Communications Monitoring Report 2017: Canada’s Communication System: An Overview for Canadians

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2.0 Canada’s Communication System: An Overview for Canadians

The CRTC continues to strengthen its efforts to place Canadians at the centre of the communication system, whether as consumers of communications products and services; creators and distributors of content; or citizens who need access to information, products, and services to fully engage in a democratic society. This section focuses on Canadians’ use of communications services, competitive prices, household expenditures, and access to communications services.^{Footnote 1} This year, this section also provides additional analysis of the wireless service industry and its regulation.

In 2015, household expenditures on Internet services and wireless services grew by 9.63% and 5.54%, respectively, over the previous year, while expenditures on wireline telephone services and broadcasting distribution services decreased by 9.5% and 3.3%, respectively, over the same period.

While average household expenditures on wireless services represent the largest expenditures on communications services, expenditures on Internet services have been increasing by 7.7% per year on average from 2011 to 2015, representing the fastest-growing expenditures category for households.

In 2015, Canadian households spent an average of $218.42 per month for their communications services, an increase of $3.67 (or 1.7%) from 2014. The average annual inflation rate in Canada was 1.1% in 2015 according to Statistics Canada.

In 2015, Canadian households continued to spend more per month on wireless services ($87.25) and BDU services ($54.50) compared to Internet services ($46.50) and wireline telephone services ($30.17).

In 2015, average communications service expenditures as a percentage of average household annual income decreased slightly from 3.0% to 2.9%. However, households in the first and second income quintiles^{Footnote 2} spent, on average, 8.6% and 5.0% of their average annual incomes on communications services.

The percentage of Canadian households subscribing exclusively to wireless services reached 27.5% in 2015.

First- and second-income-quintile households still lead in the wireless-service-only category with 35% and 30.4%, respectively. However, an increasing number of households in the fifth income quintile are forgoing wireline telephone services in favour of relying solely on wireless telephone services.

In 2015, 18.8% of households in the fifth and highest income quintile were wireless only households, compared to 11.5% in 2014, an increase of over 60%.

i) Industry landscape and competition

Canada’s communication system is composed of two broad sectors: broadcasting and telecommunications. In 2016, total communications service revenues increased by 1.4% since 2015. However, this overall growth masks important divergences across individual types of services. While detailed financial information can be found in separate sections of this report, this section presents an overview of industry revenues and the competitive landscape in the broadcasting and telecommunications industries.

Telecommunications services remain dominant

In 2016, revenues from telecommunications services continued to represent approximately 73% of all communications service revenues, with broadcasting service revenues representing the remaining 27%. This speaks in part to the scale of revenues from mobile wireless services, which accounted for nearly half of all telecommunications service revenues. Indeed, mobile wireless services alone generated more revenues than the entire broadcasting sector.

As noted above, more Canadians now subscribe exclusively to mobile wireless services than to wireline telephone services. This reflects financial data trends that demonstrate relatively consistent mobile service revenue growth.

A similar phenomenon – one in which certain services drive overall sector growth while other services remain flat or shrink – has emerged across multiple subsectors of the communication system. Services introduced in the early-to-mid-20th century, including wireline voice services, conventional television services, and radio services continue to be widely used by many Canadians. However, these services’ revenues have not grown at the same pace as those of newer services; in many cases, they have even declined.

A concentrated market

The competitive landscape in the communication system as a whole remains mostly unchanged from last year. Large vertically and horizontally integrated entities hold dominant market positions. As Figure 2.0.1 indicates, the top five broadcasting and telecommunications groups/entities (Bell Canada, Quebecor, Rogers, TELUS, and Shaw/Corus) together accounted for approximately 83% of total industry revenues in 2016, a slight increase compared to 2014 and 2015 data.

Figure 2.0.1 Percentage of total combined revenues, by broadcasting and telecommunications ownership groups

Bundling

Market concentration plays a role in the rise of bundling, since the largest entities are well positioned to offer their customers discounts in exchange for subscribing to a range of services. The table below shows the number of subscriptions to two or more services with one company. From 2012 to 2013, the number of subscriptions to bundled services increased from 10.0 million to 10.4 million. Following a stagnation in the number of bundled service subscriptions from 2013 to 2014, bundled service subscriptions decreased for two subsequent years. In 2016, bundled service subscriptions were lower than what they were almost 4 years earlier, which shows that the market might have reached its saturation point in 2014.

ii) Communications service expenditures and prices

The amounts that Canadian households spend on communications services provide an important perspective on how communications services impact the household budget. These data also point, to a certain extent, to national shifts in demand and the competitive landscape.

However, it is important to recognize the limitations of expenditure data. First, the data may overlook the fact that certain free services, such as over-the-air television and radio services, remain valuable to Canadians. Second, the average expenditure amount takes into account all households, including those that do not subscribe to one or more services. As a result, expenditures by households that purchase services may appear lower or higher than they actually are.

Spending on communications services continues to rise^{Footnote 4}

Throughout 2015, the average Canadian household spent $218.42 per month on communications services, an increase of $3.67 (1.71%) from 2014. Similar to 2014, Internet services and mobile wireless services drove household expenditure growth and telecommunications industry revenues.

In 2015, expenditures on Internet services took the lead in terms of growth (9.6%), followed by expenditures on mobile wireless services (5.5%). These increases reflect the observed trends in subscriptions to higher Internet speeds and to mobile plans with more data.

While there is considerable variance between the average amounts spent by Canadians in each income quintile, households tended to devote a larger amount of their communications service budget to either mobile wireless services or cable IPTV services and DTH satellite services. However, spending on cable, IPTV, and DTH services decreased across all income quintiles between 2014 and 2015. Household wireline telephone service expenditures also decreased across all income quintiles, although at a faster pace than expenditures on cable, IPTV, and DTH services.

On average, household spending on BDU services decreased by 3.25% from 2014 to 2015, while average household spending on wireline telephone services decreased by 9.5% during the same period. In both cases, spending decreased across all income quintiles, although the decrease in expenditures was the least pronounced in households in the first income quintile, while expenditures by households in the fourth income quintile decreased the most.

Similar to previous years, household spending on mobile wireless, Internet, and overall communications services continued to grow in 2015. Household spending on wireline telephone services and Internet services fluctuated the most from 2014 to 2015: spending on wireline telephone services decreased 9.5% and spending on Internet services increased 9.6%.

Overall, households spent the most on mobile wireless services ($87.25). On average, for all income quintiles, spending on wireline services declined from 2011 to 2015 at a compound annual growth rate (CAGR) of -6.9%. However, average expenditures on Internet services for all income quintiles show the largest growth (9.63%) between 2014 and 2015, and the strongest 2011 to 2015 CAGR (7.68%).

Although average household spending on communications services increased 1.71% between 2014 and 2015, households in the highest income quintiles spent more on communications services than those in the lower quintiles. This is reflected in the total growth of expenditures in each income quintile. Expenditures by households in the first income quintile stayed somewhat stable between 2014 and 2015, showing only a slight decrease (-0.18%), while expenditures by households in the fifth income quintile increased the most (3.53%).

Even though spending on communications services by lower-income households was less than that by higher-income households, as shown in Table 2.0.3, expenditures on communications services take up a significantly larger percentage of their annual incomes – as Table 2.0.4 shows.

Based on Statistics Canada’s Survey of Household Spending, the average annual household income before taxes in Canada in 2015 was $88,867. The Canadian provincial average annual household income before taxes ranged from $71,436 to $127,859. Alberta had the highest average ($127,859), followed by Saskatchewan ($94,007). From 2014 to 2015, the average annual household income increased for each income quintile except for the first quintile, which decreased $261 from $19,664 to $19,403.

Between 2014 and 2015, the average number of members per household remained constant. However, the average annual household income increased by 2.9%, while expenditures on communications services increased by 1.7%, resulting in a decrease in expenditures on communications services as a percentage of annual household income, from 3.0% in 2014 to 2.9% in 2015.

Figure 2.0.2 Monthly household expenditures, by service and by age of reference person ($/month/household), 2015

In 2015, persons in all age groups except those aged 65 years and over spent the least on wireline telephone services. Persons in all age groups, excluding those aged 65 years and over, also spent the most on mobile wireless services. Persons under 30 years of age spent the most on mobile wireless services ($112.75 per month), which is more than 12 times the amount they spent, on average, on landline telephone services ($8.92 per month). Persons aged 40 to 54 spent the most on communications services ($252.42 per month), while persons aged 65 years and over spent the least ($172.58 per month).

A true generation gap is demonstrated in the amount spent on communications services between persons aged less than 30 years and persons aged 65 years and over, since the youngest generation tends to spend more on communications services, specifically on mobile wireless services ($112.75 per month). However, although members of the eldest generation spent the least on communications services, they spent the most on wireline telephone services ($41.83 per month).

Figure 2.0.2 demonstrates the difference in importance of a service for persons in different age groups through the amount spent per service. For instance, persons under 30 years of age spent the least on wireline telephone services ($8.92), whereas persons 65 years and over spent almost four times that amount ($41.83).

Price indices

Price indices offer a perspective on the extent to which prices for a basket of goods and services change over time. Figure 2.0.3 shows the price changes for fixed baskets of telecommunications services (telephone and Internet services), and BDU services (cable, DTH satellite, and IPTV services), as well as overall price changes as measured by the Consumer Price Index (CPI). By maintaining a consistent basket of goods and services and comparing prices in the current year to the index reference period (2002), these indices measure price changes accurately.

Figure 2.0.3 Price indices for telephone services, BDU services, and Internet services compared to the CPI

As measured by the CPI, average annual inflation in Canada was 1.4% in 2016. In comparison, from 2015 to 2016, the prices of key communications services changed by -0.3% (telephone services), 4.5% (BDU services), and 0.8% (Internet access services). As shown above, telephone service prices decreased in 2016 for the first time in over 10 years.

Overall, the CPI increased at an average annual rate of 1.6% over the 2006-2016 period, while telephone, Internet, and BDU service prices increased at average annual rates of 2.0%, 2.6%, and 4.3%, respectively, over the same period.

National prices – Urban vs. rural

The following figures present broadband, wireline, and wireless service pricing on a national scale for rural and urban communities to show the price differences between regions and services. More detailed information on wireline telephone service pricing can be found in section 5.2 of the report, details on broadband service pricing can be found in section 5.3, and details on wireless service pricing can be found in section 5.5.

The number at the end of each bar in figures 2.0.4 and 2.0.5 represent the highest price reported. The number of service providers in each province (in both urban and rural communities) is indicated in parentheses. For example, “B.C. broadband (2/3)” means that the number of service providers in the communities in British Columbia included in the survey varied between 2 and 3.

Prices for broadband, basic local wireline, and wireless services were compared in urban and rural communities. Depicted broadband service prices are based on the least expensive service with a 5 Mbps download speed and a 1 Mbps upload speed or greater offered by the service provider. Basic local wireline services include unlimited calling within a specified geographic area, 9-1-1 services, message relay services, and access to long distance services. Figure 2.0.4 displays the prices of basic local telephone services on a stand-alone basis in a number of rural communities. Mobile wireless services include 1,200 minutes or greater of voice service, at least 300 SMS, and over 2 GB of data per month, since 81% of subscribers have data plans and used on average 1,570 MB of data per month in 2016.

Figure 2.0.4 Broadband, wireline, and wireless pricing comparison in rural communities, per province/territory, 2016

Broadband in rural communities

The average minimum price is $53.67 per month for broadband services in rural Canada. Ontario has the lowest price for broadband services in rural communities ($24.95 per month) compared to the other provinces/territories. The Northwest Territories have the highest reported price for broadband services in rural communities ($110.95 per month). The variance data was calculated by finding the difference between the minimum and maximum prices in each province/territory. The widest range of prices is in New Brunswick, where prices range from a minimum of $32.99 to a maximum of $88.45 per month, a variance of $55.46.

Basic local wireline in rural communities

The minimum prices for basic local wireline services are relatively the same among the provinces/territories, with an average of $31.05 per month. The lowest price, $25.36 per month, is found in Newfoundland and Labrador. Similar to last year, Ontario has the highest maximum price of $37.99 per month.

Wireless in rural communities

The lowest reported price for wireless services in rural communities is approximately $55.71 per month on average. Once again, Quebec has the lowest price at $40.00 per month. Most provinces and territories (Nunavut, the Northwest Territories, Yukon, Manitoba, Saskatchewan, Alberta, and British Columbia) have the same maximum price of $85.00 per month. British Columbia has the highest variance at $40.00.

Overall, prices in rural communities are highest for broadband services, with wireless service pricing not too far behind.

Figure 2.0.5 Broadband, wireline, and wireless service pricing comparison in urban communities, per province/territory, 2016

Broadband in urban communities

The highest price reported across all provinces/territories is $88.95 per month for broadband services. In most provinces, the lowest reported price for broadband services is $25.00, as seen in Figure 2.0.5. The widest range ($55.96) is seen in Newfoundland and Labrador and in New Brunswick, where broadband service prices range from $32.99 to $88.95 per month.

Basic local wireline in urban communities

There is little variance in basic local wireline service prices in urban communities. The average maximum price for these services in urban communities is $34.73 per month. The highest price is $39.95 per month in British Columbia, Yukon, the Northwest Territories, and Nunavut, and the lowest price is $22.37 per month in Saskatchewan. The highest variance is in Ontario ($10.00), which demonstrates that most basic local wireline service users in urban communities across the country pay approximately the same amount each month and are not subject to widely varying prices.

Wireless in urban communities

The average maximum wireless service price in urban communities is $69.48 per month. British Columbia, Alberta, and Ontario all have the lowest price of $37.70 per month. Wireless service prices in urban communities in the North reach a reported price of $85.00 per month, the highest reported price in Canada, which is the same for wireless service prices in rural communities (see Figure 2.0.4).

Overall, pricing patterns in rural communities are similar to those in urban communities throughout most provinces/territories. However, the variance in prices is much higher in urban communities due to lower minimum prices.

Primary brands vs. flanker brands^{Footnote 5}

An examination of the different prices offered under primary brands and flanker brands gives perspective on how prices vary depending on the brand and region. In this subsection, primary and flanker brand prices are broken down nationally and by province/territory. The analysis is further divided into service baskets to view the magnitude of price differences between service levels.

The division of service levels into baskets is based on consumer use. The baskets help differentiate between available phone and data plans. To analyze what prices service providers have to offer, both flanker and primary brands were considered. Prices were assessed for all provinces/territories and baskets. To assess the pricing of mobile wireless services, the following four baskets were used:

• Basket 1 represents introductory or low-usage types of plans that offer 150 minutes of voice service per month, with no SMS or Internet data service.
• Basket 2 encompasses low- to mid-tier types of plans that provide customers with at least 450 minutes of voice service, 300 SMS, and 1 GB of Internet data per month.
• Basket 3 comprises plans representative of a typical smartphone user that offer at least 1,200 minutes of voice service, 300 SMS, and 2 GB of Internet data per month.
• Basket 4 comprises plans geared towards smartphone users who want access to unlimited voice service and SMS, along with 5 GB of Internet data per month.

Figure 2.0.6 Price differences between primary and flanker brand phone plans, Canada, February 2017

Figure 2.0.6 presents average primary and flanker brand prices, as well as the variation in pricing for each basket across service providers. Data shows that variation in pricing is accentuated in the baskets that comprise more minutes, SMS, and data. As such, basket 1 has the lowest price variation, which indicates that the pricing of services in this basket tends to be consistent across service providers.

Overall, the average advertised price of the studied service baskets is 23% lower under flanker brands compared to primary brands. As demonstrated in Figure 2.0.6, flanker brand average prices lay clearly below primary brand average prices for each basket.

The average incremental cost between basket 2 and 3 wireless services is $11 under primary brands and $9 under flanker brands, while the average incremental cost between basket 3 and 4 wireless services is $18 under primary brands and $24 under flanker brands.

The following two figures show the pricing of the 4 baskets of wireless services studied, by province and territory.

Figure 2.0.7 Primary vs. flanker brand wireless pricing, baskets 1 and 2, by province and territory, February 2017

This chart depicts the pricing of primary brands and their flanker brands for baskets 1 and 2, by province/territory. As observed in the national figures, pricing for basket 1 is somewhat consistent across service providers. However, a gap between the primary brand average price and the flanker brand average price for basket 2 can be observed in most provinces, except Manitoba and Saskatchewan. The average price differences between primary brands and flanker brands are $3.46 and $20.95 for baskets 1 and 2 respectively.

Overall, basket 2 prices offered by primary brands are lowest in Saskatchewan ($40.00) and Manitoba ($40.00). Also in Saskatchewan and Manitoba, the average advertised price of basket 2 was higher under flanker brands than under primary brands.

Figure 2.0.8 Primary vs. flanker brand wireless pricing, baskets 3 and 4, by province and territory, February 2017

This chart depicts the pricing of primary brands and their flanker brands for baskets 3 and 4, by province/territory. There is a notable difference in pricing (i.e. prices are consistently lower than the national average) in Quebec, Manitoba, and Saskatchewan, where regional service providers are present, for baskets 3 and 4. In the other provinces and in the territories, the prices seem to follow a consistent trend. Overall, the flanker brand average prices for basket 4 are only slightly higher than the primary brand prices for basket 3.

The area with the highest average price for basket 4 offered by primary brands is Alberta ($108.33), while the area with the highest average price for basket 4 offered by flanker brands is Yukon ($93.33).

iii) Access and service availability

One of the CRTC’s key goals is to ensure that Canadians have access to a world-class communication system. Achieving this objective requires quality information about the diverse challenges faced by communities across the country. To better understand how the communication system is evolving to help Canadians connect with one another and the world, the rest of this section focuses on the availability of communications services in Canada, with particular regard to official language minority communities and access to communications services in minority official languages.

Wireless and wireline telephone services

Another approach to the issue of availability is to consider the extent to which Canadian households subscribe to key communications services. As Table 2.0.5 shows, nearly all Canadians (99.3%) subscribed to either mobile wireless or landline telephone services in 2015. However, rather than subscribing to both telephone services (i.e. landline and mobile wireless services), some Canadians are choosing only one service – and for the most part, this appears to be mobile wireless service. As noted in Table 2.0.5, the percentage of mobile-wireless- only households (27.5%) continues to exceed the percentage of wireline-only households (13.2%). Over the last decade, the percentage of wireline -only households has continuously decreased, while the percentage of mobile-wireless -only households has steadily increased.

While the transition to widespread mobile wireless service use – partly at the expense of wireline telephone service use – is a long-term process, the historical data in Table 2.0.5 shows how rapidly Canadian households have embraced this newer technology. In 2005, wireline-only households (36.0%) far outpaced their mobile-wireless -only counterparts (4.8%).

By organizing this information by province (see Table 2.0.6) and income quintile (see Table 2.0.7), it is more apparent which groups of Canadians are driving the year-over-year shift in service subscriptions. For instance, consumers in the four Western provinces (Manitoba, Saskatchewan, Alberta, and British Columbia) and Ontario have played a key role in the rise of mobile-wireless-only households. In contrast, both Quebec and the Eastern provinces (New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland and Labrador) continue to feature a larger percentage of wireline-only households. Nevertheless, all provinces had decreasing percentages of wireline-only households in 2015, except Manitoba, Quebec, and Nova Scotia, whose percentages of wireline-service-only households increased (see Table 2.0.6). However, this had no effect on the provinces’ percentages of mobile-wireless-only households. In fact, mobile-wireless-only households in all provinces increased.

Figure 2.0.9 shows the ownership rates of cellphones and landlines by Canadians. In 2015, 99.3% of Canadian households owned either a cellphone or a landline. While 86.2% of households had cellphones in 2015, from 2012 to 2015, the percentage of households owning more than one cellphone increased from 45.9% to 51.2%. During the same period, landline ownership decreased gradually from 83.8% in 2012 to 71.9% in 2015, as seen in Figure 2.0.9. Overall, cellphone ownership rates rose from 85.6% in 2014 to 86.2% in 2015, compared to 71.9% of Canadians who had a landline in 2015, down from 75.5% in 2014.

Figure 2.0.9 Cellphone and landline ownership rates

The link between income and telephone service subscriptions

The data on telephone ownership rates by income quintile (see Table 2.0.7) continue to illustrate the overall transition to mobile phones. Household telephone service subscribers tend follow the same trend every year across most income quintiles, in which the uptake of wireline services decreases in favour of mobile wireless services. However, the number of wireline-only households in the second income quintile increased from 16.2% in 2014 to 18.7% in 2015.

In 2015, of the five income quintiles, households in the fifth quintile changed their telephony habits the most. Their exclusive use of cellphones increased 63.5%, while wireline-only households in this income quintile decreased by 35.4%.

Financial resources appear to play a role in whether households subscribe to both wireless and wireline services, or only one of the two. While only 21.9% of households in the highest income quintile subscribed to only wireline or only wireless services in 2015, there is a significant difference in the percentages of households in lower income quintiles that subscribed to only wireline or only wireless services (63.7% in the first income quintile). Indeed, the data suggest that the higher a household’s income, the more likely it is that the household subscribes to both types of telephone services.

The link between income and Internet subscriptions

Mobile wireless devices (such as smartphones and tablets) and technologies (HSPA and LTE^{Footnote 6}) enable Canadians to access the Internet from nearly any location. However, home computers still play an important role for Canadians. As Table 2.0.8 shows, most Canadian households have home computers (84.5%).

Overall, slightly more households owned cellphones (86.1%) than home computers (84.5%) in 2015. This trend is more pronounced in the lower income quintiles. For example, 69.9% of Canadian households in the lowest income quintile owned cellphones (see Table 2.0.7), compared to 61.9% of households that owned home computers. Overall, the average of home computer ownership for all income quintiles has had fairly flat growth, increasing only 0.2% between 2014 and 2015.

The only decreases in home computer ownership in the household are seen in the fifth income quintile and in the first quintile, by 0.8% and 3.7%, respectively. While this may be due to a number of factors, one important factor could be that low-income households are choosing to devote their resources to a technology that can provide multiple communications services (e.g. voice and Internet), rather than subscribing to each service individually.

Internet use from home has increased throughout all income quintiles except the fifth quintile, which saw a decrease of 0.1%. The majority of growth came from households in the second and third income quintiles, which reported increases of 4.6% each in Internet use from home. Overall, Internet use from home has increased 2.4%. However, Internet use from home in the first income quintile is still 17.7 percentage points lower than that in the second quintile, and 22.5 percentage points lower than the overall average.

Figure 2.0.10 Residential broadband service availability (5 Mbps or higher download speed), by province/territory (% of households), 2016

The rise in Internet service use across income quintiles is also reflected in overall residential Internet service availability and subscriptions. The percentage of households with access to broadband services with a download speed of at least 5 Mbps is 97% nationally.

The data indicates that Canadians are clearly embracing faster connections, which are becoming more widely available: the majority of households now subscribe to Internet service packages with download speeds at or above 10 Mbps.

iv) Internet data consumption

While 86.9% of Canadian households use the Internet at home, their Internet use and data consumption varies greatly. To better understand the impacts of using different online services, 3 different data usage scenarios were created and data usage was analyzed. Table 2.0.10 presents the activities included in each usage profile, while Figures 2.0.11, 2.0.12, and 2.0.13 present overall data consumption and a breakdown by service.^{Footnote 7}

Low-volume usage

This scenario covers individuals who regularly participate in low-usage activities, such as Web browsing, and social media, as well as occasional video streaming.

Figure 2.0.11 Low Internet GB consumption, per service, per month

Medium-volume usage

This scenario covers individuals who participate in low-usage activities, such as Web browsing and social media on a daily basis, as well as medium-usage activities, such as audio and video streaming on a regular basis.

Figure 2.0.12 Medium Internet GB consumption, per service, per month

High-volume usage

This scenario covers families with children who participate in low- and medium-usage activities on a daily basis, as well as high-usage activities, such as video streaming on a regular basis.

Figure 2.0.13 High Internet GB consumption, per service, per month

As shown in the figures and table above, streaming HD content accounts for the largest portion of data usage in all three scenarios, followed by streaming SD content and gaming.

v) 2017 CMR Rotating Spotlight: The Wireless Code

The rotating spotlight is a new annual feature in the CMR to highlight changes in the Canadian communications industry during the year. It presents information that impacts consumers directly. This year’s spotlight is on the Wireless Code.

The Wireless Code – The beginning

The first version of the Wireless Code came into effect in December 2013. The Code was created to respond to significant concerns about wireless services and to establish more consumer-friendly business practices. The Code addresses the clarity and content of wireless service contracts to assist consumers, including small businesses, in making informed choices in the marketplace. The Code also endeavours to limit the risk of bill shock to customers and to facilitate switching service providers, thus contributing to a more dynamic marketplace.

The Code applies to all WSPs that serve customers of retail mobile wireless services, irrespective of their business model or where they operate. The Code is administered by the Commissioner for Complaints for Telecommunication Services (CCTS).

The Wireless Code – Implications for consumers

Each rule in the Wireless Code was designed to address a specific consumer concern, such as the following:

• Long contracts and associated early cancellation fees – the Code does not allow for early cancellation fees to be imposed after 24 months.
• Unilateral changes to contract terms – the Code requires WSPs to obtain customer consent for changes to key terms and conditions related to postpaid services.
• Unclear and confusing contracts – the Code requires WSPs to communicate in plain language, including in their written contracts, and sets out the information that must be included in both postpaid and prepaid contracts. The Code also requires WSPs to provide a Critical Information Summary to postpaid service customers summarizing the most important elements of the contract in two pages or less.
• Bill shock, especially related to data and roaming fees – the Code requires WSPs to suspend data roaming and data overage charges once they reach $100 and $50, respectively. The Code also requires WSPs to notify customers when their device is roaming in another country.
• Opportunity to test a service – the Code requires WSPs to offer customers who are subject to an early cancellation fee a 15-day trial period in which they can cancel their service and return their device without being subject to an early cancellation fee. WSPs must also offer an extended trial period of 30 days to persons who self-identify as having a disability.

As a result of the Review of the Wireless Code, Telecom Regulatory Policy CRTC 2017-200, 15 June 2017, which amended the original Wireless Code, WSPs are required to do the following:

• As of the date of the decision:
  • Application of overage and roaming caps - apply the data roaming charge cap and the data overage cap on a per-account basis rather than a per-device basis (i.e. the $50 data overage cap is triggered at $50 for the entire account, not at $200 for an account with four devices).
  • Consent regarding data roaming or overage charges - obtain consent from the account holder of a family or shared plan to incur data roaming charges or overage charges beyond the Code-established caps, unless the account holder authorizes another user associated with the account to consent to additional charges.
  • Consent regarding changing key elements of a contract - obtain consent from the account holder of a family or shared plan to change the key terms or conditions of the contract; key terms now explicitly include those related to voice, text, and data, if those services are included in the contract for the duration of the contract term.
• As of 1 December 2017:
  • Paper/electronic contacts - allow customers to expressly choose between an electronic or a paper copy of their contract.
  • Electronic contracts - If the customer opts for an electronic copy of the contract, the WSP must send it to the customer within 1 business day of the agreement being entered into.
  • Unlocking - provide newly purchased devices unlocked and unlock any devices immediately upon request, at no charge.
  • Service trials - allow customers to use at least 50% of their regular monthly voice, text, and data allotments during the 15-day trial period, and 100% of those allotments for the extended 30-day trial period for persons with disabilities.
  • Service trial notifications - notify customers, 90 days before the end of their contract, of (i) when their contract is going to end, (ii) whether their monthly charge will stay the same or what the new charge will be going forward, and (iii) that they are no longer subject to any penalty to switch plans, cancel their service, or switch service providers.

The Wireless Code – Public opinion research highlights (Fall 2016)

As part of the process to update the Code, the CRTC sought to understand the impact of the Code over time on consumers’ understanding of their wireless service contracts and related rights. Public opinion research (POR) was conducted in the spring of each year since 2014.

Highlights of the Fall 2016 POR as they pertain to bill shock and complaints, are as follows:

Bill shock

• A sizeable number of Canadians (21%) continue to experience bill shock; however, Figure 2.0.14 demonstrates a decline in bill shock since 2014.
• Most incidents of bill shock (64%) are for amounts of $100 or less.
• Similar to previous years, data overage fees are the primary cause of bill shock (48%), followed by international roaming fees (17%).

Complaints

• 17% of Canadians made a complaint about their wireless services in the last year.
• Figure 2.0.14 demonstrates a decline in complaints since 2014, when the research began. Nonetheless, there was a peak in complaints in 2015.
• Canadians who tend to complain do so often, averaging 2.88 complaints in the past 12 months.

Figure 2.0.14 Percentage of Canadians experiencing bill shock and filing complaints

Wireless-service-related contacts, complaints, and spam

The increase in wireless device usage presents unique challenges for Canadians. Between 1 April 2016 and 31 March 2017, 41% of Web form submissions to the CRTC’s Spam Reporting Centre concerned spam sent through mobile text messages. This represents an increase from the 2015-2016 fiscal year, when SMS-based spam represented 18% of Web-based submissions. In 2015-2016, the CRTC and the CCTS combined received approximately 12,000 wireless-service-related complaints and contacts.

CCTS

• The CCTS logged almost 8,000 wireless-service-related complaints in 2015-2016, representing 50.3% of all complaints to the CCTS.
• Wireless-service-related complaints to the CCTS in 2014-2015 accounted for 52% of total complaints, compared to 61% in 2013-2014.

CRTC

• The CRTC received about 4,000 wireless-service-related contacts in 2016, representing 21% of all contacts received by the CRTC.
• In 2016, wireless-service-related contacts ranked second to telemarketing-related contacts, which accounted for approximately 4,200 contacts or 23% of all CRTC contacts.
• Billing/rate issues were the primary source of wireless-service-related contacts (with approximately 1,300 contacts), and CRTC policies/decisions came in second (with about 1,000 contacts).

Metrics – Contract length

As illustrated in the figure below, the percentage of postpaid plans with contract periods exceeding two years dropped following the 2013 implementation of the Wireless Code.

Figure 2.0.15 Percentage of wireless service plans with contracts, by duration

Metrics – Early cancellation fee revenues

Early cancellation fee revenues (for the five entities that submitted data as part of the Wireless Code review proceeding) in 2013 and 2014 were relatively flat, at approximately $130 million, rising to approximately $140 million in 2015.

Three of the five companies posted a decrease in early cancellation fee revenues in 2014, with three of the five also posting a decrease in such revenues in 2015.

Unlocking fees

Since the creation of the Wireless Code, the CRTC has received over 650 complaints/inquiries about unlocking fees.

Unlocking fees were one of the most frequently cited frustrations of consumers on the record of the Wireless Code review proceeding: 46 Canadians commented on unlocking fees, with many subscribers suggesting that once a mobile device has been fully paid for, WSPs should unlock the device free of charge.

2.1 Local spotlight: Access for official language minority communities

As a designated institution under section 41 of the Official Languages Act, the CRTC is committed to enhancing the vitality of the English- and French-language minority communities in Canada, supporting their development and addressing their needs within the context of its mandate, and fostering the full recognition and use of both official languages in Canadian society. To this end, the CRTC focuses on ensuring that official language minority communities have access to an appropriate and equitable number of quality services and that these communities are adequately represented in the programming of these services.

These objectives reflect the Canadian broadcasting policy objectives, which the Commission is tasked to pursue. In this regard, the Broadcasting Act specifies that the Canadian broadcasting system should demonstrate Canada’s linguistic duality through programming and employment opportunities; that a range of broadcasting services in English and French shall be extended to all Canadians as resources become available; and that the programming provided by the Canadian Broadcasting Corporation be in English and in French, and reflect the different needs and circumstances of English and French linguistic minorities.

Map 2.1.1 Locations of official language minority communities in Canada

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Date modified:

2017-11-09