Footnote 6

Paragraph 26 of Telus’ application.

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