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Telecom - Commission Letter addressed to Stephen Schmidt (Telecom Policy and Regulatory Affairs)

Ottawa, 15 July 2022

Our reference: 1011-NOC2022-0100

BY EMAIL

Stephen Schmidt 
Vice-President – Telecom Policy & Chief Regulatory Legal Counsel
Telecom Policy and Regulatory Affairs
regulatory.affairs@telus.com

Subject: Preliminary Request - Telecom Notice of Consultation 2022-100 - Show Cause proceeding and call for comments – The Wireless Code – Manufacturer’s Suggested Retail Price (MSRP)

Stephen Schmidt,

This letter is in response to a preliminary matter raised by TELUS Communications Inc. (TELUS) as part of its intervention filed on 20 April 2022 in relation to Telecom Notice of Consultation CRTC 2022-100 (TNC 2022-100).

In TNC 2022-100, the Commission expressed a preliminary view that the regular (i.e., non-sale) price of a wireless mobile device as published by the original equipment manufacturer is to be considered the de facto MSRP for the purpose of Section G. of the Wireless Code. This section of the Wireless Code addresses contract cancellation and extension, and the only reference to a MSRP is in the subsection addressing the methodology for calculating the early cancellation fee. As such, the purpose of this proceeding is to address what is to be considered a MSRP for the purposes of calculating the applicable early cancellation fee under the Wireless Code.

In its intervention, TELUS submitted that by issuing its preliminary view and by issuing the Notice as a Show Cause proceeding, the Commission had predetermined its analysis and conclusions for this matter.

TELUS pointed specifically to the following sections of TNC 2022-100 in support of its position:
“16. Because neither the MSRP nor the price set by the wireless service provider (WSP) for the device without a contract appears to provide a reliable metric upon which WSPs could calculate ECFs, the Commission considers that Section G.2.ii.b) of the Wireless Code is ambiguous and requires clarification. Accordingly, the Commission does not consider it appropriate at this time to assess whether Bell, RCCI, or TELUS are in non-compliance with that provision of Wireless Code.
[...]
20. On a preliminary basis, the Commission considers Quebecor’s interpretation of the term “manufacturer’s suggested retail price”, namely that the price at which an OEM sells its own devices at the retail level becomes the de facto MSRP, is consistent with the objectives of the Wireless Code. Moreover, the current practices of WSPs in this regard, whether or not they are technically in non-compliance with the Wireless Code, appear to be frustrating the Code’s objectives.

21. The Commission therefore considers that Section G. of the Wireless Code requires clarification.

22. The Commission is of the preliminary view that the regular (i.e., non-sale) price for a wireless mobile device as published by the OEM is to be considered the de facto MSRP for the purpose of Section G. of the Wireless Code.” (emphasis added)

TELUS argued that paragraph 20 demonstrates that the Commission has prejudged TELUS’ practices as having frustrated the objectives of the Wireless Code without first having heard any evidence from TELUS.

TELUS expressed further concerns that the Commission framed TNC 2022-100 as a Show Cause proceeding, stating that it is inappropriate and incorrect that TELUS should bear the burden of proof in this proceeding to show cause why the Commission should not act on the basis of Quebecor Media Inc.’s (Quebecor) complaint. It submitted that the Commission indicated, in its last formal Wireless Code review, that Show Cause proceedings are reserved for “more problematic cases of non-compliance”.Footnote1 It stated that by initiating a show cause proceeding, the Commission has admitted to prejudging TELUS’ practice as a “problematic case of non-compliance”.

TELUS stated that the Commission’s pre-judgment is amplified by the short timeframe the Commission provided for comments, which consisted of a 15-day intervention period followed by a 5-day reply period.

TELUS relied on Majithia v Residential Tenancy BranchFootnote2 (Majithia), a judicial review undertaken by the Supreme Court of British Columbia in which Justice Edelmann determined that the director of the Residential Tenancy Branch had “already formed strong views and conclusions about the very issues he would be called upon to decide.” TELUS claims that the Commission has done the same with respect to TNC 2022-100 – that is, formed pre-judged conclusions    regarding TELUS’ business practices without having provided TELUS and others an opportunity to comment.

TELUS submitted that instead of commencing a show cause proceeding, the Commission should have either commenced a Notice of Consultation without its preliminary view, or asked Québecor to re-file their complaint as a Part 1 Application. It requests that the Commission re-issue TNC 2022-100 without its preliminary view and without being framed as a Show-Cause proceeding. TELUS also provided full submissions in response to TNC 2022-100, in the alternative.

Commission analysis

It is the responsibility of the party alleging disqualifying bias to establish that there is a prejudgment of the matter, in fact, to the extent that any representations at variance with the adopted view would be futile.Footnote3 The Commission does not consider that TELUS has established such prejudgment, as set out below.

Use of a show cause proceeding

TELUS submitted that the Commission’s decision to frame TNC 2022-100 as a Show Cause proceeding is evidence of its prejudgment of the matter. TELUS cited the 2017 Wireless Code Review, where the Commission stated:

“With regard to compliance, the Commission considers that there is value in conducting ongoing compliance monitoring, over and above the implementation reports WSPs are already required to submit. Ongoing compliance monitoring allows the Commission to assess whether there are any systemic issues with WSPs’ interpretation and implementation of the Code, and to ensure that WSPs are consistently applying the Code. It also offers WSPs an opportunity to flag and promptly address any issues; for more problematic cases of non-compliance, the Commission may conduct a show cause proceeding.”Footnote4[emphasis added]

The Commission considers that the fact that it chose to highlight that it may conduct a show cause proceeding for problematic cases of non-compliance does not prevent it from conducting a show cause proceeding in other circumstances. Indeed, the Commission specifically stated in TNC 2022-100 that “the Commission considers that Section G.2.ii.b) of the Wireless Code is ambiguous and requires clarification. Accordingly, the Commission does not consider it  appropriate at this time to assess whether Bell, RCCI, or TELUS are in non-compliance with that provision of Wireless Code.” (emphasis added). The Commission considers that this statement is sufficient to indicate that TNC 2022-100 is seeking clarification of the Wireless Code rather than assessing compliance.

The Commission has utilized Show Cause proceedings for a wide variety of issues in the past, with a recent applicable example being Telecom Notice of Consultation CRTC 2019-309 – Show Cause proceeding and call for comments – the Wireless Code – Device financing plans. That Notice, much like TNC 2022-100, sought to clarify certain elements of the Wireless Code, with the Commission calling for comments on its preliminary view related to the applicability of the Wireless Code to certain device financing plans.

The Commission chose to launch TNC 2022-100 as a Show Cause proceeding because it considered that the ambiguity around the interpretation of the term “MSRP” could be a systemic and widespread issue, impacting every customer who is subject to such an early cancellation fee.

The Commission did, however, acknowledge that the actions of WSPs as described in the letter exchange added to the record of TNC 2022-100 appear to be problematic under the Wireless Code, stating “the current practices of WSPs in this regard, whether or not they are technically in non-compliance with the Wireless Code, appear to be frustrating the Code’s objectives” (emphasis added). The Commission did not explicitly state in TNC 2022-100 that WSPs business practices were frustrating the objectives of the Code, and notes that this does not lead to a finding of non-compliance. The only determination made by the Commission in TNC 2022-100 is that Section G.2.ii.b) of the Wireless Code is ambiguous and requires clarification.Footnote5

The Commission, therefore, does not consider that the decision to conduct a show cause hearing is evidence of pre-judgment on the issue that TNC 2022-100 seeks to clarify.

Shortened timeframes

With respect to the TELUS’ argument that shortened timeframes indicated that the Commission had prejudged its determination, the Commission notes that all parties are able to request an extension when submitting their views on the record of a public proceeding if they feel that they cannot meet the deadlines set forward by the Commission. Neither TELUS nor any other party did so on the record of TNC 2022-100.

The Commission adopted a shorter comment and reply period for this show cause proceeding since the issue was quite focused and the Commission presented a preliminary view. The Commission does not consider the shortened timeframes to be indicative of prejudgment, and  further notes that WSPs had already provided responses to Quebecor’s initial letter and had therefore already considered the issues in question.

Reliance on Majithia v Residential Tenancy Board 2021 BCSC 737 (Majithia)

The Commission has reviewed Majithia and is of the view that the facts that gave rise to the allegation of prejudgment are markedly different than the facts at hand.

In Majithia, the decision maker made findings of fact prior to receiving submissions, used language such as “I have determined” and upon advising the party that it had the right to make submissions, clarified that “these submissions should relate to your repeated failure to comply with the Act…”.

Unlike the case of Majithia, the Commission did not make any findings of fact in TNC 2022-100, and did not make a finding that TELUS or any other WSP was in non-compliance with the Wireless Code or any other regulation. The Commission set forth a preliminary view and indicated that the policy required clarification. The Commission specifically noted it would be inappropriate to assess WSPs’ compliance with the Wireless Code due to ambiguity around the term “MSRP”, and did not attempt to do so. Accordingly, the Commission does not consider that this case furthers TELUS submissions as it is distinguishable on its facts.

Commission Determination

In light of the above, the Commission considers that it has not indicated that representations on this matter would be futile, and that the Commission has used language in the Show Cause proceeding indicating that while it has a preliminary view, it is open to submissions and has not predetermined the outcome of the proceeding. 

Accordingly, the Commission denies TELUS’ request that the Commission re-issue TNC 2022-100 without its preliminary view and without being framed as a Show-Cause proceeding.

As noted above, the Commission continues to have an open mind with respect to TNC 2022-100 and will rely on the evidence put forward on the record of that proceeding to make its determinations.

Yours sincerely, 

Claude Doucet 
Secretary General

c.c.:  Kelsey.Evaniew@ccts-cprst.ca;
regulatory.matters@corp.eastlink.ca;
regulatory@rci.rogers.com;
ysai@piac.ca;
bell.regulatory@bell.ca;
jfmezei@vaxination.ca;
regaffairs@quebecor.com;

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