CRTC Rules To End  3-Year Cell Phone Contracts. What Now?

CRTC Rules To End 3-Year Cell Phone Contracts. What Now?

Its no secret that Canadian wireless companies had some of the priciest cell phone plans and the longest contracts terms in the world and hopefully some of that is about to change. Thanks to a new law implemented by the CRTC, all of Canada’s wireless carriers are preparing for an unprecedented wave of customers having the ability to cancel out of their existing 3- year contracts to pick new ones or shop around for the best provider without penalty as this new regulation kicks in on Wednesday June 3.

It looks like the CRTC (Canadian Radio-television and Telecommunications Commission) got so many complaints by Canadians getting locked into very costly and long 3 year cell phone plans they’ve decided to mandate and prohibit all Canadian cellular wireless carriers from selling 3-year plans and charging cancellation fees after 24 months of a 3 year contract. In addition, carriers must now unlock phones if a customer leaves so that they can work on other providers’ networks. Something all carriers were very reluctant to do in the past.

For the average person, if you are in a two-year agreement, your contract will not be affected, but if you still have a three-year cellphone plan,(and again there are an estimated of at least 2 million Canadians currently on a 3 year plan) you could be affected in one of two ways.

  1. If you signed a three-year agreement before June 3, 2013, you will not have to pay any device subsidy balance remaining on your contract and cannot be charged a fee for cancelling your contract. That is because you will already have been on the contract for at least two years, the maximum length of time the carriers have to recoup the value of the device subsidy.
  1. If you signed a three-year contract after June 3, 2013, but before Dec. 2, 2013, you will soon be able to walk away from your contract without a cancellation fee, and those who have not reached 2 years on their 3-year contract can still cancel but will have to pay a cancellation fee. Now that fee will now be cheaper than normal because it is now calculated under the terms of the new CRTC’s wireless code found under see section G of the CRTC website – a place I’d highly recommend taking a quick look at: ).

Therefore, most people can then use this to their advantage. On top of the routine expiry of two-year contracts, the June 3 deadline will leave a wave of customers under three-year contracts able to cancel with no penalty, creating what has been called the “double cohort effect” whereby millions of customers who normally would still be locked into a contract can immediately cut loose, keep their phone, and finally have the freedom now to switch providers.

To prepare for the increased number of free agents this deadline will create, wireless carriers have been taking steps to convince customers to stay, as well as preparing to spend more on customer acquisition during this period. Which means if your provider hasn’t called you yet to negotiate a new contract then they just might. There has been lots of talk about providers dangling discounts on new smartphones as well as offering to waive the remaining device subsidy balance.

So, if your contract is up and you are still happy with the handset you own, you could take it and run to another provider and take advantage of plans that offer “bring your own device” discounts which are typically in the range of $20 a month.

Be that as it may, there are disadvantages. So, this change is not news to the industry – it was actually announced in December 2013 and so all wireless carriers began adjusting their plans and pricing since then. That is why a big disadvantage to this change is that most two year plans are now more expensive than any of the previous three year plans as the carriers said they had to increase the monthly prices to recoup the device subsidy over a shorter period of time.

So, the bottom line is if you are one of the millions of Canadians locked into a 3 year contract, and you feel that your monthly cell phone bill is expensive or much higher than what you would like to be paying, then on Wednesday June 3rd, you should call your provider and try to negotiate a new plan, phone and hopefully a better price. If you cant’ get a better deal, you have the opportunity to cancel your current contract paying little or no cancellation fees and take your phone to another provider.

CBC National “New CRTC Rules”




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