ARCHIVED - Transcript, Hearing 14 February 2013
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Volume 4, 14 February 2013
TRANSCRIPTION OF PROCEEDINGS BEFORE THE CANADIAN RADIO-TELEVISION AND TELECOMMUNICATIONS COMMISSION
Proceeding to establish a wireless code for consumers Telecom Notice of Consultation CRTC 2012-557, 2012-557-1, 2012-557-2, 2012-557-3 and 2012-557-4
140 Promenade du Portage
14 February 2013
In order to meet the requirements of the Official Languages Act, transcripts of proceedings before the Commission will be bilingual as to their covers, the listing of the CRTC members and staff attending the public hearings, and the Table of Contents.
However, the aforementioned publication is the recorded verbatim transcript and, as such, is taped and transcribed in either of the official languages, depending on the language spoken by the participant at the public hearing.
Canadian Radio-television and Telecommunications Commission
Proceeding to establish a wireless code for consumers Telecom Notice of Consultation CRTC 2012-557, 2012-557-1, 2012-557-2, 2012-557-3 and 2012-557-4
Crystal HulleyLegal Counsel
Celia MillayHearing Manager
140 Promenade du Portage
14 February 2013
- iv -
TABLE OF CONTENTS
PAGE / PARA
23. Bell Canada, KMTS, NorthernTel, Limited Partnership (NorthernTel), Télébec, Société en commandite (Télébec), and Bell Aliant Regional Communications, Limited Partnership (Cont.)1211 / 7014
24. Government of Alberta1299 / 7525
25. Vaxination Informatique1408 / 8138
26. Public Mobile Inc.1461 / 8416
28. Saskatchewan Telecommunications (SaskTel)1504 / 8688
- v -
PAGE / PARA
Undertaking1243 / 7202
Undertaking1248 / 7233
Undertaking1290 / 7466
Undertaking1353 / 7812
Undertaking1357 / 7835
Undertaking1368 / 7895
Undertaking1389 / 8008
Undertaking1396 / 8050
Undertaking1398 / 8067
Undertaking1481 / 8520
Undertaking1486 / 8568
Undertaking1518 / 8742
Undertaking1522 / 8771
Undertaking1527 / 8801
Undertaking1532 / 8843
--- Upon resuming on Thursday, February 14, 2013 at 0900
7008 THE CHAIRPERSON: Good morning, everyone.
7009 Before we start I just wanted to point out that there is a blood clinic going on right next door, so if anybody has some free time they might want to pop in there. You might find it less painful than in the hearing.
7010 THE CHAIRPERSON: I know we started the opening remarks yesterday and you weren't able to be there because of the -- do you have a few words to add in your presentation, Mr. Oosterman?
7011 MR. OOSTERMAN: Nothing in addition to the opening remarks, but thank you for giving us an opportunity to appear before the panel. I think the issues in front of us are complex and we hope to make a position contribution to an ultimately successful outcome and we hope to do that by thoughtful, balanced perspectives on the issues at hand. So thank you for giving us the opportunity.
7012 THE CHAIRPERSON: Good. Thank you.
7013 So Commissioner Molnar will start with the questions this morning.
7014 COMMISSIONER MOLNAR: Good morning, everyone.
7015 I have had the ability to go over your documents last night. That's always helpful.
7016 Anyway, I want to start, before I go into the content of your document, just getting a little bit of clarity around who all you are representing here. There are a number of different organizations that you are in front of us representing.
7017 MR. DANIELS: Sure. So we are here representing Bell Mobility.
7018 You also see, in terms of the documents that we filed, that we are representing Bell Aliant. So as we represent Bell Aliant, Bell Aliant actually does not have wireless operations itself where it markets as Bell Aliant wireless, Bell Mobility owns those operations in Atlantic Canada for example, but Bell Mobility does own three companies, KMTS, Télébec and Northern Tel where it does have wireless operations and so we -- excuse me, Bell Aliant does, and we are representing Bell Aliant in terms of their wireless operations in that area.
7019 COMMISSIONER MOLNAR: And Virgin?
7020 MR. DANIELS: Virgin is a brand, but yes, we are representing Virgin Mobility as well.
7021 COMMISSIONER MOLNAR: Okay. Thank you.
7022 So when I'm asking these questions you need to think about all of your different offerings, if you don't mind.
7023 Could you tell me if Bell and its associated brands offer any device subsidies or economic incentives outside of a fixed term contract?
7024 MR. DANIELS: So I'm going to hand it over to Claire and the answer is yes.
7025 MS GILLIES: Yes. So in fact beyond fixed terms contracts, if you specifically look at our Virgin Mobile brand we offer something called the SuperTab and the SuperTab does just that, it's not a fixed term contract, but our consumers get a device discount per se at time of activation which they pay back as 10 percent of each months revenue.
7026 COMMISSIONER MOLNAR: Is that a prepaid offering?
7027 MS GILLIES: No, it's not.
7028 COMMISSIONER MOLNAR: No, it's not. Okay. Thank you.
7029 Do you offer any fixed term contracts that have a separate price with or without a device subsidy?
7030 MS GILLIES: We do. In fact, for consumers who come to Bell Mobility we offer 10 percent off their monthly price plan if they do not take a device discount.
7031 COMMISSIONER MOLNAR: Thank you.
7032 And your monthly plans, are they at the same price or a different price than fixed term contracts?
7033 MS GILLIES: Our monthly plans are at the same price.
7034 COMMISSIONER MOLNAR: And if they came in with a device, then it would be 10 percent less?
7035 MS GILLIES: That's correct.
7036 COMMISSIONER MOLNAR: Okay. Thank you.
7037 Okay. Moving on to your submission, I want to begin by a couple of issues that you know we have discussed throughout this hearing that I didn't actually see you discussing in your submission.
7038 So let's cover those before we get into the details of what you want to talk about.
7039 The first one is the whole notion of separating the service from the device.
7040 As you know, yesterday the Consumers' Association was in front of us and their position was that there should in fact be two separate financing arrangements. They suggest that there is no such thing as a device subsidy, it is simply a financing of the device over a term and it should be done separate and distinct from the service.
7041 I wonder if you could provide us your comments on that?
7042 MR. OOSTERMAN: Yes. If I may, there are no financing in the legal sense of financing provisions or allowances made for consumers, it is an economic inducement for the client to commit to stay with us for a certain period of time and separating those two would be difficult, to say the least, because what you are really asking, or what is being asked by that suggestion, is that we allow somebody to take a device that we finance -- and financing in the true legal sense -- and operate it on somebody else's network where we have no ability to influence the service experience they would get on that device that they financed through us.
7043 If that were to happen and the operator was not a good operator and so the service experience was poor and the consumer blames the device for that and therefore takes it out on us, that would just be wrong.
7044 So we are not at all in favour of that and think it would have a number of unintended harmful consequences.
7045 MR. DANIELS: If I may add here, just when we were discussing this as we have been listening to various peoples' proposals on it, we would have to look at it and go back to the question: What would be the market impact if we actually went with a rule that said that?
7046 For example, I think the logical extension is if there is a separation that you can cancel your service with us, but continue to finance the device in the way that that's being suggested from Bell while they take it to a different operator.
7047 In that situation, we are not a financial institution, we are not in the business of financing devices for people. You know, we had a discussion as to what would be the impact of that. I think the actual impact is Bell would have to look at whether we would continue to subsidize devices in that manner.
7048 So that is one of the things that I think we were -- it's an example of something that we were cautioning about in our opening statement.
7049 We have to be careful here as we do things and progress things and look at how we can improve things as from the CRTC's perspective for consumers, to make consumers better informed and to give them the kind of tools and information that your Code is looking at, that we don't do something that is going to actually undermine the state of competition or the ability -- and this is not necessarily state of competition -- I would say the ability of consumers to get handsets for cheap prices.
7050 If we actually came up with a rule that separated and allowed people to basically separate the service from the subsidy there wouldn't be any subsidies, at least not from us. That's a bank's role. We are not in that. We are not in that business and I don't think any of the other service providers would do it.
7051 Therefore you would end up with a situation where companies would stop subsidizing phones, to the detriment of people having those handsets, the latest, greatest handsets in their hands, not just on the Bell Mobility network, but on all networks across Canada.
7052 MS BARBER: Maybe I might also add that one of the objectives here I believe is to simplify matters for the consumer and it seems counterintuitive to me that two contracts would be simpler than one.
7053 We throw around the term "subsidy", it has sort of become jargon but, whatever we call it, this "subsidy" is not a loan, it's not some kind of installment loan, it is a reduced retail price to the consumer on the sale of a handset, or I guess other device, in exchange for a term commitment.
7054 COMMISSIONER MOLNAR: Okay. And actually that was going to be my next question.
7055 I know when we came into this proceeding CWTA made a very significant point about talking about the difference between and economic incentive and a subsidy and that in fact this is not a subsidy, this is, as you mentioned -- what did you call it, an inducement -- but certainly consumers view it as being that they are paying off the cost of that subsidy over the period of their contract and the early termination fee being something that suggests the unamortized value that is not paid off is your cost of getting out of that contract tends to even emphasize more -- will ingrain more the view that in fact it is not something that you are providing for the right to have their contract, it is in fact something that they are paying for.
7056 So we have a little bit of a -- you know, I think the market views one thing and the providers are saying something else, but it is certainly not aligned at this point.
7057 MS BARBER: Well, if I might continue, with respect to the early termination fee, the early termination fee, based on the original economic inducement or some unamortized portion of it, was a formula that the Québec government came up with to address the concern that consumers had expressed with respect to early termination fees.
7058 There are a variety of methods that you could use to calculate an early termination fee, it could be something like an amount based on the number of months remaining in the contract, it could be any kind of formula. Perhaps the difficulty, as you expressed, was that consumers actually didn't understand, maybe we hadn't been very clear in our documentation or clearly explain to them at the point of sale what the cost was of exiting that term commitment.
7059 So in Québec the government adopted a formula and that formula reflected the unamortized portion of the value that the consumer had been given of that discounted value and the Québec government believed that was fair and you could look at it.
7060 It's one way of doing it and it seemed fair to the Québec government and that has sort of become a model and it makes sense, I guess, to a consumer and it is something that is explicable.
7061 But it's only one model, it could be any other kind of formula.
7062 COMMISSIONER MOLNAR: Fair enough. But it's the model that's being proposed here, it's the model I believe you have agreed is appropriate to be extended across Canada and so there is a separation and there is a defined value in the eyes of consumers that they are paying for it. The device is not being perceived as a gift for their business, it is being perceived as something they are paying for over the life of their contract.
7063 Having just heard that there is a different monthly price whether you do or do not have a device as part of that term also leads to that consideration or that conclusion that in fact customers are paying for the cost of that device over the term of their contract.
7064 MR. OOSTERMAN: I think the mechanism being proposed on the early termination fees assigns an unamortized value of that, economic inducements we provide, but it is, I think, too simplistic to suggest that pricing is based solely on that. We have an enormous number of factors that go into our overall pricing.
7065 We take solely, as the carrier, the risk that the total value proposition that we put in front of a subscriber is one that is competitive in the market and that will attract a sufficient number of subscribers for us to meet all our goals and objectives, and so it is but one element, and to cherry-pick different elements, I think, leads again to unintended consequences.
7066 Let me add that in many cases there are network and handset interoperability issues or products. Take, for example, Bell Mobility offers mobile TV on your handset. Not every carrier does. If the subscriber believes, oh well, I get this device that has a little TV in it, and now they leave our network and go to a competitor's network and the little TV isn't working anymore. That is not the device, which we are now on the hook for if we were to adopt that model, it's the network operator that doesn't offer the service.
7067 So to try and separate the handset from the network, I think, brings with it, you know, a number of operational complexities, a number of increased costs for the industry and ultimately higher prices for the consumer.
7068 And I think if the problem we're trying to solve is we just want to make sure that when people sign an agreement they know what it includes and they know what it costs to leave, then we're satisfying that. We don't need to separate handsets from network and get into complicated double agreement with very different, I think, legal issues if I'm not mistaken.
7069 I'm not a lawyer but I understand financing agreements have a completely different set of legal requirements. So it becomes way more complicated than is currently the case.
7070 And the issue we're trying to solve is does the consumer know what they're going to get, how long are they committing for, what does it cost to get out. That can be accomplished by the Code as suggested. So I'm not sure what additional problem we're trying to solve.
7071 COMMISSIONER MOLNAR: Okay, thank you.
7072 Just speaking about does the consumer know what they're going to get and complications, and in fact, as you noted, it's a complex business, and sometimes some of the rate plans appear perhaps -- or the offers appear to maybe make a complex business even more complex.
7073 I brought with me the Bell Mobility Solution, looking at how the device, your economic incentive was presented to customers, and I looked at this for the BlackBerry 10 because it's a new product and it was interesting to me to see how it was being presented in the market.
7074 And so you offer on a three-year term the BlackBerry that is suggested to be at no term -- well, at no term you offer it for $649.95 and if you sign a three-year agreement the one-time charges are $139.95. So there's $510 being offered up as some kind of an incentive.
7075 So explain to me. When I look at this, this incentive is separated into a device credit of $175, a data credit of $260 and an agreement rebate of $75.
7076 So just explain because you market and what is the reason for adding that layer of complexity onto this product or, you know, onto the device over your fixed-term contract? What would be the reason that that $510 economic inducement is separated into three categories?
7077 And then just confirm for me that when we're talking about the early termination fee, what of those elements are you viewing to be the early termination fee?
7078 MS GILLIES: Let me start by talking about the $510 and how the cancellation fee or the early termination fee is adjusted.
7079 So, it is in fact the entire $510. You would divide that by 36 months, the term of the contract, and the termination fee would be the equivalent of that fee times the number of months remaining in your contract. So it is in fact the entire $510.
7080 The reason we break it down into a series of different buckets is because to get that $139.95 price on a three-year term, as you quote, there's a number of components.
7081 What you will also notice perhaps on that document, but certainly as you see on our handset page, that you must sign up for a minimum $50 price plan. And so, one of the things we talk about, and Ruby spoke about it, is that the economic inducement we pay is a discount based on your agreement for service with us.
7082 Yes, in one case you're subscribing to a three-year term with us, and then, secondarily, you're subscribing to a certain level of price plan or a commitment in terms of the rate you're paying over that term.
7083 COMMISSIONER MOLNAR: Again, as you know, and I feel certain you folks have read the record and read the input from the public on this, and they just talk -- I mean, and part of why we're here today is because this has all become so complex and customers don't feel that they are -- don't necessarily feel that they're empowered and informed.
7084 So why is it -- what would be the real need for you from a marketing perspective to separate that device credit, to offer $75 of that device credit as an agreement rebate? There must be a business reason that would say we can't make this simple, we have to make this complex. What is that reason?
7085 MR. DANIELS: Just in terms of one of the things I was just checking in the back here my understanding.
7086 So you mentioned there's three parts to it, one part related to the data part, for example. So what we have done is allowed that if you want to just cancel part of the plan, like the data plan, you only have to pay out that portion that's associated with the data plan.
7087 So this just gives the consumer the option to be able to cancel a portion of their contract, pay out -- and not have to pay out the full $510. So it's just giving the consumer greater options.
7088 If they want to cancel the whole contract after the first month, for example, they pay out $510 less one month. I didn't do the math quickly. But if they only want to cancel a portion, like they -- oh, I've decided I don't want the data package, they would only have to pay out the data portion. And so, therefore, it's just giving them greater options.
7089 MS GILLIES: What I would just add after Mr. Daniels there is, you know, the important thing to remember is it is always our intent to be competitive in the marketplace and some of the pricing you see before you is, yes, there's a $75 agreement rebate, that gets you to the three-year term; yes, there is an additional discount layer that allows you to -- that ascribes you that $50 price plan I spoke about; but the final piece is we need to be competitive in the marketplace.
7090 And so, you know, if we didn't have that ability -- and yes, I agree we can present it in a very clear and compelling way. We need the flexibility to maintain competitiveness. Otherwise, we wouldn't be able to offer that $139 price on the newest device in one of the only countries in the entire world to have the Z10.
7091 COMMISSIONER MOLNAR: Okay, thank you. I understood Mr. Daniels' response as really a market response and a consumer response.
7092 Another issue that you didn't address in your comments is the issue of contract length, and again, as you know, that's been a key issue for the public in this proceeding.
7093 Let me just begin by understanding what contract lengths do you offer today.
7094 MS GILLIES: We currently -- on our Bell Mobility service we offer a no-term contract as well as three years. On Virgin Mobile we offer an additional offering with the SuperTab.
7095 COMMISSIONER MOLNAR: So, the Blackberry that I was talking about, is there any way that you could get that with a subsidized device with less than a three-year contract?
7096 MS GILLIES: So, there's a couple of different options. So, first of all, if you want it on a fixed-term contract, no, currently at Bell we only make it available on fixed term on a three-year because we wouldn't categorize the SuperTab as a fixed-term contract.
7097 MR. OOSTERMAN: Maybe I can add to that though.
7098 It's important to go back in a little bit of history and put some context around the public issue with three-year contracts because I think if we put it into context and take a balanced perspective -- and I think we must. I think, you know, Canada has a lot to be proud of. It's an industry that is, frankly, the envy of the world at the moment, at this point in time in Canada.
7099 We at Bell had one-year contracts and two-year contracts and three-year contracts and no contracts, and the vast majority of people, the vast majority of people took three-year contracts. One- and two-year contracts did not sell. They were costly for us to maintain in our billing systems, et cetera. So at some point the decision -- I can't quite remember when it was -- the decision was made that consumers don't seem to want these.
7100 Now, we heard from Rogers that 70 percent of the industry is three-year contracts. We have 27 million subscribers. Let's just do simple math and say 70 percent -- let's call it 20 million subscribers on three-year contracts in Canada. That's an exaggerated number but it will be the most conservative for the example I'm about to give.
7101 COMMISSIONER MOLNAR: I appreciate the example and I just want to be clear as you go through it.
7102 MR. OOSTERMAN: Yes.
7103 COMMISSIONER MOLNAR: When you say 70 percent, are you using Rogers' number --
7104 MR. OOSTERMAN: Yes.
7105 COMMISSIONER MOLNAR: -- or is that your number? What's your number?
7106 MR. OOSTERMAN: I'm using Rogers' number.
7107 COMMISSIONER MOLNAR: Would you have your own number you could use in your example? What percentage of your customers are on three-year contracts?
7108 MR. OOSTERMAN: Well, we view all that as competitively sensitive, but we're happy to submit it.
7109 COMMISSIONER MOLNAR: So you will use Rogers.
7110 MR. OOSTERMAN: So I will use the number that was given and say 70 percent. Great. Seventy percent, 20 million just to keep the math simple.
7111 All of those people get a bill once a month. That's 240 invoices per year that have the opportunity to surprise somebody or give them sticker shock or bill shock, or a contract expires and it's time for renewal. All those things happen 240 million times.
7112 If 10 percent of people complained, had issues, that would be 24 million complaints. If 1 percent did, that would be 2.4 million; if a tenth of a percent, that would be 240,000; a hundredth of a percent, it would be 24,000.
7113 We're at 7,000 submitted complaints. It's less than a hundredth of 1 percent of people who have issues. Now, that's too many and we're not saying that it's not, and we wish it was zero. Honestly, we do.
7114 That's why we work so hard and invest so much in making sure that we communicate as clearly as we can to people, this is what you're signing up to, this is what you get, this is what it will cost you to get out.
7115 Do we always get it right? No, of course not. But when you put it into context and then you say 90 percent of people in Canada who buy a device today are doing so for at least the second time. They have already gone through the contract experience, they know what it is about. They are an educated, informed consumer. Many of them are at the second, third, fourth, fifth, sixth, seventh, eighth, ninth time that they are entering an agreement with a carrier.
7116 So while I appreciate that we must do whatever we can to clarify to the greatest extent possible what it is that consumers are committing to, I also want to make sure that we don't hurt this industry, which has been an enormous economic driver for this country. It has been an enormously beneficial element to have in consumers' lives.
7117 We heard again -- and we know this to be true -- that in the U.S., where two-year contracts are the norm, you would pay more, in total, for that two-year term, paying the monthly fees plus the device, than you would in Canada if you left after two years and paid the ETF.
7118 And, frankly, the whole issue of contract terms becomes irrelevant if we adopt the code, as proposed, because people can cancel at any time.
7119 So there are no, in effect, term contracts. It's just that, if you make a commitment to stay with me for three years, I will give you that price on the handset.
7120 And if you would like to leave earlier, then here is what it will cost you to do so.
7121 I think that's what we are trying to do. We are trying to achieve clarity for the consumer.
7122 But we have a remarkably good industry here. It has been a fantastic benefit to Canadian consumers. Less than one-hundredth of 1 percent complain. Of course, I appreciate that there will be unhappy people who have not complained, so the number is higher than that.
7123 And you will appreciate that there are people who are very happy who did not submit.
7124 So we just have to keep it all in balance, and I am worried that we overreact one way or the other, frankly, to hurt an industry that is the envy of the globe.
7125 COMMISSIONER MOLNAR: Mr. Oosterman, we are not here attempting to, in any way, hurt the industry. We are here as a consequence of what has occurred in the industry, at the request, frankly, of you and your industry, to address what has occurred because of the problems.
7126 And those problems didn't exist because customers were satisfied and happy.
7127 That's not why provincial legislation went into effect.
7128 One of the things I didn't hear -- I heard what you said about the history, and that you had two-year contracts and there wasn't take-up. And you told me, actually, the exact same story as the wireless providers who came before you, that, based on the history, if you go back forever, and you get to now, three-year contracts were what customers wanted.
7129 And, yet, the overwhelming statements coming to us are that customers don't.
7130 One of the problems we have is that none of you folks who came before us provided a market response to that. If you folks would have come forward and said: Yeah, we are seeing that customers are looking, you know, the public is saying that three years is too long, maybe we will try two years. If it doesn't work we will know it, but we will give them that option for a period of time. You don't have to mandate it, we will do it in our competitive market, because there is clearly a demand for it.
7131 But none of you came forward with that response.
7132 MR. OOSTERMAN: But, I'm sorry, we did do that. We did have one-year contracts. We did have two-year contracts. There was no market demand, so we eliminated them. To suggest that --
7133 COMMISSIONER MOLNAR: Did you have those options in the environment of Smartphones?
7134 MR. OOSTERMAN: Absolutely.
7135 COMMISSIONER MOLNAR: You did?
7136 MS GILLIES: Yes, we absolutely did.
7137 We eliminated those options due to low take-up, as Mr. Oosterman said, at the end of 2011.
7138 I think what I would come back to is that we talk about the high percentage of consumers who take three years, whether one and two years were in the market, or one and two years is there today for Bell Mobility. That offering is not available.
7139 We use the example of the U.S. pricing comparative. It has been incredibly positive for Canadians to have three-year pricing, because it allows them to get those amazing Smartphones, some of the best Smartphones in the world, at the most heavily discounted rate.
7140 What it has done is, if you actually look at the penetration of those devices in Canada, versus in the U.S., you will actually see that in Canada we have a higher Smartphone penetration overall.
7141 So customers, yes, they are choosing with their wallet. They are saying: I want to get the best devices now, at the cheapest price.
7142 And with the changes made to the termination fee, if they want to leave at any point in time, it is not causing them -- again the comparison to the U.S. -- the totality of their service and their hardware pricing, Canadians are actually still advantaged over the U.S.
7143 MR. DANIELS: If I also may jump in here, just looking at it, coming back and saying, as you said, that there is consumer discontent about three years, what is underlying that?
7144 Let's ask ourselves that question.
7145 I think the provinces did, for example, and they came to the conclusion that it's not the fact that it's three years that is the problem. The fact that was underlying it is the cost of exit and making sure that the consumer understands the cost of exit.
7146 So what is the solution? The provinces, and now the CRTC, in its draft code, which we support, are recommending establishing the new early termination fee. You all know how it works.
7147 We heard an example from Rogers, which I think was a very good explanation, that given the early termination fee, if you look at a customer -- if we had a three-year offer, a two-year offer and a one-year offer, that customer would logically, if they were thinking rationally, take the three-year offer and just exit early.
7148 So I appreciate that you understand the concern, but yet consumers are still responding to the three-year contract.
7149 In other countries, admittedly, as it has been stated about the United States, two years is the standard. Europe bans anything longer than two years. But none of these countries have done the ETF proposals. There is no law that we have seen elsewhere -- Australia, the U.S., Europe -- that we are aware of that has the ETF as a requirement. And I believe the difference is -- and this is the advantage -- that by imposing an ETF obligation, you are getting to the heart of the matter with the consumer, and yet you are not removing and hindering the kind of solution that Claire was talking about, about keeping prices lower.
7150 It really addresses the underlying cause, and the only other thing you need to do, I think -- that you can't just do the ETF alone, you have to marry it -- is that you have to make sure that the consumer understands what they are signing up for and understands how the ETF works.
7151 How do we address that? Well, you have put it in your draft code that you have a personal information summary, which makes sure that, at the point of sale, this is explained to the consumer.
7152 If you put those two together, I think, frankly, you are solving the real problem, the underlying problem, without doing the harm that we are saying could potentially happen.
7153 We want to continue to have prices that are lower for our handsets than in the U.S., and it's not just for the iPhone, it is for --
7154 I have a whole list, if you would like me to give it, of all of the devices that we have lower subsidies for, even though we probably have much higher costs because of the bargaining power of U.S. carriers versus us to buy them.
7155 We don't want to take that away, and that is the balance.
7156 I think we have the solution, and it's also, I think, why some of the consumers groups that came in before with the position that you should ban three-year contracts, now, I think, hopefully, listening to this, they have been reconsidering that and have softened that a little bit.
7157 I think they are understanding that logic, as I hope we are explaining it, collectively, as an industry.
7158 COMMISSIONER MOLNAR: Fair enough.
7159 I want to give you the opportunity to comment on others who have spoken on the issue of the two versus three-year contract.
7160 CIPPIC, I believe, mentioned that the early termination fee is, in fact, a switching barrier, and the Competition Bureau, as you know, looking at our model and recognizing the early termination fees that were proposed as a way of minimizing that contract length, said, nonetheless, that we should be looking at banning the three-year contracts because they are also an impediment to competition.
7161 Would you like to comment on that?
7162 MR. DANIELS: I am not going to offer anything more profound than what we just said.
7163 When I look at the Bureau's comment, where I do agree with the Bureau is that they said: If you are not going to do it, you have to look at the two other switching barriers, which have to do with unlocking and the early termination fee, both of which are addressed in our proposals.
7164 As you say, you have to look at it. I think you are, quite rightly, looking at it and asking the right questions, and I hope, based on the answers that the three of us just gave, as well as what you heard from the rest of the members of the industry, that you begin to appreciate that the initial reaction to say "Remove the three-year contract" as an option, outright, is actually anti-consumer.
7165 Yes, I say that, it's anti-consumer.
7166 MR. OOSTERMAN: I will second that, it is anti-consumer. We know that the prices people pay on two-year agreements, as demonstrated in a lower-cost market called the United States -- they pay, in total, more than they do in Canada.
7167 We know that our penetration rate of Smartphones in Canada, because prices are lower, is higher than it is in the U.S.
7168 There can be no doubt that consumers benefit greatly from access to Smartphones. They can do things like price comparison shopping through the browser when they are in a store buying Good A, B or C.
7169 There is nothing but good that comes out of that for Canada as a nation, and for consumers as a group.
7170 So any code that would increase the price for consumers and lower access to technology that benefits their personal day-to-day life, we just can't comprehend that it's even being contemplated.
7171 What is relevant is exactly what my colleague said. Let's make sure they know exactly what they are signing up for, which we are fully in support of. We have done a lot of work in that space. That's why our calls -- Bell's calls -- into the CCTS are down 21 percent, year over year, without any code.
7172 We care about it passionately. We want that number to be zero, we really do.
7173 That is what is relevant, making it clear, not hurting consumers on the way through.
7174 MR. DANIELS: There is only one last thing that I was going to ask permission for of the Commission.
7175 We have done a very similar study to that which Rogers did, where we looked at our prices compared -- I think that we made reference to it generally, but specifically we had undertaken to look at the plans for AT&T and Verizon, for the exact same phone that we offer here, with the exact same plan figures, and worked it out, including the ETF.
7176 I think that Mr. Oosterman spoke for it generally, but we actually did a specific calculation for that, and with your permission, I would like to file that on February 22nd, so that everyone can see the record of it.
7177 I appreciate that as we gave this answer we referred to it, but we didn't specifically ask, as an undertaking, if you would like us to file it.
7178 COMMISSIONER MOLNAR: Yes, go ahead.
7179 Will that information -- and that is looking at the U.S. versus your pricing -- will that also address some of the comments we are hearing about the price of devices in Canada versus the U.S.?
7180 It is looking at the full complement of the devices, plus service?
7181 MR. DANIELS: It can. I have separate lists of just the actual prices of the phones, but then we did the actual study looking at the entire -- the price of device, all the exact same features, the exact same features, how that works out, including paying the ETF.
7182 COMMISSIONER MOLNAR: And you have a list of the price of the phones and it compares the price of the phones in Canada versus the U.S.?
7183 MR. DANIELS: In terms of what they do, yes. For example, we have the BlackBerry Bold 900 is $49.95 with a three-year contract with Bell, where Verizon sells it for $99.00 on a two-year contract, AT&T for $199.99 on a two-year contract, but I could keep going.
7184 COMMISSIONER MOLNAR: Does it or could it include in there as well the price outright from the carriers in the U.S. versus you?
7185 MR. DANIELS: You mean...?
7186 COMMISSIONER MOLNAR: Device prices outright, because there's been some suggestions that there's inflated prices here.
7187 MR. DANIELS: Yeah.
7188 COMMISSIONER MOLNAR: So, if you have something that you could --
7189 MR. DANIELS: Absolutely.
7190 COMMISSIONER MOLNAR: Please go ahead.
7191 MR. DANIELS: But it is -- we can. You will find generally that the stand-alone price is higher in Canada than the U.S. and that has everything to do with the bargaining power.
7192 We don't get the phones. I know Rogers made a comment, I don't know how much the Americans pay for their phones, but I think we're pretty confident that they pay less than we do.
7193 COMMISSIONER MOLNAR: Okay. It's just a matter if you want to file something to support that.
7194 I think you hear the conversations, you've heard the same as we have here and there's some suggestion that maybe -- you know, that up-front price is inflated and, therefore, has the potential to inflate the early termination subsidy, or early termination charge.
7195 So, if you've got something that's going to help relieve that, please file.
7196 MR. OOSTERMAN: Well, again, if 30 percent of the phones in Canada are not on three-year contracts we would, as a carrier community, would be taking a huge risk in terms of subscriber losses if we were to price our phones too high on a non-contract basis.
7197 We can't lose 30 percent of our sales. We'd be in real trouble, Rogers would be in real trouble, TELUS would be in real trouble, the new entrants would be in real trouble. It's an incredibly competitive market.
7198 I understand the suggestion --
7199 COMMISSIONER MOLNAR: I just want to be clear because I don't --
7200 MR. OOSTERMAN: -- I just reject it.
7201 COMMISSIONER MOLNAR: -- want us to have a real big discussion here about the pricing of devices because it's not what this is about and we shouldn't we touching on it, in my view, however, it is relative to that cost of the early termination fee.
7202 MR. DANIELS: We understand and we'll take that away.
7203 COMMISSIONER MOLNAR: Thank you.
7204 Okay. I'm going to move on to the document that you provided that provides your comments on the Working -- on the Draft Code.
7205 I'm going to start with B1, the implementation date. So, you're proposing a phased-in implementation that could occur.
7206 Maybe just some clarity around this. You've also provided here in your document the time needed for industry to implement the decision. And just for clarity sake, is that the industry or is that Bell and its brands, or you think everyone in the industry can meet these time frames?
7207 MR. DANIELS: We -- it is our estimate of what the industry can do. For example, there's some things on there that we are already doing. Date of notifications, you already heard we did it. We actually thing we put that as the longest one.
7208 Now, when I say "we" did it, I actually should be more specific, Bell Mobility has done it, Virgin has done it, but the small Bell Aliant companies like Télébec and even the smallest one KMTS, they have not. We talked to them, so we got a sense of how long it would take for them to do it.
7209 So, I think we were able to look at this as how long it would take us to build it as well as how long it would take a small player to build it because, of course, if you apply this, it's going to apply to the small players as well as the big players.
7210 And, so, this is our best guess, but it's an informed guess and, so, we thought that would be helpful to put it out for you in that format.
7211 COMMISSIONER MOLNAR: Yes. And thanks for that clarification because I was a little confused as to why it would take Bell this long to do some of it, given the legislations that you are right now, you know, operating under, so... Okay.
7212 So, you're proposing that this Code -- are you saying could be or should be implemented in a phased-in approach?
7213 MR. DANIELS: Our position is, it could be, it probably should be in order to make sure that the consumers get the best advantages right away, but I appreciate -- we've listened to the Chair and others on the Panel ask the question about how do we market or explain to consumers the phased-in approach.
7214 The unfortunate thing is that if we are going to -- if the solution to that is to have it all come in at the same time, then you have to wait for the thing, as the longest pole in the tent, I think someone described it as, so you have to wait until the end.
7215 That's acceptable to us as well, but it could be done in a phased-in approach and we would support doing that, but either is fine with us.
7216 COMMISSIONER MOLNAR: And do you believe that it should apply to new contracts only; new contracts, contract amendments?
7217 MR. DANIELS: Yes, we believe it should apply to new contracts. As for amendments, I'd like to -- I'm going to hand it over to my colleague, Ruby here, to just sort of explain what we mean as amended as opposed to when we think it becomes a new contract.
7218 MS BARBER: With respect to -- I guess it's an option, I think it's your option 3. In our view, a renewal of a contract, so if after -- if after two years a customer upgrades and gets a new handset and enters into a new term, and somebody might look at that as a renewal, we view that as a new contract.
7219 But a contract amendment, I don't think, should trigger the application of the Code. For example, the customer may add a monthly feature -- or may add a feature at any point in time, they may remove a feature that's on -- that they pay for on a monthly basis, and for that to trigger the application of the Code, I think, doesn't make sense from our perspective because one of the elements of the Code is the new ETF formula applying on a national basis.
7220 And I understand that, from our perspective, we would not have records of the various subsidy amounts that might have been paid by -- that might have applied to a pre-existing contract, to the extent that we weren't required to have them.
7221 COMMISSIONER MOLNAR: Okay. I'll ask the question, and I guess you can choose whether you will answer it or not, but it is a question that we've asked of others and that's how many existing customers are on fixed terms.
7222 Is it something you're prepared to file?
7223 MR. OOSTERMAN: At minimum we'll file that, for sure. We're not trying to avoid letting you know, it's we're trying to let our competitors not know.
7224 COMMISSIONER MOLNAR: Fair enough. Fair enough.
7225 MR. OOSTERMAN: Yeah.
7226 COMMISSIONER MOLNAR: So, you can file it in confidence.
7227 MR. OOSTERMAN: Thank you.
7228 COMMISSIONER MOLNAR: And with that, could you provide details, if you look at your customer base and assuming that, you know, under the Draft Code that there is no changes or no prohibition on three-year contracts or anything -- I guess that doesn't really matter, it's your existing customer base and their existing terms.
7229 Could you also provide us details on a year-by-year basis as to how many of them would become subject to a new Code each year?
7230 MS GILLIES: Yes. So, we've actually done the math and we will absolutely --
7231 COMMISSIONER MOLNAR: Oh, you have.
7232 MS GILLIES: -- put that in our filing.
7233 COMMISSIONER MOLNAR: Okay. Very good. Thank you.
7234 COMMISSIONER MOLNAR: So, what I'd like to understand, without getting into any kind of legal discussion as to whether we do or do not have jurisdiction, because you have lots of lawyers and so do we and they can sort that out.
7235 If we were to accept the argument right now that we can't apply it to existing contracts, there's obviously many elements of this Code that are just good business and I think you've acknowledged yourself that some of the elements will be applied, regardless of when their contract has been signed, there's some of the elements that would be applied to existing customers.
7236 Could you be more clear as to what would and would not -- under your proposal, what would and would not apply to existing customers until they signed a new contract?
7237 MR. DANIELS: Well, I mean I guess it would all have to be when, as you say, to go through to look at element by element as to what we think we would like to do in that regard, but I think we've given some examples that generally -- the notifications, for example, would be something.
7238 We already do it, but in terms of what we would expect for our units that don't do it, I should say, that we're representing from Bell Aliant, that they would apply that across their base.
7239 So, that's an example of something that would be applied across the base.
7240 And at the other end, you've already heard about the early termination fee we can't even do.
7241 As to each element, we can take that away and submit something that would -- if that's what you'd like to look at, but, you know, part of that is we'd want to evaluate that when we saw the actual Code and make the decision based on market determinations at that point.
7242 I mean, you know, it's a competitive market and we'll examine what makes sense at that point.
7243 COMMISSIONER MOLNAR: I'm not sure I understand because it's not -- I mean this Code is not intended to be a competitive market issue, this Code is intended to be a baseline protection for all customers.
7244 So, hopefully, there's nothing in here that is a competitive market issue, that's the entire -- you know, that's the intent of it.
7245 But I would be interested in knowing specifically, we have heard from the other carriers about the early termination fee and I'm not sure when I -- I guess where I'm left not really understanding is, is that the key issue that's out there?
7246 Like you would apply, for example, the new locking -- your proposal on new locking to all customers right now or are you suggesting that that would come in at the time of a new contract, or are you prepared to unlock phones within 90 days now, or do they have to wait until they sign a new contract?
7247 MS GILLIES: So, I think that the language we used in our opening statement was about being practical. And, I mean, from an operational perspective, many of the changes we would make and could make to the benefit of consumers, you know, within the time frame that we've indicated on our document; things such as the early termination fee, you know, we talked about that one being a challenge.
7248 The other thing that, you know, many of the other carriers also spoke to was re-contracting your entire base and doing a new contract.
7249 So, I think those are the two that are probably the most difficult and most challenging, but for the most part, again, you know, from an operational perspective, it would make the best sense for many of the changes we talked about, notifications as an example, indicating to customers when they're about to come up to expiry, we would apply that.
7250 COMMISSIONER MOLNAR: Okay. Thank you for that. And I would ask that you be very clear and detailed and provide it as an undertaking. That would explain to us what of these elements can be applied to existing customers without you having to re-contract. I mean, I know your argument is around re-contracting and ETF. And we wouldn't have to mandate if you agree to do. You know, for example, notification of price changes and the ability to get out of a contract if the contract terms are changed to the customer's detriment and those kind of things, does that have to wait until you sign a new contract or can that be in place?
7251 MR. DANIELS: I understand what you're asking, so we'll take it in the undertaking and be specific about in terms of what would be our -- you know, our business response to if we could make that change, what do we think practically we would plan to do in that regard. I just -- I'm making the distinction from as opposed to legally saying mandate it, but, yeah, what would we do practically, we will do it on an item-by-item basis.
7252 COMMISSIONER MOLNAR: Exactly, and thank you because we don't need to mandate what you offer to do yourself. So this isn't an issue we necessarily have to deal with if you just, you know, can address the market's needs. Things like the unlocking, for example, just to be clear. And if it isn't at the time this code comes in or before, frankly, I'm not sure if you need -- if you said you needed 12 months to unlock phones. Maybe you'll have it done before we even have this code in part -- or in effect.
7253 MR. DANIELS: Well, there are certain things that we constantly look at in the market and change. And, for example, our early termination fee now across the country, if anyone who signs up, is the new rule for us across the country. So, yes, we look at it and try to be consumer friendly and implement it in that manner.
7254 COMMISSIONER MOLNAR: Thank you.
7255 Moving on to D1.4, the personal information summary. And you've proposed -- you're okay with the content of that personal information summary?
7256 MR. DANIELS: That's correct.
7257 COMMISSIONER MOLNAR: Okay. And you've proposed that you'd make it page 1 of your contract?
7258 MR. DANIELS: What we've said is that we have -- it should be at the front of the contract, that that information be contained.
7259 COMMISSIONER MOLNAR: Oh, yeah, okay, not page 1, yeah.
7260 MR. DANIELS: Sorry?
7261 COMMISSIONER MOLNAR: Okay, it doesn't have to be page 1, I understand, yeah.
7262 MR. DANIELS: But our concern is we're not saying in the format actually laid out by the Commission. The information needs to be there, but leave it to us to set up the format of how we present the information. That's the distinction we're making.
7263 COMMISSIONER MOLNAR: Because you could make it more clear and understandable and easier for your customers to understand than what we've proposed?
7264 MR. OOSTERMAN: Yes.
7265 COMMISSIONER MOLNAR: Is that why you want that?
7266 MR. OOSTERMAN: Well, not necessarily that you've proposed, but we believe fully and truly that it's a competitive differentiator and I'll give you a simple example. Let's say we decide we want to use pictures and our competitors decide they want to use words. If the information that's at minimum required is present in both cases, we should be allowed to bet that our picture approach will win in the market over their word approach. And so, we don't believe that anything that lowers competition is positive. We totally agree that the information that's required needs to be there and that it should be up to us to present that information in a way that we believe consumers will like better than the way our competitors present it. So I hope that makes sense.
7267 COMMISSIONER MOLNAR: I understand what you're saying, yeah.
7268 MR. DANIELS: If I can just add something.
7269 COMMISSIONER MOLNAR: So if you're going to use it as a competitive differentiator, you probably didn't like the notion of folks that said, well, we should be able to use this form and basically shop it so we can do better comparison shopping before we sign a contract.
7270 MR. OOSTERMAN: That's correct, we did not like that. Jonathan, I don't know if you want to comment and then I'll add, but feel free.
7271 MR. DANIELS: Our concern here in terms of -- it's coming back to what's the purpose of the document. So the purpose of the document, we believe, is in the contracting phase to have a fully informed consumer understand what are they committing to and what are the obligations of the service provider with regard to the items that the Commission has specifically chosen. We agree. I think everyone is in agreement on that.
7272 But some other people during this hearing have suggested that it should be a document that you can take around and I want to use it for a comparison shop. And that's where we get into a little bit of a problem here because you're dictating the format of the material that the Commission has decided, the regulator decided that the consumer should be using for comparison shopping purposes without adding other features that may actually be equally relevant from the comparison shopping perspective. In that document do we talk about how we have better coverage than other people? If it's only that two pages, it doesn't allow us to emphasize some of the strengths that may work to our advantage compared to others. And so we're a little concerned when it's starting to become a marketing decision-making tool because we don't think that's the purpose. And that's why we're saying from a format perspective we're concerned about establishing, oh, format because we may want to include other information that's equally relevant if a consumer is going to look at it from that perspective. But, and let me be very clear about this, that doesn't mean that any of the information that's in there shouldn't be in our contract at the front of the contract so the consumer understands what they're signing. That we'd totally sign up to.
7273 COMMISSIONER MOLNAR: Okay, thank you for that.
7274 In D2.1, "Changes to contracts by service providers", I just want to make sure I'm understanding. You noted that changes to month-to-month contracts should be permitted upon 30 days prior notice. We also had a discussion with the CWTA and I understand you're talking about month-to-month contracts here, but you -- I assume you, like others, have contracts, have fixed term contracts that are a mix of fixed term and -- fixed term elements, monthly elements, pay-per-use elements all within that same. So do you agree that changing any month-to-month prices or optional prices or pay-per-use prices, customers should be granted 30 days notice?
7275 MS BARBER: Yes.
7276 COMMISSIONER MOLNAR: Very good. Thank you.
7277 D3.3 is the early termination. Now, we've had a discussion of early termination on the fixed term, but I just want to focus for a minute on the month to month, and you mentioned that you do have month-to-month services with device, economic incentives, device subsidies like everybody else calls it. And I understand this has come in the draft code and you've supported it, but it's come from existing legislation, the notion that you would calculate the early termination fee on a month to month based on a 48-month amortization period. And I just am trying to understand really why we should be using 48 months. You know, everybody is saying that -- we've just had the conversation that devices don't last three years, so why would we be amortizing over four? Why does that make sense?
7278 MR. DANIELS: Well, I'm going to hand it to my colleagues in a moment to talk about devices not lasting three years because I think we actually have some facts to suggest that that's not quite the case in terms of the amount of phones that we have still on our network of people that are much older than three years.
7279 But in terms of addressing where the 48, the 48 is a backstop for -- that allows us to have products in the market, like our supertab, I think as you've explained, and we're not the only ones. There's many companies out there that have that, where it's really based on what the customer depends, but you need some backstop to work it out as what the alternative is. So the way -- so the consumer gets the benefit. And let me just explain how that practically works.
7280 If there is a subsidy that the consumer has signed up for, let's say it's a 200 dollar subsidy on a supertab, and in -- over the course that they're spending, I don't know, $40 a month, the way the supertab works is it will say the $200 will go down by 10 percent of what they spend every month. And so you look at it and say that's $4 reduced and so on. If the consumer spends more in a particular month, obviously their supertab is going to go down even more, by 10 percent of that value. And so, the consumer at the end can pay off that based on just their spend, or what the legislation says and what this supports, the consumer wants to exit the contract, they haven't, they -- it's either what they've left still on their supertab or what's left divided by 48 and how many months are left than that. So the consumer is actually getting a benefit. The only place this will really kick in is if the consumer would actually have paid less over the 48 months -- excuse me, less at the time for exiting than -- the only time it will kick in is if they have -- it would be, oh, you'd have to pay more. So this 48 months only happens if the consumer actually exits the contract without paying back the full subsidy. So it's to their advantage.
7281 MR. OOSTERMAN: And I will add some colour on the claims that phones only last two or three years. I'm not sure where that comes from because it just isn't true. It's a little bit like driving a car. If you really drive your car roughly, it'll last less long than if you take good care of it and do the proper oil changes and all those things, it can last quite a long time.
7282 So we launched in Canada as Bell a new network on HSPA. That's an irrelevant term, but it's our new technology that we launched back in '09. Before that we operated a network on a technology called CDMA. And again, that term is not relevant. What's relevant is before '09 CDMA, post-'09 HSPA, and now more recently LTE. We still have -- you know, again it's competitively sensitive information, so we'll file the exact number if you'd prefer, but let me just say we have over a million people left on CDMA. Over a million. We changed network infrastructure to HSPA in '09. So the view that all these handsets, you know, stop working when they hit 24 months or 27 months or 36 months or even, frankly, 48 months just isn't true.
7283 COMMISSIONER MOLNAR: Okay. And I think you mentioned you actually have done some more work that you want to file on that issue, the length of the handsets and how long they are in your own marketplace, is that right?
7284 MS GILLIES: Yeah, we could actually share with you how long each device has been on our network to, you know, again sort of debunk the myth that phones all break after two years.
7285 COMMISSIONER MOLNAR: Well, break or get tossed in the pool or the battery dies or whatever that might be.
7286 MR. OOSTERMAN: Ah, yes, certainly people abuse their devices and they need a new one.
7287 COMMISSIONER MOLNAR: Still on the issue of early termination fees before we go. It's not obvious if the early termination fee, when there is a device subsidy is the amount of the unamortized device subsidy.
7288 Why is there then an early termination fee where there is no device subsidy?
7289 MR. DANIELS: I think the reason for that is the provinces put that in, I think, makes a lot of sense in terms of preserving an option in the market.
7290 So today, if your customer comes up and wants to sign a term commitment, for example with no device, we don't have a special extra price for them, but that's something that the market could deliver and be available.
7291 Take all of -- in the telecom world on the wireline side with tariffs the Commission has long approved term and volume commitments. I'm not talking volume here but there's term commitments. You get a lower rate for making a longer term commitment.
7292 Now, does that make sense if we have a world that says, "No subsidized device"? So you're coming in. You bring your own phone. Would I ever give you a reduction of a price for a longer term commitment? Instead of 10 percent off, let's say I decide, oh, if you sign it for a year I'll give you 15 percent off.
7293 Would I ever offer that in the market if there is no penalty for exiting? No, I will not have that as an option in the market because everyone would sign up for their 15 percent and just exit for free. So that will remove that option from existing in the market.
7294 We anticipate that the market -- you know, that by preserving a small -- and it is a relatively minor -- exit fee up to a maximum of $50 allows service providers to create incentives for longer term contracts which again are to the benefit of consumers.
7295 So we just don't want to remove that option from that market and that's why we support the provision that the provinces have all adopted.
7296 COMMISSIONER MOLNAR: Okay. Well, thank you for that explanation, because I didn't realize it was there to actually help consumers.
7297 Okay. D3, Point 4, automatic contract renewal.
7298 I'm going to steal the Chair's question and ask the question here if you have a fixed term contract that expires and the customer automatically goes on to month to month at the same price, why would they not move to your 10 percent discount?
7299 You say that you have a 10 percent discount when there is no device subsidy. So why would they not automatically move to the discounted price?
7300 MR. OOSTERMAN: Well, it's ultimately a pricing question. As I said before, the carrier takes the risk that in total their pricing proposition to the market is competitive and attracts a sufficient number of clients that they meet their particular plans.
7301 And again, the relevant point, is a consumer aware of what they're committing to and what they're paying and what it costs them to leave and all those things? We're fully committed to making sure that people know fully what they're signing up for.
7302 But given that, as Ruby explained earlier, the discount on a device and return for a term contract is not alone. It's not a repayment schedule. There are no fixed fees associated with paying it back. Our pricing is our pricing.
7303 And so when you have satisfied your obligation to stay for three years, I've satisfied my obligation to give you that device at a lower price and now we're on to the normal levels. Those normal levels are this is the price.
7304 So I don't understand why it's even being tied together, quite frankly, because it isn't related at all.
7305 MR. DANIELS: If I could just add on that, when you look at it from an informed consumer perspective, which is what this exercise is about, the consumers coming in and making a commitment over a three-year period, at the end of that three-year period there is no -- generally, you would say, well, what's our commitment towards the consumer at that point in time? Well, they have made a three-year commitment. However, as a protection we support this.
7306 The Commission is saying: We think that there should be a provision to allow the consumer to continue to receive the same terms and conditions. At that point this is our customer in the most vulnerable spot in terms of us keeping that customer.
7307 You suggested that we notify that customer 90, 60 and 30 days before their term is up. We've agreed to that. That's not really a problem. We're definitely trying to notify the customer because this is a customer that now knows that they are at a three-year end of the contract and this is the place. They're a free agent and they can go anywhere and join any other company.
7308 Now, hopefully they're going to stay with us because they're happy with the service proposition that they've received from us and maybe they'll want to get a new phone. We obviously want to keep that customer and we want to keep that customer happy.
7309 But if that customer calls us up and says, "Oh, I'm thinking I'm just happy with my phone"; has a discussion with us, "What are my options?" We could at that point have a discussion with the customer to say, "Do you want to stay with that phone?" Maybe we have this plan. Maybe it's the 10 percent reduction. Maybe it's something else. Maybe there is a cheaper plan program out there for that customer.
7310 That's totally the informed customer's decision. I think that's a little different from saying as a matter of, you know, we should have some sort of obligation to reduce this rate. Our three-year commitment we had an obligation during the contract term.
7311 After it we are signing up. Yes, we'll continue to provide the same terms and conditions and rates that that customer had before. And of course, we're going to try to market to that customer and probably try to induce them into a different kind of program, hopefully for another commitment. Obviously, that's what we want to do.
7312 But I think that's a little different than saying, "Why don't we just, you know, automatically lower his rates to someone who hasn't contacted us in that situation".
7313 COMMISSIONER MOLNAR: Okay, thanks.
7314 I'm going to move on to D4.3 "Unlimited Plans".
7315 So do you agree that plans where there are limits, on unlimited -- where unlimited actually can be limited, that they should not be advertised that way?
7316 MR. DANIELS: I'm going to let Ruby explain our position on this.
7317 MS BARBER: We believe that unlimited means unlimited, subject to a fair use policy and the fair use policy should not contain a hidden actual limit. The fair use policy is intended to prevent abuse of the network.
7318 I think Mr. Engelhart had a great example about a customer who buys a wireless device and then uses it as some form of SPAM or for call forwarding. They end up with racking up thousands and thousands and thousands of minutes. That would be abusive.
7319 MR. DANIELS: More minutes than in a day.
7320 MS BARBER: More minutes than in a day, actually. It's, I guess, the direct quote. And that would be abusive and that would be a violation of a fair use policy and that would cause the person likely to be kicked off.
7321 But unlimited means unlimited and, to the extent that we have unlimited plans, they are unlimited.
7322 MR. DANIELS: And just in that regard, that's why some of our suggested changes to specifically take out -- you said that we should tell the provider -- the customer. You know, actually set what the actual usage limit is.
7323 We don't think that can be unlimited. And I think the Competition Bureau had a similar view on that if you actually have an actual threshold saying, "Oh!" So that's why we struck that language out from your suggested wording.
7324 We don't think that if we actually put in a maximum of 250 gigs it's unlimited. That's a 250 gigabyte plan.
7325 MR. OOSTERMAN: And we do think that's one of the areas where a common industry definition which I think today we follow, that is understood and applied by everybody, the exact same language everywhere, we'd be fully supportive of.
7326 In our case unlimited means unlimited, subject to the fair use policy, as I think is common in the industry, but as Ruby explained.
7327 COMMISSIONER MOLNAR: And you did answer. I just want to make sure I understood.
7328 So your fair use policy has no limits. So if you have used this service -- I don't know. I can't say what your fair use policy -- but there are no limits. There is no threshold at which you cut off? You either determine that they are using the service consistent with your terms of service or they're not?
7329 MS BARBER: That's correct.
7330 COMMISSIONER MOLNAR: Okay. Okay, moving on to the issue of notification.
7331 So you have established the 12-month period for this notification in response to other carriers' needs to implement and not your own?
7332 MR. DANIELS: Well, when we say other carriers, again, I have to be a little careful. You reminded me of that.
7333 COMMISSIONER MOLNAR: I have to be careful about carriers. I'm sorry.
7334 MR. DANIELS: But I represent more than -- here on the panel we're representing more than just Bell Mobility and Virgin.
7335 But we have actually implemented notifications. Not exactly. The thresholds are different. So the 12 months is really looked at from an industry perspective including looking at the Bell Aliant wireless divisions.
7336 COMMISSIONER MOLNAR: And you're in favour or the discussion has occurred over the week that what's really -- where consumers are perhaps most vulnerable and most in need of some support at this point is data and roaming. You are in favour of that approach?
7337 MR. DANIELS: When we said data, absolutely, both domestic and international. International, I'm including the U.S. Therefore, yes, data.
7338 But when you say roaming, I just want to be careful here.
7339 COMMISSIONER MOLNAR: Because you're just in favour of information on data, roaming on data?
7340 MR. DANIELS: In terms of roaming on data when I say information let's divide this again into notifications as to thresholds, like the 50, 80, 100 percent for example. That is for data both domestically and internationally.
7341 In terms of notification requirements when you land in another -- as soon as you start roaming on another network; for example, in our case if you take the phone into the United States. Immediately you are going to get a notification that's going to tell you your text, long distance and -- sorry, text, voice and your data rates. And we support an obligation for all carriers to have to do that from an information perspective for all three roaming situations.
7342 I'm just making a distinction between notification as to what the rates are which on international is all services. Well, you know, all the three services that we're talking about.
7343 But in terms of the 50, 80 and 100 percent that's only for data for both domestic and international.
7344 I hope that's clear.
7345 MR. OOSTERMAN: And I think we'd support the common view that's been echoed throughout the week, that people intuitively understand how long a minute of talk time is and they understand the counter in their heads on how many text messages did I send?
7346 But, quite frankly, I work in this space and I have no idea what a kilobyte is. None. And so on data, we do need to provide help. It is just good business practice to do it, which is why we have done it already.
7347 We also work at things like providing more intuitive units of measure, but that's not something that should be legislated. That's a competitive advantage for us.
7348 So for example, on our mobile TV product, we charge $5 for 10 hours. I understand, as a consumer, what an hour of viewing is and so I don't need to worry about kilobytes. We don't -- you know, we do that separately. With our competitors who do not offer that functionality, it would cost you much more, perhaps.
7349 So we believe in notifying people of what their exposure will be and where it's difficult, intuitively, to do the mental math to get there, we believe it's appropriate to let people know you're at X percent of your paid-for bucket, if you will.
7350 COMISSIONER MOLNAR: Okay. And just before I go on to caps, which is the obvious next question, I want to clear off on this notification.
7351 You say at the end, "providing consumers with opt-out ability creates unwarranted operational capacity" -- or complexity.
7352 MS GILLIES: Yeah. So I think that -- sorry, go ahead.
7353 COMMISSIONER MOLNAR: Go ahead.
7354 MS GILLIES: I was going to say, I think that particular point speaks to the fact that if you allow consumers the ability to say, you know, yes, I would like those notifications and no, I would not, is that what you get into is system from, you know, your care operations, you know, and your sales channel operations where you've got thousands of people who are controlling that. And to ensure that customers get the most consistent type of service, our recommendation would be that everybody gets notifications.
7355 It's -- you know, again, it's back to averages. Everybody could need them. It's not stopping them in using their devices in any way and, therefore, it would be the simplest thing for us to do across the board.
7356 MR. DANIELS: Just so we're clear, the reason we've put that in, it's because of a cross-out we made in your draft which says "unless the consumer opts out of that specific message alert type".
7357 And what we're suggesting is, from an operational perspective, we think it's just easier and actually better from a consumer perspective that we just send these to everybody.
7358 We're worried about any mistakes that happen or something like that in terms of having a mandatory obligation to do it, and you've heard about implementation.
7359 So we think that mandating that option -- maybe some carriers will want to come up with that option for people who are really concerned, "don't send me texts telling me what I'm actually spending or doing". I don't think there's much of a demand.
7360 I don't -- and we're saying that adds a lot more expense and complexity. You don't need that. We're about protecting consumers here, so let's just scratch that out as an obligation.
7361 COMMISSIONER MOLNAR: Okay. Moving on to monitoring -- and I mean, this whole notion of notifying consumers, helping them to deal with the complexity and the bill shock that comes with this, you know, we talk about the push tools, the pull tools and the potential caps.
7362 And I read your submission, and you essentially say you've met all your customers' needs in this regard and it's a competitive issue and yours are good and don't require any refinement.
7363 Is that -- I mean, that's essentially your position. Is that right?
7364 MR. DANIELS: Well, I think there are some refinements. Like we're not following today the exact setup that you've outlined here in terms of our data notifications, for example.
7365 But yes, in terms of -- so we will have to make changes to accommodate this. But if you're -- so there are some refinements we have to make, but I'm not quite sure in terms of we say everything is good or whatever. What we're here and focused on and what we approach this on is how do we ensure that the consumer is fully informed and when we do exceed that in terms of situations.
7366 I guess there's two factors. One, we want to make sure the consumer's fully informed, and how do we let them make the buying decisions thereafter. And so we think we've struck, from a regulatory mandated standpoint, the right compromise here.
7367 That doesn't mean someone can offer or do more. Absolutely. That's something that you can differentiate yourselves in the market with.
7368 COMMISSIONER MOLNAR: Would you agree it's informed and empowered?
7369 MR. DANIELS: I'm sorry?
7370 COMMISSIONER MOLNAR: Informed and empowered.
7371 MR. DANIELS: Yes.
7372 COMMISSIONER MOLNAR: Okay. So you're opposed to these caps and say they're unnecessary.
7373 Do you have any customer information, feedback, evidence, something to give us that would provide us some evidence or some background upon which we could say yeah, well, they aren't necessary?
7374 What's out there except for, you know, we have CCTA statistics that say bill shock is a huge issue, bill shock because of the unanticipated increases in bills, right.
7375 So what is your evidence to say that these caps are unnecessary?
7376 MR. DANIELS: I'm going to hand it to Wade to answer that, but the one thing I just want to make a distinction, we said they are --mandating it by the regulatory is unnecessary. It's an important distinction because there could be a market -- you know, if someone believes that that's a tool to differentiate themselves in the market, that's available to them.
7377 MR. OOSTERMAN: Well, I would take issue with the word it's a huge issue for consumers. I think it's a huge issue for some consumers, but as we discovered in digging through the facts, it's 1/100th of one percent who have the issue with, oh my goodness, that bill came out of nowhere and I don't know what it is.
7378 And so I think you do have to, as we do as a good business practice, let people know. And then you say what are their abilities to manage the bill shock.
7379 And I would say there are three or four.
7380 So first, if you really don't want bill shock, buy pre-paid service because it's guaranteed to be X and not more than X and not less than X. It's X. So that's one solution.
7381 Second, if you do get a notification that you're at 50 and then at 80 and then at 100, you have kind of three options available at that time.
7382 You can decide, you know what, I know I'm at my limit, but this next activity that I want to complete, phone home or look up something online, is important enough to me that I know I'm at my cap, I'm going to do it anyway. So you keep going, but you're making an informed decision to keep going.
7383 You can, as you get to 50 and 80 percent notifications, say I'm going to be in Europe another three days or wherever you might be, I'm going to curtail my usage or slow it down so that I don't exceed my cap.
7384 And third is, of course, the ultimate power, you can actually turn off your phone and avoid any additional charges.
7385 So I think you know, the important point, again, to us is, people need to be informed. And when they're informed, they are actually empowered. They have multiple options to deal with whatever comes next. And I don't want to pre-suppose what their individual circumstances might be at any one point in time or how important that activity that they want to complete is to them at that point in time.
7386 So we're opposed to caps. We're assuming that people are able to make informed decisions that they take responsibility for, and so we think that when we inform somebody this is where you're at and you have four options on how to deal with that, then that's sufficient and so it shouldn't be mandated.
7387 Plus, if you mandate, that takes away the opportunity for a competitor, us, somebody else, to offer that as a product.
7388 And so again, I don't think we should do anything that limits competition so long as the consumer is informed and, therefore, is empowered.
7389 COMMISSIONER MOLNAR: I just can't -- I've heard you and others and it's -- you know, all have said the same thing. And it's just hard for me to understand, you know, if you have a family down in Disneyland why they should be spending quite this much time figuring out when they're going to hit their data cap and, you know, what's the easy solution.
7390 I guess you say it's shut it off, but with data sometimes you don't even know what's running when.
7391 MR. OOSTERMAN: But that's -- we give you notification that you're at X percent.
7392 Now, if you didn't know that you were using any data, which I think is the suggestion being made, and you get a note saying I'm at 50 percent, the normal course of action, for our clients, anyway, is to phone and say, "Hey, what's happening? I'm at 50 percent. I didn't think I was using any".
7393 And we explain to you, it turns out that you have your weather network update app open and it's updating constantly. Turn that off and charges will be smaller. That data traffic will disappear.
7394 And so the issue is, are you informed. And the answer is yes, you are.
7395 We send you at 50, we send you at 80, we send you again at 100. I mean, I don't -- I don't think that means people are spending all day thinking about where am I at. They get notified where they're at. They don't have to do anything other than read the text message that comes in saying you're at 50.
7396 If it's a concern for them --
7397 COMMISSIONER MOLNAR: And phone in.
7398 MR. OOSTERMAN: Hmm?
7399 COMMISSIONER MOLNAR: And phone in.
7400 MR. OOSTERMAN: Well, no. If it's a concern for them --
7401 COMMISSIONER MOLNAR: That's quite a lot of the time on your holiday if you're going to phone in.
7402 MR. OOSTERMAN: But if you're concerned about it, first, I believe -- and I believe I'm right, that we provide 1-800 numbers to call in to client care from anywhere in the world.
7403 MS GILLIES: We absolutely do.
7404 MR. OOSTERMAN: Yeah. So it's, you know, a call that isn't punitive in any way to the consumer. But you're informed.
7405 COMMISSIONER MOLNAR: So can I ask, a comment was made that you don't want us to mandate this because this is potentially a competitive offering. I mean, it is not certainly in the carrier's best interest to limit in any way overage charges. The impact on our --
7406 MR. OOSTERMAN: I would disagree with that so strongly I can't even -- I don't even know where to begin.
7407 COMMISSIONER MOLNAR: Do you offer any kind of capping ability?
7408 MR. OOSTERMAN: When people -- when people have sticker shock, they're unhappy, and when they're unhappy, they leave us. And I promise you, we do not want people unhappy and we do not want them to leave us.
7409 I appreciate it's too much to ask, and so perhaps not right, but if you look at the money we have spent in eliminating calls into our call centres, eliminating calls into CCTS, improving our material to let people know what it is they can expect and what they can get and you look at our results, and most obviously indicated by churn, where we have seen significant improvements in the satisfaction levels of our clients, I would say that, you know, as a prudent business organization we are taking the steps proactively to minimize the negative impact that a consumer has when they do business with us.
7410 I fully acknowledge that we don't always get it right. I fully acknowledge that it would be helpful to have some common terms and ease of reference for consumers.
7411 I also want to balance that with it's 1/100th of one percent. Let's keep that in perspective.
7412 We have world leading networks in Canada that's to the benefit of all consumers, all Canadians. Our penetration levels on Smartphones are better. There's a lot of good about the industry. I don't want that damaged.
7413 And I think you used the term -- you didn't say tweaking. I forget the exact word. But you know, nuancing -- nuance adjusting what's in the market now.
7414 I think any help that we can get on making sure that, you know, this would make it even better is good. Anything that throws the baby out with the bath water is bad. And so we just have to have a balanced perspective on this.
7415 And so we are not -- we are not out to maximize somebody's bill shock, it's bad for us.
7416 COMMISSIONER MOLNAR: Okay. I'm going to move on.
7417 Before I leave this category, you make a comment here -- and I need to find it -- where you say on the ability to restrict features that you would be able to disable categories of features.
7418 Do you have just a very simple, quick explanation of what that's meant to be?
7419 MS GILLIES: Yes, we do.
7420 We looked at and we looked at the multitude of features or services that are available today, whether you talk about voice, text, Internet browsing, mobile TV and, you know, all of the wonderful things that are still to come in our industry, and one of the things we thought is it could be complex for customers today or in the future to determine what do they want blocked and also for us, "Yes, I want this App blocked, but not that one and this one". So what we suggested we might do is provide a blocking service for voice, for text, for Internet and create it into buckets of categories rather than individual applications or services we provide.
7421 COMMISSIONER MOLNAR: Okay. Thank you.
7422 That could be your response. Would you agree if we just said disable any -- it's okay. That's okay.
7423 Moving on to D7.1 on locking.
7424 So you have said here the time needed is 30 days.
7425 Do you have a timeframe for you folks? When is it you are planning to unlock?
7426 MS GILLIES: So today we offer unlocking service for our Bell customers. We offer it -- it's available for customers who don't have a device subsidy or, if they have a subsidy, in up to 90 days.
7427 COMMISSIONER MOLNAR: Oh, you do that today?
7428 MS GILLIES: We do.
7429 COMMISSIONER MOLNAR: You unlock after 90 days today?
7430 MS GILLIES: We will.
7431 COMMISSIONER MOLNAR: You do or you will?
7432 MS GILLIES: We do.
7433 COMMISSIONER MOLNAR: Okay. Thank you.
7434 What's your fee?
7435 MS GILLIES: Our fee is $75.
7436 COMMISSIONER MOLNAR: I'm trying to get quickly here to the end of things.
7437 E.1, mechanisms to promote the wireless code. You have this within 30 days and I just wonder --
7438 MR. DANIELS: I'm sorry, Commissioner Molnar, just we were having a quick chat here whether we should just explain in terms of our policy. You heard that today, but in terms of the unlocking we made changes to say that if you have the actual device and paid the full device you can unlock immediately.
7439 And that the one thing we said is -- because you asked what we do today, and so on, I just want to be clear that we also put it subject -- we put at the very beginning subject to D9.1. So legalese what are we doing, we are protecting ourselves so that this is a slight difference than we had from what the other carriers have suggested. But I think they would probably support this -- I hope -- is that if we suspect fraud after the 90 days -- the reason for the 90 days is we are concerned about fraud. If we actually suspect that there is fraud involved and the consumer comes back to us -- or in this case the fraudster or potential fraudster comes back to us -- in those rare cases we want to have the protection to seek a deposit in that.
7440 So I just want to be fully upfront with what we are doing and what we are suggesting here, because we had a slight nuance, it's 90 days, but if we have a fraud concern we want to be able to seek a deposit from the customer. That is only based on after 90 days if we see that the way they are using the service suggests that it's a fraudulent situation.
7441 Again, we are aligned with the other providers about in terms of 90 days would be sufficient for us to detect that.
7442 COMMISSIONER MOLNAR: Okay. Maybe I misunderstood, I thought you said you are doing this already.
7443 So already you have that practice and if you are concerned that it's fraudulent you request a service deposit?
7444 MS GILLIES: Yes.
7445 COMMISSIONER MOLNAR: Okay.
7446 Moving on to promotion, you say 30 days. I was just struck by the fact that this actually could occur so quickly. Service -- because it includes saying that one of the things you will do is you will promote the Wireless Code not just to your customers, but to your employees and your agents and I'm pretty impressed that you can get through your entire CSR group, your dealers, your agents, and so on, so that they are educated and informed on this Code in 30 days and able to promoted to customers.
7447 Is that your view, you can do that?
7448 MR. DANIELS: Can you point to -- you are ahead of me. You haven't given me the number here.
7449 COMMISSIONER MOLNAR: Sorry, E1.
7450 MR. DANIELS: E1.
7451 I take your point. I think when we looked at this we were thinking about making sure that you could get whatever needed to the stores and how long, and so on, but I think you are right that 30 days is probably ambitious and in retrospect we probably were doing this rushing at the very end when we got to E1.
7452 So I think you are right that we should probably -- we would require a longer timeframe to do a proper rollout to all of our employees. So thank you for catching us on that one.
7453 COMMISSIONER MOLNAR: Yes. And I guess I just bring it up because I have seen you and others say, "We agree, we will put this on our website and we will give a copy with the contract if you want us to", but there is a big difference between these sort of passive put it on a website and having a sales team and a customer service team who are both knowledgeable and engaged in giving this information to customers and for this to be most successful it's those first points of contact that really have to be the ones who go out and promote it.
7454 MR. DANIELS: I agree. Actually, now that I look at it I remember, I am the one responsible when we had the discussion on it and I focused on the first part and said can't we -- because at first sight, can we give a customer a copy of the Code in the contract that they sign and I felt uncomfortable that it would take us six months to give the customer a copy of the Code or the contract, we could get it into their hands sufficiently. And I guess I focused on the first sentenced and not the second sentence.
7455 COMMISSIONER MOLNAR: Yes, that's fine.
7456 MR. DANIELS: So I apologize for that.
7457 COMMISSIONER MOLNAR: That's fine. Again, my point was more that I was hopeful that you folks would see your role to be more than putting it on the website, it would be using your frontline to promote this.
7458 MR. OOSTERMAN: Absolutely. Let me say it again, anything that makes consumers unhappy is bad for us and what makes consumers unhappy is when they get a surprise. So the more disciplined and diligent we can be about ensuring that there are no surprises, the better off we are.
7459 COMMISSIONER MOLNAR: Okay. Very good.
7460 My last question. You have suggested that we would review this Code in five years. How did you come up with five years?
7461 I mean we have heard and we know that your industry moves at a rapid, rapid pace and the use and the issues could certainly evolve far more quickly than five years.
7462 So what is your thought on five years? What's the justification?
7463 MR. DANIELS: I'm just looking for -- I know what we did is we sat down and I just can't access it very quickly so I apologize -- in terms of we looked at other Commission decisions in terms of how long it was implemented for a review.
7464 Keep in mind that the way we are calculating this five years is that you come out with the decision and the Code sometime this year, the Code isn't fully implemented until another year later and then you have a time to basically go through a few years of implementation and we thought three years was just too soon considering that the Code comes into effect -- in our view doesn't fully come into effect one year and we were looking at it from you want to have enough of a cycle that you can see it work through the system.
7465 And so unfortunately we also looked at other CRTC decisions and maybe I could give an undertaking because I just can't seem to find the page, but we had a couple of examples of what we looked at and I don't want to take the time here to find it for you.
7466 So if that's okay?
7467 COMMISSIONER MOLNAR: That's fine. Thank you.
7468 Those are my questions.
7469 THE CHAIRPERSON: Commissioner Simpson...?
7470 COMMISSIONER SIMPSON: Good morning. Thank you very much for accommodating us yesterday and today, it's much appreciated.
7471 I want to get back to the Twitter sphere is alight right now with something that they think they heard and I would just like to get clarification that you had said in your testimony this morning that the nature -- that the contract isn't so much -- and again I'm paraphrasing here, but what it is is a contract for a phone that is not so much a -- it's a discount in return for a term agreement.
7472 Is that essentially what you said to Commissioner Molnar's questioning?
7473 MS BARBER: Yes.
7474 COMMISSIONER SIMPSON: Okay.
7475 I was doing a little shopping this morning online and what is confusing to me is that, you know, taking a base level iPhone 4, if one was to go shopping to Bell for this model it would be no money down and $549 for an iPhone 4, an 8 gig base unit, 549; same price at TELUS, same price at Future Shop, same price at Walmart, but if you go directly to the Apple store it is $450.
7476 So how is it a reduced -- how is the consumer getting -- aside from the ability to amortize the purchase price, how is the consumer getting a break by going directly to you?
7477 Because it seems to me that -- sorry, I shouldn't do a follow on, it's bad practice, but it seems to me it's like an oil company offering to give you terms on the purchase of a car in return for having to buy their gas for three years, but it's also looking like you could buy the car cheaper if you went directly to General Motors.
7478 MR. OOSTERMAN: Well, again, it's a total pricing package and I think you are highlighting one specific element of pricing which is what is the no contract price. I suspect you would suspect that Apple probably has a lower cost than we do, given that it is their own, and therefore that maybe translates into a lower-cost in their stores.
7479 I don't think the price is different if you signed a three-year agreement and so the benefit to consumers is there is an opportunity to avoid paying anything in return for your commitment to stay with us. If you decide at some point, for whatever reason, your circumstances change, you would like to leave, all we are asking back for is you should have paid $549, whatever you haven't paid of that -- I guess is the formula being suggested -- is what you would owe us on an early exit.
7480 COMMISSIONER SIMPSON: Following on with this thinking, what is your view that if one was to be able to buy unlocked phones on an easier basis that there wouldn't be so much of a preoccupation with three-year contracts?
7481 Because we've heard a lot this week that one-year contracts just aren't being asked for and I'm putting to you that that could be because the amortization of a $500 or $600 or $700 unit is a lot easier for a consumer to absorb.
7482 But if they were able to finance the purchase of their phone separately, do you think that they might be inclined to ask for one-year contracts more frequently?
7483 MR. OOSTERMAN: Well, it's -- I don't think so because if you're talking about truly financing, so you're going to the bank to get a loan, your fees would obviously be much higher than an unfinanced straight discount, the discount amortized over whatever period of time. So I don't think so.
7484 I think consumers -- and again, a reminder that 90 percent of people who buy at any one point in time are educated consumers and that they have done it before -- make a proactive decision that they prefer to pay less for the device in return for the commitment because they know they are likely going to use the device for the next period of time because, you know, it's a life-enhancing product that you carry around with you.
7485 So I don't think so. I think people -- you know, you say we have to listen to consumers. We do try to listen to consumers and what consumers are telling us is they prefer to pay less and commit to three years, the vast majority.
7486 MR. DANIELS: If I could just add, Commissioner Simpson. You gave the example -- I'm not familiar with the price at the Apple Store but you're saying that Apple is actually in the business of selling the device, not selling the service.
7487 The question becomes, if they see that there's a market in subsidizing and allowing people to sell, why don't they turn into a financing arrangement? You've just said that they had a cheaper price to pay it outright. Again, I'm not familiar, I'm just taking what you've described here.
7488 If that's the facts on the table, why aren't we looking -- why hasn't the market developed at Apple, who's interested in selling the device?
7489 We're here -- it's all about selling the service and we're using the device subsidy as an inducement, economic inducement for the customer to make the commitment.
7490 Now, we've changed it. As I said, about the ETF, they can exit and so the customer is only better off.
7491 But I look at it and say to your question or the Competition Bureau's suggestion, does Apple also have a requirement to have to offer that kind -- will they offer that kind of offer? I don't think so because they're not in the business of financing. Neither are we.
7492 COMMISSIONER SIMPSON: Rogers is in your business and they're offering that phone for $449, even less than Apple.
7493 MR. OOSTERMAN: I guess they'll gain market share.
7494 COMMISSIONER SIMPSON: Okay.
7495 MR. OOSTERMAN: I mean that's the competitive risk we take. And I don't mean to be facetious at all but it is the competitive nature of the business.
7496 COMMISSIONER SIMPSON: M'hmm.
7497 MR. OOSTERMAN: Not all prices for all phones and all service plans are identical across all carriers. We compete.
7498 And I'll tell you, we are more expensive on some elements for sure, we are less expensive on a number of elements for sure. Consumers do that total value evaluation, you know, the total package value assessment and then they choose a carrier.
7499 COMMISSIONER SIMPSON: M'hmm.
7500 Last question and I think it's appropriate for a company like Bell because I have great respect for the size and scope and increasing areas of consumer activity that you're getting into, you know, having such a large corporate footprint in so many areas from broadcasting to wholesale networks and everything in between.
7501 So here's the question. In talking with the consumer groups this week and specifically with the gentleman from the consumer affairs group yesterday, we talked a little bit about how the phones are becoming not only ubiquitous but becoming so full facility that they're becoming an entertainment device, a social media device, and somewhere in the middle of it all they're also still a telephone, but how does it challenge an organization like yours to be able to keep meeting consumer expectation for areas that aren't really your core business?
7502 And I'll sort of leave it with this qualifier, that it's becoming a financial transaction device too, and do you think that the carriers at some point, from your perspective, are going to be able to keep pace with consumer expectations based on the increasing ability of these devices and how they pull you into an area of responsibility to satisfy their expectations?
7503 MR. OOSTERMAN: Well, that's an excellent question and it is the challenge that we face every day, and if we get it wrong we will lose badly in the market, and if we get it right we win in the market.
7504 And you're right, the functionality of these devices is exploding. You will be able to pay all your bills through them and all those good things. You can watch TV on them. You can watch 3D HD movies on them if you like. So they are increasingly powerful devices.
7505 We of course work closely with manufacturers to try and stay abreast of what might be coming. More importantly, we work closely with infrastructure providers to assess what functionality might be supported in the future and we listen very carefully to our consumers. You know, I can't overstate the importance.
7506 Every single transaction that a consumer has with us, a phone call, a purchase in a store, we do a post-transaction survey of that consumer.
7507 We poll our store people and our front-line client care reps to ask them, so what is of relevance to consumers, what are they upset about, what can we fix, what are they interested in, what new products should we consider, and the combination of that hopefully lets us win in the market. Again, if we get it wrong we lose badly.
7508 THE CHAIRPERSON: I think we're due for a health break. So that's a given.
7509 I'm going to ask you, and do feel free to tell me if you're uncomfortable with this, but we do have a Minister from the Government of Alberta who is scheduled next, and, as you know, ministers have busy schedules -- what I was going to suggest is after the break we set your presentation aside and the questions, because I think we still have some questions, and hear from the Minister and then get back to your panel. Would you be okay with that?
7510 MR. OOSTERMAN: Somewhat subject to the timing of course, but yes, generally we are.
7511 THE CHAIRPERSON: Yes. I don't expect our conversation with the Minister will be very long --
7512 MR. OOSTERMAN: Oh, no problem then.
7513 THE CHAIRPERSON: -- and so it's just a question of accommodating his schedule.
7514 MR. OOSTERMAN: Absolutely.
7515 THE CHAIRPERSON: I'm sure he has other business too. So thank you very much --
7516 MR. OOSTERMAN: No worries.
7517 THE CHAIRPERSON: -- for accommodating that.
7518 MR. OOSTERMAN: Thank you.
7519 THE CHAIRPERSON: So let's take a short 10-minute break and we'll come back at five minutes to 11:00. Thank you.
--- Upon recessing at 1043
--- Upon resuming at 1055
7520 LA SECRÉTAIRE : A l'ordre, s'il vous plaît.
7521 Mr. Chairman, we are now ready to hear by videoconference from the Regional Office in Alberta the Honourable Manmeet S. Bhullar.
7522 Good morning, Minister Bhullar. Can you hear us well?
7523 HON. BHULLAR: Good morning. Yes, I can.
7524 THE CHAIRPERSON: Good morning, Minister. Welcome to our hearing. Please go ahead and then we'll have some questions for you.
7525 HON. BHULLAR: Wonderful. Thank you very much and good morning.
7526 Good morning, Mr. Chairman and Members of the Commission. Exactly one year ago today, February 14th, 2012, I had a meeting with Minister Paradis to urge the federal authorities to develop a national Wireless Code that would empower and protect not only Alberta consumers but all Canadian users of wireless services.
7527 The need for a national Wireless Code became obvious soon after I became the Minister of Service Alberta as my Ministry and I receive hundreds of consumer complaints regarding wireless services every year.
7528 After my meeting with Minister Paradis, I continued my advocacy for a national solution through correspondence with Mr. Paradis and Mr. Katz, the Acting Chairman of the CRTC at the time, via letters I sent in early March of last year and I today am very pleased that after all of this effort I am standing here today advocating for a national Wireless Code that will protect all Canadian consumers.
7529 I think it's obvious that having 10 provinces with varying legislation could be a regulatory nightmare for consumers and wireless service providers. A national solution is really the only way to go on this. It will ensure consistency across all provinces and territories and best serve consumers and service providers.
7530 Commissioner, Alberta is a province on the move. We get approximately 100,000 new residents every single year.
7531 Our significant population growth has a direct impact on wireless use as well. In the past year alone, smartphone use in Alberta has increased by more than 52 percent, data use by more than 19 percent and tablet ownership has increased dramatically by at least 257 percent.
7532 In such an active market, there's no room for confusion and complexity, especially given that services provided by wireless companies are truly essential in this day and age.
7533 In fact, the importance of mobile phones as a means to connect people is similar to the surge of landline telephones back in the 1930s and 1940s.
7534 However, unlike landlines, where government support was necessary to develop infrastructure and encourage use, the mobile services market is booming without the need for such intervention.
7535 So the role of government this time around is to ensure consumers are empowered and protected, and consumer empowerment and protection is about ensuring consumers have the tools to make informed choices.
7536 I am confident a national Wireless Code that applies to all carriers and resellers, for both pay-as-you-go and post-paid services, can meet this objective by ensuring consumers have clear and accurate information on which to base their decisions about the services and features they wish to purchase.
7537 While I feel the Wireless Code Working Document is a good start, I believe it should go further. With this in mind, I would like to take this opportunity to highlight some of the key elements of my submission.
7538 First, I would like to share with you two examples that illustrate the basic challenges Albertans face with their wireless services.
7539 Jason is an Alberta resident who was in contact with my ministry. Like many Albertans, he owns an iPhone, which he used while abroad. When returning from his three-day trip, he received a bill for over $7,000 for 130 MB of data use.
7540 Interestingly, this individual reports notifying his service provider that he would be travelling internationally. Yet, the representative made no mention of possible roaming fees and Jason was never prompted to buy a roaming package to reduce costs, nor was he notified what the charges would be while abroad.
7541 A second example is that of John. He took his family on vacation to Arizona and returned to a bill of over $10,000 in data charges. It turns out his grandkids were charged hundreds of dollars for each movie they watched on Netflix on a laptop via a mobile Internet stick.
7542 The cell phone company did end up reducing the charge by about $1,000, but, in his own words, this individual said: "Old guys like me just aren't up to speed on technology."
7543 What is disappointing about both of these stories is that neither received a prompt or notification indicating they were being charged additional charges.
7544 Mr. Chairman, the experiences of these individuals are extreme examples but they are common. They represent the challenges many consumers face when trying to understand their wireless service cost obligations, as such, Mr. Chairman, consumers are not able to make informed decisions and not able to protect themselves.
7545 To help consumers, the Code should require that communication with consumers be clear, concise and use standard data -- standard units of measurement. The Code should identify "plain language".
7546 While consumers are generally well-informed about voice services, such as how much it costs per minute, per call, awareness of data charges is much more challenging as consumers often struggle to understand the amount of data being used.
7547 The average consumer does not understand how many megabytes or kilobytes sending an e-mail or watching a YouTube video consumers. Having different units for each service or having different companies use different units only confuses consumers further.
7548 You don't see gasoline in today's day and age or any age for that matter, being advertised in litres in some places, millilitres in others, or cups or gallons in others, so why should telecommunication contracts be any different?
7549 Plain language and consistent units of data should be standard for all advertising, contracts, communications, warranty explanations, etc.
7550 I applaud initial steps taken by some providers to provide tools to help consumers understand their data consumption. However, there is currently no standard in place and I believe a standard is a MUST in a future Code.
7551 Another item important to consumers is ensuring service agreements clearly disclose the costs of all mandatory and optional services.
7552 While establishing minimum standards for contracts is a good first step, I propose the Code go further by asking wireless service providers to provide a document outlining the costs for mandatory and optional services in plain language with consistent units of data that can be easily understood.
7553 Mr. Chairman, this is no different than how a pizza menu is set out. You are presented with the costs which includes a certain number of toppings, a certain number of options. Next, you are given options for selecting additional toppings for a specified amount. The point is, you know what you are getting and you know what other options are available and what the costs for each of these items will be.
7554 One of the most important areas is notification of additional costs.
7555 As outlined in m y submission, I proposed wireless service providers be required to notify consumers, free of charge, before they incur additional charges - such as when a voice or data use limits are exceeded or when they are attempting to use a service that is not part of their agreement or obviously, when they are roaming.
7556 The technology to alert consumers when they are about to incur additional charges has been around for some time.
7557 To me, having hidden or extra costs in a contract is like staying in a hotel, turning on the tv and flipping through your channels and finding a movie. You watch the movie and at the end of your stay, you are presented with a bill for the movie, for which there was never any notification. There was no notification that it was not included in the cost of your hotel. Quite simply, it's wrong.
7558 I must acknowledge that there are solutions available for consumers to monitor their use.
7559 For example, certain companies provide mobile applications that track voice minutes or data. Other companies use text messaging to respond to consumer inquiries or automatically provide usage updates at regular intervals.
7560 While we applaud these actions as a step in the right direction, the notifications we are proposing should be mandatory, proactive and sent before any overage costs are charged.
7561 For example, a user who is about to exceed their usage limits or access a service that is not part of their user agreement should receive a text message informing them of the charges they are about to incur.
7562 The notification should be sent to the user's wireless device and be very simple and clear. Most likely, this should take the form of a text message, e-mail or similar electronic communication.
7563 The notification should tell the consumer: They are about to incur an additional costs; how much it will cost to continue using their device; and how the consumer can mitigate the additional costs.
7564 To manage costs while abroad, service providers should provide a free avenue for consumers to access and purchase mobile phone packages to mitigate exorbitant fees. Avenues could include a text message or e-mail with a phone number of a link which could be accessed without cost to the consumer.
7565 I also endorse the proposal to notify consumers at intervals of 50, 80 and 100 per cent of the users' usage limits.
7566 In addition, as stated in the Wireless Code Working Document, I endorse giving consumers the option to cap their use, at the time a contract is entered into or at any point thereafter, free of charge. Use should be capped at either the specified limit in the plan or to a dollar value.
7567 So, if a consumer was to go abroad, he or she should be able to call his service provider and ask for a plan to be capped at 10MB of data and 250 minutes of talk, because his international plan covers as much. Alternatively, the consumer should be able to say, "I am willing to spend $100.00 for services, as I need them, so please cap my plan at $100.00."
7568 Notification should be sent to the consumer while once he or she approaches the cap limit at 50, 80 or 100 intervals and they should be presented with options on how to raise the cap should he choose to do so. Again, all of this should be done free of charge.
7569 Through these caps and notifications, consumers are presented information in a clear, transparent and understandable manner so that consumers can choose if and when they want to incur that cost.
7570 In Europe, Australia, Argentina and virtually all of Asia, consumers are not charged for incoming calls.
7571 Many Alberta consumers have expressed frustrations with the cost of incoming calls within Canada.
7572 This can be a substantial cost with implications on all consumers. To illustrate my point better, just imagine if Canada Post started charging you postage for all your incoming mail - important and junk mail alike. And not only would this cost a lot of money to you, but you would also regard it as an unfair practice.
7573 Well, if you regard this to be objectionable, then you should also regard charging consumers twice for a single call while in Canada to be objectionable as well.
7574 The next issue I would like to speak about is Contract Length.
7575 One of the most common statements we hear and something else posted on your own site was "CRTC, please get rid of the three-year contract. Canada will love you for it."
7576 I feel this comment sums up the most popular topic posted to the CRTC's online communication website.
7577 In fact, 26 of the top 100 comments were about doing away with three-year contracts -- that's one in four people commenting on one very specific topic.
7578 What's even more interesting is that when you narrow these comments to only the top 10, all but three are requests to prohibit long term contracts.
7579 Contract length was not addressed in the Working Document, and the public as well as the Competition Bureau has taken issue with this omission.
7580 The online consultation clearly tells us this is a top issue for consumers.
7581 Given the level of public interest in this, it would be something to consider. Additionally, it would be prudent for the CRTC to evaluate whether mobile devices even last that long.
7582 Additionally, I would suggest the Code prohibit contracts from being amended or renewed without the express consent of the consumer.
7583 Another issue I raised in my submission, which has also been identified by consumers in the online consultation, concerns charges to unlock cell phones. This issue was also recently flagged by the Competition Bureau as anti-competitive.
7584 If I buy a new iPhone 5 from the Apple store, it costs me $899.00 and it comes unlocked, which means that I can use it with any service provider I want.
7585 The cost is the same if I buy exactly the same type of phone through a service provider, however, I will only be able to use that phone on the provider's network and the provider will charge between $35.00 and $70.00 to unlock it.
7586 Since the cost of the device is recovered over the length of a contract, there is no cost recovery reason to charge consumers for taking their paid-in-full phone to another carrier.
7587 Additionally, at the end of a contract term the consumer owns the phone, and should not be charged to use their property with another carrier.
7588 Given that wireless providers will always recover the cost of the device, I see no reason why devices should not be sold as unlocked at the point of purchase.
7589 Cancellation fees were another topic many consumers have contacted my ministry about or commented on the consultation page about.
7590 I believe cancellation fees should not exceed the remaining balance of any device subsidy.
7591 For example, if a consumer received a discount on the cost of a phone for signing a three-year contract and the consumer cancels the contract after two years, whatever balance remains to pay off the cost of the phone should be the cancellation cost.
7592 Many of the cost formulas currently used are very difficult to understand or add indirect fees that are not part of the formula.
7593 An example of an indirect fee, Mr. Chairman, is a disconnection fee.
7594 I believe that putting a cancellation formula in a national code would make Canada a leader in consumer protection and balance the rights of consumers more fairly with those of service providers.
7595 As I indicated in the submission, it is critical for the Code to be enforced to protect consumers.
7596 I believe the CRTC is best positioned to enforce the new Code. The CRTC has broad powers of enforcement that include conducting preemptive investigations into market trends and issuing administrative fines -- two very effective tools.
7597 The Commissioner for Complaints for Telecommunications Services, by its own admission is not equipped to do more than investigate complaints and resolve disputes on a case-by-case basis.
7598 Finally, consumers should be permitted to cancel a contract with no penalty if the contract fails to comply with the provisions of the wireless code.
7599 Lastly, I suggest that the code be reviewed every five years. This would allow sufficient time to observe the code's effect on the marketplace and will ensure the contents of the code keep pace with technology so as to make the code outdated.
7600 Mobile devices today are much more than just phones. They contain information about almost every aspect of a person's life: contacts, messages, e-mails, banking information, browser history, calendars, et cetera. You know who the person talks to, where they bank, where they will be.
7601 For this reason, it is imperative that strong checks and balances be in place to ensure that the privacy of consumers be protected.
7602 With this in mind, plain language is key to ensuring that consumers understand how their privacy is being protected by wireless providers. A breach of this duty to protect privacy on the part of service providers could have a detrimental effect on consumers.
7603 For this reason, I propose that privacy audits and assessments be conducted at regular intervals by the Office of the Privacy Commissioner of Canada. Regular audits will pre-empt any misuse of consumers' information.
7604 In closing, Mr. Chairman, I would like to reiterate the importance of this issue to consumers in my province. Alberta has the largest cellular use in the country, with nearly 87 percent of Alberta households owning, at the least, one phone.
7605 Furthermore, an increasing number of Canadians use their cellular phone or Smartphone as their only telecommunication device. In 2010, 13 percent of Canadians reported owning only a cellular phone and no home landline.
7606 This figure was only 8 percent a couple of years earlier, and I would predict that it is much higher today.
7607 We have a responsibility and an opportunity to ensure that consumers can make informed decisions through the establishment of a strong national wireless code. While it may not be practical for every aspect of the wireless code to be retroactive, some elements, such as notification, protection of privacy, and the ability to cap charges should immediately apply to all consumers.
7608 I look forward to the redrafted Wireless Code Working Document, one that takes into consideration the proposals put forward by consumers and intervenors alike. As someone who is advocating for Alberta consumers, current and future, a national code is the most appropriate solution to address the challenges that many are experiencing. I am pleased that after exactly one year since my first meeting on this issue, we are headed in that direction.
7609 Thank you very much, Mr. Chairman and Commissioners. I would be pleased to answer any questions you may have.
7610 THE CHAIRPERSON: Thank you very much, Minister, for your presentation. It is very clear.
7611 Commissioner Simpson will begin the questioning.
7612 COMMISSIONER SIMPSON: Good morning, Minister. We are very pleased to have you as part of the hearing this morning. With the wonder of communications and the things it can do, I only wish, as you are experiencing it, that we could somehow equalize the time zones so that we are not up so early when we are in the West.
7613 COMMISSIONER SIMPSON: If I may, I would like to start at the broader end of jurisdiction, and then get into some of the finer points of your submission toward the end.
7614 HON. BHULLAR: Sure.
7615 COMMISSIONER SIMPSON: It is of great interest to me that the provinces, and Alberta very clearly, are finding it necessary to take a position on behalf of the consumer, and some, like Quebec, are considerably more advanced.
7616 And here is the first question for you.
7617 We have heard a lot from the provinces and from the carriers that a single, standard, coherent, clear code is what everyone is looking for.
7618 But it is already apparent to us that some jurisdictions, such as Nova Scotia, for example, have requirements or expectations of the code that exceed even Quebec's, which, right now, is being touted as the benchmark, if you like.
7619 You have one, as well, in that you are believing that this code ought to advocate on behalf of small business, which is not part of other provincial submissions.
7620 So my question to you is, should the code embrace every aspect of every condition of every province and territory as our goal? Or, if it was to fall short in any of the exceptions, how do you think the provinces would intermediate and act on behalf of their constituents if the code wasn't sufficient?
7621 HON. BHULLAR: One of the reasons why I advocated for a national solution was just the fact that Albertans and Canadians alike tend to migrate to different provinces and do business and do work all across this country. The sheer number of folks from the eastern coast of Canada that work in Alberta today is very significant.
7622 So I feel that a national solution works best to ensure that all Canadians are protected, and to reduce confusion for consumers.
7623 I also think that it is a way to have the industry step up to the plate more readily, to have them be able to be more progressive in this area, if you have a national solution.
7624 Now, there is no question that some provinces have taken some steps on this file. My opinion would be that the national code should be strong enough to encompass the strongest actions which any given province may have already sought to include, or have, in fact, included in their provincial solutions.
7625 COMMISSIONER SIMPSON: With respect to your request to include small business in the code, could you give me an idea of what the metric would be that determines what a small business is?
7626 Is there something that you already have as a predetermination in your government?
7627 HON. BHULLAR: I think that when Canadians travel abroad, especially, they come back with a series of questions about why Canada's marketplace is not as competitive as others, especially in this particular area.
7628 So my perspective is really that we should encourage smaller enterprise to be involved in these businesses.
7629 Obviously, a small business should be defined in relation to the volume and cost of telecommunications services similar to the definition in the Commissioner for Complaints for Telecommunications Services' procedural code.
7630 But I think, at the end of the day, the point of having small business included is to create a more competitive Canadian marketplace.
7631 Now, there are some who would argue that, with Canada's landscape, that's not possible, that with the sheer infrastructure investments required, that's not possible. But I would profess that a lot of the changes, I feel, that have taken place in the interest of consumer protection have always come about through small business and the smaller players.
7632 So I think that's imperative for allowing small business to get involved in the industry, but I also feel that small business needs to be protected by this code.
7633 An example of what could be used to define a small business would be a monthly invoice for all telecommunications services in the month preceding in which a complaint is made --
7634 I am sorry, I am trying to point out the exact definition here.
7635 HON. BHULLAR: Average net monthly invoices for all telecommunications services in the three-month period preceding the month in which a complaint is made against such a participant not exceeding $2,500.
7636 So I guess that would be the threshold for small business for us.
7637 But I really want to stress two points here, and I know that the first one I made is a bit off of what we are discussing today.
7638 If you look at consumer protection, consumer protection in this area, I feel -- and consumer competition -- has been promoted by smaller players that have joined the marketplace in the past.
7639 For example, when I was growing up, I think there was a company called Clearnet that first came out with no contracts.
7640 Now, when you have these smaller providers come into the marketplace, they push the envelope and create more competition.
7641 I know this is not something we are discussing on the national code, but it is not every day that a provincial minister gets to make a submission to the CRTC to encourage you to allow small players to get involved in this marketplace. That's why I wanted to take this opportunity to make that point.
7642 On the other side, a definition that could be used is $2,500 over a three-month period. So not exceeding that cost over a three-month period would constitute a small business.
7643 COMMISSIONER SIMPSON: Thank you very much. That was an excellent answer.
7644 The next question I have for you has to do with how much bite can be put into the bark of legislation, and it is your position that the CRTC is the ideal enforcement entity, with CCTS, the complaint commission, being the entity that would continue in its mandate of administration and complaint resolution.
7645 The CCTS has the ability to fine up to $5,000 per complaint. The Commission has no ability to do this whatsoever other than through our Do Not Call legislation, which is not a piece of legislation sufficient to support the code. So my question is is $5,000 enough to mitigate and modify industry behaviour? For example, this is in contrast to legislation in Nova Scotia that foresees the need or the ability to go up to $300,000 and I believe Quebec is a hundred thousand. So if you were to have moved forward in your jurisdiction on a provincial code, would you have monetary penalties and how much would they be?
7646 HON. BHULLAR: Well, you know, I don't want to let out all of Alberta's secrets just in case we don't get everything on here, but I will say that I think $5,000 is not significant enough. I think that especially dealing with the scope and the ability and, quite frankly, the revenue involved in this business, I think the fines need to be much, much higher.
7647 Now, I think that having higher fines also just sets a tone of how seriously we take this matter. So I think fines need to be much higher. I would push the envelope and say -- and move up to that half a million dollar mark.
7648 COMMISSIONER SIMPSON: Okay. Thank you for that. Your position was caps are necessary and that caps shouldn't necessarily -- if I'm reading your information correctly, shouldn't necessarily be set at some arbitrary level but there should be an ability between carrier and consumer to set a level that's appropriate to the consumer's need, is that correct? Or the consumer's --
7649 HON. BHULLAR: Well, I think --
7650 COMMISSIONER SIMPSON: -- threshold?
7651 HON. BHULLAR: I think you need both. I mean, first of all, what you need is -- let me give you an example of the developing world. Much of the developing world today, once an individual makes a call or uses the internet for even a couple of minutes, they automatically receive a notification saying here's how much you just used and here's what your balance is left. That's a tool that allows people to understand that -- understand what they're using and how much they have left, obviously. So I think we need to have built-in caps at 50 percent, 80 percent, a hundred percent, but in addition to that I think consumers need to have the ability to set a cap, especially when roaming. So if an Albertan or a Canadian chooses to go to Arizona, they should have the ability to say we want to set, you know, a cap of $200 or $300 in that particular case. And they should -- there should be the technology to allow those people to know when they've reached 50, 80, and a hundred percent of that cap.
7652 COMMISSIONER SIMPSON: Thank you. Would it be your view that caps also protect the carrier from bad debt or losses? You know, do caps have a dual protection capability?
7653 HON. BHULLAR: Oh, absolutely. I mean, look, the challenge in this industry and the challenge in protection -- protecting consumers is the fact that consumers don't know, right? Consumers don't have an idea of how much they're going to end up using. So, for example, you go overseas or you go to the States, you turn on your phone and you end up hitting the Twitter app or the Facebook app. A consumer would likely have no idea how much data they've used. They end up using that data, they come back, they get that awful feeling in their stomach and say, oh, gosh, I can't -- I don't want to see my bill. They get the bill, they see the bill, and they end up calling the company and having a whole series of arguments and discussions. And the call gets escalated, and before you know it it's taking the company a lot of time, effort, and energy to deal with this consumer as well.
7654 So this has the opportunity to protect everybody, right? I think this has the ability to protect consumers obviously, but it also has the opportunity and ability for companies to perhaps reduce the number of people that they have in their complaints, investigations, and retention departments. So I think this definitely has the ability to offer dual protection.
7655 COMMISSIONER SIMPSON: So caps could be a positive benefit for both.
7656 Just a few more questions, minister. We had a group of academics from Ryerson earlier in the week and their research was focusing on the needs of disadvantaged and disabled individuals. And there was an interesting group within their sphere of interest and it had to do with those living in rural communities. And this question that I have for you has to do with an individual who purchases a cell phone who is in the remote area but the effectiveness of the coverage is not really known until after the contract is signed. Do you have a view as to whether inconsistent or unacceptable service is a reasonable ground for termination of the contract without penalty?
7657 HON. BHULLAR: You know, I'm glad you brought that up because that is something that I hear a lot about from many, many rural Albertans. They too have the necessity or feel it's necessary to use this technology. And the range can be so different. The coverage range can be so different in so many different places that it almost feels unjust for a consumer to have to walk into a contract, purchase a device, then go home and realize that it's only usable in a very small part of their property or of -- or their county. So I think that as this conversation develops, it's very important that we have an opportunity and give consumers the opportunity to cancel a contract if it can be established that there is no use for that device where they clearly intended.
7658 So I know that this is obviously a very difficult thing to define, but in the case of folks situated in rural and remote areas, I think that there has to be some compassion on the part of companies and -- to help people perhaps even test a device or test coverage before they lock into a two-year contract. I think it's just -- I think it's very, very important.
7659 COMMISSIONER SIMPSON: Mmm. The compassion --
7660 HON. BHULLAR: Now, there is -- yeah.
7661 COMMISSIONER SIMPSON: Compassion is hard to regulate --
7662 HON. BHULLAR: You know, you're very right, commissioner, but here's the issue. A lot of folks have said that, well, coverage map should be able to do this. They don't do this. In my opinion, I've -- and in my experience I've spoken with many, many individuals who have purchased devices, being told that they would be able to work within a certain area. They go and they actually -- they go home and use the device and it doesn't work. So if we're going to rely on coverage maps to make the sale, then if that coverage map is not accurate, then the consumer should have the ability to return that device and rescind the contract.
7663 COMMISSIONER SIMPSON: Thank you. I just have two more questions, sir. With respect to your position on contract terms, you have said that three-year contracts would not be on as far as Alberta legislation is concerned, but we've heard and fairly convincingly that there's not a lot of consumer interest in shorter term contracts, I suspect, because they're linked to the amortization of the purchase of the device. So in shortening the term of a contract and mandating three-year contracts out of existence, are we not making the overall entry on a monthly basis more expensive?
7664 HON. BHULLAR: Well, look, the reason why we brought that issue up for discussion is the fact that a lot of Alberta consumers are saying, listen, my device doesn't last me three years. So what I would push the CRTC to consider is, you know, if devices are being sold on a three-year contract, maybe we need to look and see what percentage of devices actually ends up lasting three years. And if they don't end up lasting three years, then obviously some changes need to be made in this area.
7665 COMMISSIONER SIMPSON: M'hmm. Last question and it's a -- it's linked to your five-year review. One of the questions that has been, I think, plaguing all of us is exactly how long this code will hold up to the ever-changing nature of the business. And again, we had many consumer groups, including one association yesterday that was foreshadowing that these devices are becoming so much more than just being a telephone. They're a social media device, they're a transaction device and the like. And if the federal government hadn't moved into this space with the intent of trying to find a suitable code for the country, how would you have dealt with the potential of privacy, financial information, transactional abilities of these devices imposing -- causing interest from everything from, you know, again, the need to look at protection that goes so much more beyond the simple contract of a device? What would you have done?
7666 HON. BHULLAR: Well, look, that is a very, very important discussion; that is a very critical discussion, and, quite frankly, that's a discussion I think that a lot of folks -- even though it's important for them to have privacy on their devices, they're a bit scared to have that discussion because they just want to presume everything is fine. In Alberta, I would have engaged the office of our privacy commissioner to conduct audits. Now, this is one of the reasons why I'm pushing for a national solution because the moment we would have engaged a provincial officer of the legislature to do privacy audits of devices themselves and perhaps of companies, we would have found ourselves in a series of jurisdictional battles because telecoms are regulated by the federal government.
7667 So that's one of the reasons why I push for a national solution.
7668 This privacy area is one that requires, I think -- to be quite honest, I think this requires a complete study and a review of its own. I think that this is so critical that this requires -- the privacy processes of individual companies needs to be audited on a regular basis.
7669 So what I mean by that is employees at companies have the ability or presumably have the ability to review bills, to review transactions, to review what -- at least some personal information of a consumer. So we need to be assured that those -- that there is checks and balances in place on the part of companies to ensure that people don't have just a free rein on poking into consumer information.
7670 And then the next part of it is the technology itself. Quite frankly, this is an ever-growing area. This is an area that faces many, many challenges and this is something that I feel requires an expert panel to look at and look at regularly. I think it's very important that we have people that are world leaders in this area look to ensure that we have good standards in place to ensure devices are protected.
7671 This is not something that I think is feasible for any one jurisdiction to do on their own. This is -- these are issues of -- I mean, these are issues that governments, quite frankly, all across the world are dealing with. Governments are trying to make sure their devices are safe and protected and the information on those is protected.
7672 So this is something that I think nationally we need an expert panel to review, to review regularly.
7673 COMMISSIONER SIMPSON: Thank you very much.
7674 Minister, all of the other items in your written submissions are very clear and will be taken in by the Commission. And as a result, unless you have any other comments, those are my questions. Thank you.
7675 HON. BHULLAR: Well, you know, thank you very much.
7676 In closing, I guess I'll just say in the area of small business I'm going to take this opportunity once again to say the CRTC needs to do what they can to encourage small business, small enterprise and new players to enter the market because that's how we get more innovation and creativity in the marketplace. So I think that's essential.
7677 I'm going to use this opportunity to make that point again. I think that small businesses should be protected under this national Code as well, as I mentioned earlier.
7678 And the issue of privacy is not an easy one. The issue of privacy is not one that I think can be dealt with different solutions and different provinces. It's a very complex one and I think the CRTC as the regulator is in the best place to help everyone deal with that.
7679 COMMISSIONER SIMPSON: Thank you very much, Mr. Chair.
7680 HON. BHULLAR: Thank you.
7681 THE CHAIRPERSON: Before you go, Minister, I might have just one or two additional questions.
7682 Well, first of all, thank you very much for having participated in the proceeding. It's very important for us to hear. We have an unlimited plan here so you can appear as often as you want, you or any minister of provinces or territories.
7683 THE CHAIRPERSON: So at any point that you wish to participate in our proceedings you're most welcome.
7684 I was wondering if you could -- if you have any recommendations for us. Obviously, the implementation of the Code will help create a more informed and empowered consumer base, but have you given some thought to other means by which we could help consumers beyond the Code make informed choices in the marketplace on telecommunication issues?
7685 HON. BHULLAR: Sure. Telecommunications is an area that I find consumers really have some challenges understanding. And the reason for that is because of gigabytes and kilobytes and megabytes, right?
7686 You ask the average individual what size of file is that they're trying to email or a picture that they're trying to upload while they're on holidays and they just -- it's very difficult for them to know. It's difficult for anyone to know.
7687 So the more simple tools that we can put in place that are consistent. So I noticed some companies have started work in this area and they have come out with some good innovations. But those should not be innovations that are limited to one company. They should be standardized.
7688 With that consumers will better be able to assess and understand what their usage actually means. So once a consumer, let's say, watches a video on their iPhone, receives a notification of how much data was consumed during that period of time, once they see that a couple of times they'll be able to make better judgment calls on what this actually takes and requires and how much data they may actually need.
7689 Right now, if you ask the consumer how much data they need on a plan if you're like me you're going to say "I have no idea". You know, you really have no idea because who sits and measures every single email? Who has any idea how big a file size is?
7690 So the CRTC needs to take this very seriously and ensure that simple tools like notifications are standardized so consumers can have a better understanding of this.
7691 Consumers today have a better understanding of how many litres it takes or how many kilometres they could drive on a litre or a tank of gas. So if they can get that understanding they'll eventually get a better understanding of the amount of data usage they need out of their device. But the only way they can get there is if we have consistent units. The only way we can get there is if they are provided with more regular information on what they just consumed.
7692 So a simple example is, as I said before, in the developing world you go online for, let's say, a period of two minutes. After that period of time you're going to receive a message saying, "Here's what you used".
7693 So it's the developing world and their companies can use this technology. I really don't understand why we can't in Canada. I mean, if somebody watches an eight-minute YouTube video why can they not receive notification afterwards that says, "Here is how much you used. Here is how much you have left"? That's the only way consumers will really get to have a solid understanding of this marketplace.
7694 THE CHAIRPERSON: Thank you, Minister.
7695 HON. BHULLAR: I think that's one of the -- one.
7696 THE CHAIRPERSON: Thank you for that.
7697 My second question relates to your proposal that the review would occur -- well, do you mean in five years and we shouldn't do it any sooner? I note -- I believe in Alberta you have fixed term elections and you're up for review every four years.
7698 THE CHAIRPERSON: And you mentioned the rapid pace of technology. Others have expressed a view perhaps we should get to this sooner than five years.
7699 Is this -- is your position that it should be at least in five years if not sooner, or do you really want us to wait for five years?
7700 HON. BHULLAR: No, actually, my position is that, we in Canada are not very good at continuous improvement on our regulations and legislation, okay, and that's across the board. We end up doing these very in-depth processes that end up taking a year and a half to two years to make any changes.
7701 So what I feel needs to happen is we need to make incremental adjustments regularly. So that's, like, on a yearly basis and within a specified period of time we need to have very, very comprehensive reviews.
7702 So you know, the more often you do this the better. I just think that you can't do a one-year process every year to make a change. But we can do and we should get accustomed to having quicker tweaks to our regulatory and legislative system.
7703 You know, I can't stress this enough. I think in Canada one of our biggest challenges in consumer protection is how long it takes for us to make changes across the board.
7704 THE CHAIRPERSON: Understood. That's very --
7705 HON. BHULLAR: I mean, just look at this process alone. I started advocating for this after becoming a minister late 2011.
7706 We looked at -- I studied this issue and felt, okay, we need a national solution, visited the minister and then wrote to the CRTC early last year. And I was very pleased to receive a response from the CRTC in April of last year saying, okay, we're going to engage in this.
7707 But, you know, it's been a year since then, right?
7708 THE CHAIRPERSON: Yes. Unfortunately, the wheels of public policy sometimes turns slowly.
7709 But in any event, I wanted to --
7710 HON. BHULLAR: That's exactly what I'm saying.
7711 THE CHAIRPERSON: Yes.
7712 I wanted to thank you again for participating in our hearing. It's very much appreciated and you're always welcome.
7713 Thank you.
7714 HON. BHULLAR: Thank you very much. Thanks for taking action on this and let's hope we can better protect Albertans and Canadians.
7715 THE CHAIRPERSON: Okay, thank you.
7716 HON. BHULLAR: Thank you.
7717 THE CHAIRPERSON: So we will continue without a break.
7718 If the Bell panel can come back up we would appreciate that and we'll just have a few more questions for you.
7719 THE CHAIRPERSON: So thank you for having accommodated that intervener.
7720 We just have a few more questions for you. I was going to ask this, but I noted that other people on the online consultations also reacted to this.
7721 You said, Mr. Oosterman, that the industry is the envy of the world. I think I'm quoting you there -- or of the globe. It's fantastic and remarkably good.
7722 There are a few skeptics out there. I won't actually use the terms they used here, but I was wondering if, you know, you guys are in the marketing business so I'm going to ask you.
7723 Do you have an independent assessment to back up third party assessment, why you believe that is the case?
7724 MR. OOSTERMAN: Well, I can give you some practical examples. We don't have an independent third party study group who has done that work, but let me give you a few examples.
7725 We, at Bell, were the first carrier in the world to allow you to watch the Super Bowl live on your mobile device. That would be one example.
7726 More recently, when Apple introduced its new iPad, they listed five carriers around the world that would have that device at launch, three of those were the Canadian carriers: Bell, TELUS and Rogers. So, I think there's ample support.
7727 Anybody who travels globally and lands in New York, lands in London -- I think people that came back from the Olympics, for example, that took place in London this past summer indicated to me that they were quite shocked because their phones kept operating in Edge. Edge is a network technology that's at least three or four generations ago. That wouldn't happen here.
7728 So, there are many reasons why I make that statement.
7729 I look at the functionality that exists in Canada for what you can do with devices, not many places in the world would equal that functionality on as broad a geography as we do.
7730 We talked about -- well, here's one. When we launched our HSP network in '09, we finished the entire country before Chicago had HSPA. So, there are many examples where we've demonstrated real leadership on a global basis in terms of functionality.
7731 And we talked already about cost. If you looked at the cost per minute consumed, rather than the average monthly bill, because you have to include how much the people get for that, so the cost per minute. I think we have either the second or third lowest rates in the world.
7732 We have some of the highest satisfaction levels in the world. I know when I personally talk to carriers around the world that they are continuously amazed at the technical performance elements we deliver as a carrier in Canada and we know we compete against some fierce competitors and it's tough, so they are also very good.
7733 THE CHAIRPERSON: I'm not going to put it at your feet, because you aren't there, but if I were to tell you that I recently travelled to Iqaluit, I fully understood what CDMA means, and I think there are Canadians that would think that from their perspective they would question whether we are the -- of the world.
7734 That may be the case for high density urban areas where there seems to be a lot of competition, but in terms of wireless beyond that they may not have that view.
7735 MR. OOSTERMAN: Well, again, I would challenge that. I absolutely acknowledge that there may be isolated pockets in Canada that don't have the latest generation network, but certainly our HSPA coverage extends to, I believe it's 92 or 93 percent of the Canadian population, it's our -- virtually our entire coverage footprint.
7736 On the LTE, which is the absolute latest generation technology, it's now at 70 percent of the population covered and, again, I don't have the number of percent of footprint that's covered with that, but it's growing every day because we continue to build that out.
7737 And, so, while I absolutely acknowledge that there can be pockets where we may not have that latest generation, on average, I think consistent with the objectives set out by the Telecom Policy that is prevalent in this country, we deliver the best quality networks to the greatest number of people across the largest coverage footprint proportionally to any place on earth.
7738 MR. DANIELS: Mr. Chairman, if I could just add a couple of points.
7739 First of all, specifically to your example of Iqaluit, the issue in Iqaluit is that it's a satellite community, there's no fibre, there's no backbone, so, the question is, how do you come up with a solution to be able to bring the next generation technology.
7740 And, in fact, we have a filing with Northwestel to modernize the network and identified that it is proposing to bring 4G, including Iqaluit, and so it would be -- and that will be the first in the world to have satellite 4G solution. So, I think that's a demonstration of a leadership position.
7741 In terms of your question about a study, one study that I do have access to that I could happily file on the 22nd, if you would like, is from Recon Analytics which actually looked at -- the discussion is -- there's some interesting points in it where it talks about Canada having the fourth -- it looked at 14 different countries in the world and compared iPhone pricing and determined that Canadians have the fourth shortest handset replacement cycle of 14 countries in the world. So that Canadians are actually going through, despite having longer-term contracts, they're actually going through handsets quicker than the rest of -- you know, well, number fourth in the world and that we have the second lowest prices for iPhones of those 14 countries and the third highest subsidy.
7742 And that's -- I find it is a little slightly distorted when you look at it because our prices are actually lower, we were talking about in the U.S., but it's because they use a purchasing power parity.
7743 So, I'd be happy to file that study and you can look at it.
7744 THE CHAIRPERSON: Okay. Well, please do so for the 22nd, which in fact allows me to build a little bit more on the question which I think you foreshadowed on paragraph 54 of your submission this morning about how we define success.
7745 Help me to understand exactly what you're saying here, because the sentence is a bit ambiguous.
7746 You start the sentence off -- the paragraph off by talking about proper, intelligent purchasing decisions on the part of consumers, then you talk about competitive marketplace:
"...this allows us to continue to innovate, compete, differentiate, invest, that's how we define success."
7747 THE CHAIRPERSON: The "that's", does it only refer to innovate, compete, differentiate and invest, or are you talking about the other objectives as well?
7748 MR. OOSTERMAN: My definition of success is perhaps a little unusual, but I'm a fiercely proud Canadian, in fact, earlier in my career when I was responsible for the company's sales incentive travel, I ensured that a hundred percent of that travel took place in Canada. We discovered every province: Quebec, the Maritimes, the west, the middle. So, I am a fiercely proud Canadian.
7749 And what matters to me, as a Canadian, as both a business operator and as a consumer, is that I have access to latest generation technology.
7750 I don't care solely about what is the absolute cheapest price I can pay, I care about the total value proposition and that includes the functionality I have access to, the quality of the network I have access to, the functionality in the handsets that comes.
7751 And I would submit that there is no point buying a handset if your network won't allow the full functionality of that handset to be realized.
7752 THE CHAIRPERSON: I can confirm that having been in Iqaluit recently.
7753 MR. OOSTERMAN: Excellent, thank you.
7754 So, the fact that we have a higher penetration level on Smartphones than the U.S. market which has all its advantages over Canada from a purchasing power perspective to me is a remarkable demonstration of a successful balancing of all the competing interests: price, quality, service, support, regulation, all those things all added together, you'd have to look at Canada and say, that's not too bad, in fact, that's pretty darn excellent, to have achieved what we have achieved is remarkable thing.
7755 It benefits consumers, it drives business economic activity, we are able to compete on a global basis. You know, a hundred percent, a hundred percent of our suppliers are global suppliers. That's true on the handset side, it's true on the infrastructure side.
7756 Our infrastructure providers tell us that we have the highest penetration of Smartphones on our new network of any carrier in the world, any carrier in the world.
7757 So, to me that whole total proposition is what defines success for me and I think if we come out of this five years from now where we have lost that, we will not have been successful.
7758 THE CHAIRPERSON: So, I take it then we will be seeing some proposals from you in the first of March comments on performance measures as to how this Code is performing?
7759 MR. OOSTERMAN: Well, I think there are -- it's very difficult to identify precise cause and effect, as you know. I'm talking simply about Canadians have access, Canadian consumers and Canadian businesses have access to a total value proposition that is second to none anywhere in the world.
7760 That's what we should be trying to protect.
7761 THE CHAIRPERSON: Mm-hmm.
7762 MR. OOSTERMAN: And, so, my focus would be on making the necessary tweaks, the necessary nuance adjustments to make sure, because our interests are actually aligned.
7763 We have no interest, none, in having consumers come in with an expectation set that isn't met by us, none. It costs us money.
7764 You know, it was interesting listening to the discussion that just took place where the suggestion was that if we had mandatory caps wouldn't that help the carrier as well because then the people wouldn't call up with runaway bills.
7765 And, of course, if you can eliminate runaway bills through education and notification, all those things, which we believe you absolutely can, then of course you avoid the costs that would come with hard caps where somebody calls up in a panic, must have everything turned back on because they're desperately trying to do (a), (b) or (c).
7766 And, so, you have a cost burden that comes with that that would be an unintended consequence I'm sure, but it's real.
7767 And, so, the dynamics and the balances that have to be delivered are at the nuance level and at the fine tuning level, not at the oh my gosh what we have is really horrible and disastrous.
7768 Let me say it again, less than 100th of one percent of people have submitted issues. And I again acknowledge that doesn't mean that everybody that has a problem submitted something and that's it, clearly some people will have been unhappy that didn't submit and clearly a number of people are happy and haven't submitted.
7769 But I look at, for example, the experience in Australia, roughly the same size subscriber base, 15, 20 times as many complaints, 122, 23,000 I think, if memory serves me right.
7770 So, you have to say in total we're doing something okay as Canada, as this country and we're benefitting consumers, we're benefitting businesses.
7771 Absolutely let's fix what can be fine tuned and made even better, but let's be careful we don't over correct and cause something that harms what I think is an important driver of Canadian competitiveness on a global basis.
7772 THE CHAIRPERSON: Don't get me wrong, you know, all I'm asking is for you to help us formulate good performance measures down the road.
7773 I think what's interesting in your proposal is, in fact, other than the proposals that we should look at churn or number of complaints and all that, you're actually saying, if you're doing public policy correctly, let's look at the impact on the digital economy more broadly.
7774 And I think that's what I'm hoping that you'll contribute to our process because the challenge of public policy, it's not like in a private company where your only performance measure, in a sense, is whether you're adding shareholder value in the end. And it's a little bit more easy to measure that.
7775 You may break that down, but here, it's public policy and so we have perhaps other things to be looking at.
7776 MR. OOSTERMAN: A hundred (100) percent I couldn't agree more. That's why I'm hoping that we don't just look at how cheap can we make service because the consequences of that is that quality suffers at some point.
7777 THE CHAIRPERSON: Fully understood.
7778 MR. DANIELS: I think we can take away in terms of coming up, I think, you know -- I guess we will come up with some measures that both address the specific issue that we think led to this, which is about consumer knowledge, information and so on, but we want to make sure that doesn't come at the cost of the greater, so there should be some measure towards that as well. So we'll take that away and come up with recommendations on -- I take your suggestions to file, then, the 1st, not the 22nd?
7779 THE CHAIRPERSON: That's right. I think most people were there.
7780 MR. DANIELS: Okay.
7781 THE CHAIRPERSON: Because people will have a chance to reply to that later on.
7782 Now, just going to contract length just to clear up some things in my mind, I -- did I hear you answer Commissioner Molnar by saying you do not offer one and two-year contracts?
7783 MR. OOSTERMAN: That's correct. We used to offer one and two-year contracts. There was no consumer interest in one and two-year contracts, so Claire, you can verify. I don't want to say something that's incorrect.
7784 I believe we do not offer, at this point, one or two-year contracts.
7785 We do offer the indeterminate term contracts on our supertab.
7786 THE CHAIRPERSON: Which is basically a month-to-month -- oh, no, because you could --
7787 MR. OOSTERMAN: Right.
7788 THE CHAIRPERSON: So it's even less than that. Okay.
7789 Just to build the record, what would be the business consequences if we were to require one and two years to also be offered?
7790 MR. OOSTERMAN: Well, ultimately, it increases cost because you have to then build every rate plan in three flavours rather than -- or four flavours rather than two.
7791 We do have a very significant variety and choice of rate plans that consumers can choose from, so it's -- you know, it's a fourfold increase in, call it, support costs. And to what extent does that have an impact --
7792 THE CHAIRPERSON: Fourfold? Help me understand why it would be fourfold.
7793 MR. OOSTERMAN: Well, I guess two -- well, if we --
7794 THE CHAIRPERSON: Surely there's the --
7795 MR. OOSTERMAN: We have two now, so it would be four, so a doubling.
7796 THE CHAIRPERSON: But surely your costs wouldn't -- there's more synergies than that.
7797 MR. OOSTERMAN: Perhaps. Perhaps. But there's no doubt it would increase our costs.
7798 THE CHAIRPERSON: Well, Rogers, they've got 11,000 grandfathered plans. If that's correct, I don't know how they make money.
7799 MR. OOSTERMAN: I don't know, either. They're probably better operators than we are, then.
7800 But you know, what I know for sure is that the more complexity you have to support, the more your costs go up. And those costs result in one of two things, and it's the truth.
7801 They either result in higher prices or they result in lower investment, neither one of which is good for Canadian consumers.
7802 THE CHAIRPERSON: I just want to build the record here.
7803 Would it be possible for you to give us specific and detailed consequences on your company if we were to require one and two-year plans as well as -- and I'm not saying at any particular price -- if you were obliged to also offer that -- in terms of consumer choice.
7804 MR. OOSTERMAN: We can do that. But I am puzzled that in an environment where you can escape your contract at any one point in time and simply pay the difference in that economic inducement, don't we have a situation where you have a one-month contract, a two-month contract, a three-month contract, a four-month contract, a five-month contract, a six-month contract, et cetera, et cetera, et cetera all the way to 36 months? Because a consumer will be able to leave at any point in time of their choosing.
7805 THE CHAIRPERSON: You might want to look at some of the comments online because that's not going over well.
7806 MR. OOSTERMAN: Okay.
7807 THE CHAIRPERSON: In fact, one person is saying it's not because -- the reason they're going to three years is not because they necessarily are choosing that. It's that, in fact, they have no other choice.
7808 MR. OOSTERMAN: Well, that, of course, is not a factually correct statement. Maybe they don't have another choice with us in terms of contract length. They can always sign a month-to-month contract. They can always sign a supertab with our other brands. And they can always sign with a competing carrier which have a variety of offers in the market.
7809 So it's not a factually correct statement to say that, in Canada, as a consumer, I can't get a variety of offers or choices. It's simply not correct.
7810 THE CHAIRPERSON: Fair enough.
7811 But I'm coming back to my question. Could you, by the 22nd of February, provide us the exact direct costs on having to offer one and two in additional to three?
7812 MR. OOSTERMAN: We can certainly look at -- we'll do two things. We'll provide the take rates on one and two-year contracts when we had them, if that would be helpful, and we can make an estimate of what it would cost us to reintroduce them.
7813 THE CHAIRPERSON: Thank you.
7814 MR. DANIELS: Could I just add in that, I mean, I think the other issue is there's a soft cost in terms of simplification for the consumer, so again, we take the position that you're actually -- the early termination fee means that any consumer is actually better off not having to pay the money up front and just exiting. And that's our position.
7815 But in terms of all the marketing material, then if you have a one-year or two-year option, you have to basically explain what we just talked about and go through and -- with each consumer. And then they're going to reach, I think, on an individual basis the exact same conclusion.
7816 I'm not sure from a public policy perspective mandating us to do that makes sense. When we -- when you look at the numbers at the end, someone is better signing a three-year and exiting at two years than signing a two-year because the difference is that they don't have to pay the money up front. That's our --
7817 THE CHAIRPERSON: Don't take from my question that merely I'm -- getting information doesn't mean that we will require or mandate one and two-year contracts.
7818 MR. DANIELS: No, I --
7819 THE CHAIRPERSON: Nor does it mean that we will not.
7820 MR. DANIELS: No.
7821 THE CHAIRPERSON: All we're doing is gathering a record. Some parties in the proceeding have suggested that that's something that they would want. They've suggested that other jurisdictions have done so. And I want to know what would the impact be on one of the larger operators.
7822 MR. DANIELS: Totally fine. I'm happy to take away. And I just -- I guess what I was just trying to say, I didn't want to limit the answer to strictly costs because there's actually a consumer -- there's a soft cost which we can't quantify in terms of spending time talking about the options and ultimately for the consumer to reach the conclusion that they're no better off with the shorter-term contract.
7823 So that's -- but we'll include that in our answer, so thank you.
7824 THE CHAIRPERSON: I appreciate that.
7825 I was struck when looking at your implementation schedule, for instance, D1.1, six months for plain language. And D1.4, which is the personal information summary, also six months.
7826 This has been the subject of much discussion, as you know, even at the provincial level. Help me understand why six months -- is that to be fully compliant? Are you already trying to be plain language?
7827 MR. DANIELS: Absolutely. And I'm going to turn it over to Ruby, but again, keep in mind that when we looked at this, we looked at this from an industry perspective. There may be some players that are not in provinces that don't have this obligation right now, and so we looked -- is it reasonable to expect someone to have a plain language obligation and whatever that definition is in 30 days, so -- but over to Ruby from our Bell perspective.
7828 MS BARBER: We have made tremendous efforts to simplify our contracts, and we continue to make efforts to simplify our contracts and to make them more comprehensible. We still have work to do.
7829 With respect to the plain language requirements -- and in fact, all the requirements, I believe, in Section D of the draft Code, and it requires us to implement new contracts, which has a variety of ISIT costs and a timeline.
7830 And we may be a little bit farther along and maybe there are fewer changes that we would have to make, but in respect of the personal information summary of that forms, the say first couple of pages of a new contract, we think that the information that we have on our existing first two pages is 70, 80 percent of the way there, but there would be new requirements that are set out sort of on the second page of the personal information summary that we would have to build in to our contract and then roll it out.
7831 So you know, we're guessing a little bit, but I think based on our past experience in implementing in Quebec where we had to go through a similar process, we thought that's a reasonable industry timeline.
7832 THE CHAIRPERSON: Well, okay. I understood from that perspective what you're saying six month is the full roll-out, including getting the actual forms out there.
7833 MS BARBER: Yes, absolutely.
7834 THE CHAIRPERSON: Your fixed-term contracts -- because the Quebec formula has been in place for some time -- and you might not have this at hand. Would you be able to tell us in -- through an undertaking how many of your fixed-term contracts are already compliant with the Quebec formula?
7835 MS BARBER: Yes.
7836 THE CHAIRPERSON: Okay. So for the 22nd, that would be useful.
7837 You mentioned earlier in terms of when we were talking about the personal information summary -- I take it you -- it's part of the contract, in your perspective.
7838 MS BARBER: Yes.
7839 THE CHAIRPERSON: Then we -- there was a discussion today and I've had, in other occasions with other intervenors, about whether that summary plays a role in the pre-contractual phase as a comparison so people can compare and shop from one dealer to the other.
7840 And I took it from the conversation you had with Commissioner Molnar that you did not want us to be too prescriptive in the look and feel of that document so that you could tailor it to your -- to make it a marketing advantage.
7841 MS BARBER: Yes, I believe Wade addressed that.
7842 THE CHAIRPERSON: Yes.
7843 MR. OOSTERMAN: Yeah. We do feel quite strongly about that, yes. We think it's appropriate to identify for all carriers this is the minimum information set you must deliver to a consumer, but then I think we should be allowed to present that information in a way that we perhaps find better than the way a competitor would present that.
7844 It gives us competitive differentiation and an advantage in the market.
7845 So we're not, you know, restricting the consumer from having access to the information required. We're presenting it, you know, we hope, in an easier way, in a better way, and we should be allowed to do that. We should be allowed to gain an advantage on our competitors --
7846 THE CHAIRPERSON: You mentioned specifically perhaps doing it through pictograms or something.
7847 MR. OOSTERMAN: Right.
7848 THE CHAIRPERSON: Have you actually done a mock-up of that?
7849 MR. OOSTERMAN: No.
7850 THE CHAIRPERSON: When thinking about that, did you think of the barrier that would create for persons with visual disabilities?
7851 MR. OOSTERMAN: Well, we always take account of disadvantages or, you know, hearing handicapped, visually handicapped in everything we do, so of course we would have versions that are appropriate for those that have vision issues or hearing issues or what have you issues.
7852 THE CHAIRPERSON: In terms of implementation, you suggested that you don't want it to be retroactive. I think you have made some -- there were some earlier discussions on that.
7853 As contracts get amended, but on the key financial terms that are in fact covered in the Personal Information Summary, if we were going to say when those terms, those key financial terms get amended, is that an appropriate time within which to catch up people to the Code?
7854 MS BARBER: So you are suggesting when a person changes the fixed term commitments of the fixed term plan -- if we were to amend the fixed term plan, the fixed term commitment, that that would be an appropriate time to catch up to the Code?
7855 THE CHAIRPERSON: Yes. I'm asking your views on that. Because I take it your point was it can't be on minor amendments and what I'm asking is: Well, presumably the Personal Information Summary contains the most important elements to that transaction and therefore when you are modifying those, that would be a perfect opportunity to bring the Code onboard.
7856 MS BARBER: So with respect to the personalized information summary, as I read it, there are elements in the personalized information summary that relate to the price of the plan which we -- in order to comply with the Québec requirements we don't amend the plan. That is a commitment that we make to the consumer that this is your -- the fixed term element, the plan that you have committed to, we are also committed to.
7857 With respect to other things that are monthly add-on things, there are elements that are add-ons that the consumer is not committed to for the commitment period and that could change -- where the price could change with appropriate notice, but those are also -- to the extent that they are selected at the time of contract, those are also required to be in the personalized information summary. So I don't think it exactly matches.
7858 When a contract renews, when a person gets a new plan, it's essentially a new contract, but consumers change -- they can down -- like they change elements of their plan, they may add pieces, they may take away pieces and when we don't have the fundamental information with respect to the ETF formula how we could implement it I think -- I think it's just not possible.
7859 MR. DANIELS: If I may maybe help out a little bit, for example, if you sign up for us I think Claire earlier talked about how you had to have a $50 commitment, there are a number of different plans that can allow you for the $50 commitment and you make the $50 commitment and over the course of your three years you can change those plans and still, as long as you are exceeding $50, you are still, from our perspective, adhering to the commitment. There is no charge to change, you know, I want to move up, I want to get more minutes, I want to get more -- this is fundamental, yet underlying it there is still a $50 commitment.
7860 So from that perspective those are amendments, it's not quite the same as just adding voicemail that, you know, I'm changing the amount of buckets of minutes that I may have or move me to an unlimited data. No problem. That's an amendment, it doesn't change your overall commitment to us and it means that we are not giving you a new subsidy so it's not the same situation as if your contract is at the end or you come to us before it's at the end and say, "Let's start a new contract because I want to buy a new device" and at that point we can have the ETF because we know the subsidy on a going-forward basis.
7861 So I guess what I'm trying to say is that when you -- that our commitment would be in here, would be specific about the $50 at this rate plan, they could change that rate plan and still be adhering to our overall arrangement and that we don't consider a new contract, we consider amendment and we don't think it should trigger the Code applying and practically we can't implement it in the case of the ETF as an example, which is obviously not the only but the biggest issue.
7862 THE CHAIRPERSON: You see, you have made legal arguments and I want to have that debate, you may or may not be correct in law, we will figure that one out, but even if you look at it prospectively there are ongoing changes and amendments and they are of two categories, right. There are things because plans change and I respect that that might not be practical, but there are fundamental terms to that arrangement that do also get amended and it seems odd that you are taking the position because minor things can get amended we can't possibly think about it and I'm coming at the other end, there are certainly key financial economic terms of an agreement that get amended that essential recreates a new contract.
7863 MS BARBER: So in in terms of the fundamental, I'm just trying to think through what the fundamental items would be outside of sort of the committed elements where the consumer goes up or down but we still have a contract and there is no new device.
7864 THE CHAIRPERSON: Well, would a change that triggers an extension to the contract be a key economic term? So somebody changes one of the phones in a family group to another area code, gets extended by a year, which happens in certain plans, wouldn't that be a point rather than lock that person into another year under the old non-Code protected environment be something that somebody should be allowed to have the benefit of the new Code?
7865 MS BARBER: I guess to the ongoing -- the difficulty is, would we have the information in order to apply the requirements of the new Code, including the ETFs?
7866 MR. OOSTERMAN: I think the reason we are struggling answering the question is because we don't do what I think is at the heart of the angst. So when somebody signs an agreement with us we don't change the core elements.
7867 Your example of where one member on a family plan gets a new device, on that new device we would be able to know the ETF and so we would do that.
7868 THE CHAIRPERSON: Same device, new area code.
7869 MR. OOSTERMAN: New area code.
7870 THE CHAIRPERSON: One year extension.
7871 MR. OOSTERMAN: We don't do that.
7872 THE CHAIRPERSON: I'm not saying you do, but somebody did.
7873 MR. OOSTERMAN: Really?
7874 THE CHAIRPERSON: Yes.
7875 MR. OOSTERMAN: Okay.
7876 MR. OOSTERMAN: Well, you have us stumped because we don't do that so we can't even really relate to the question. I know that's not a good answer, but --
7877 MR. DANIELS: I think where we are struggling is because your example talks about a change in the term commitment and we have some sympathy, but it's not something that we do.
7878 Like the way we change a term commitment is there is a new contract entered into with a new device and there would be a new contract with a new Personal Information Summary, and so on right at that.
7879 So you are giving us a factual situation, we are struggling because we don't extend someone's contract as far as --
7880 THE CHAIRPERSON: I gave you that because you were struggling with my theoretical approach. My theoretical approach was: There are essential terms to the agreement, right? There are secondary terms and there are essential that go to the essence of that. That's usually what the consumer focuses on.
7881 What I'm saying is, if we are going to have amendments to those I don't understand why --
7882 MR. OOSTERMAN: No, we would agree with you.
7883 THE CHAIRPERSON: -- at that point they wouldn't apply.
7884 So what are, in your view, the key economic arrangements?
7885 I would have thought the Personal Information Summary actually defines those because they are the key information summary.
7886 MS BARBER: So with respect to that, the Personal Information Summary which I am looking at includes information with respect to the monthly costs for optional services selected at the time of the contract.
7887 So that actually just addresses the example that I gave. So a consumer can add to those, subtract from those, that is technically an amendment to the contract and we wouldn't want that to trigger an obligation to comply with the Code in the case of the ETF for example.
7888 The items that are the fundamental core elements as to the price of the plan that they initially selected we don't actually change.
7889 And I guess the struggle that we have been having a little bit is that we normally don't extend contracts. To the extent the consumer entered into a new contract with a new arrangement, the Code would apply.
7890 MS GILLIES: If I may jump in on this one, what I would just express is there are some practical things as we talk about amendments that are important from an operationalization that you appreciate.
7891 I think first of all, you know, the panel here has made the argument around if customers are making a monthly rate change, you know, we may not know in that instance what the customer's handset subsidy was and therefore difficult to apply the ETF policy.
7892 I think the most from an operational component, a major amendment would be simply getting a new device and whether that is a new activation or a hardware upgrade, at that moment in time that transaction is, for the most part, you know, it is done with an agent of our company and during that point in time that agent, whether it is over the phone or whether it's in a store, they would actually take the time to go through -- as, you know, this whole Code is setting out to do -- go through and ensure that that consumer is well versed in what that Code is trying to do.
7893 To make a rate plan change, you can change a rate plan today independently over the Web on your mobile device and so I think that the practical application and the goal that we are trying to set, which is: Do consumers understand the Code, we would really want it to apply at the handsets and I think that's how I would describe amendment at this point.
7894 THE CHAIRPERSON: Going back to my original question, which is, could we identify the elements, the essential elements of the transaction -- I think they are in the Personal Information Summary, and if you could tell us by the 22nd of February which ones of those you would agree that if they are amended it would trigger the application of the Code, assuming we accept your argument that we have to somehow go just prospectively?
7895 MR. DANIELS: Yes, we will take that away.
7896 THE CHAIRPERSON: Thank you.
7897 People with disabilities. I mentioned earlier you said you do consider that.
7898 Could you help me understand? I think you may have been briefed or some of your representatives have been in the room, what kind of outreach do you do for people with disabilities?
7899 MR. DANIELS: Bell has been very involved in working with groups of disabilities. I think that we would be seen as sort of a leader in this area in terms of working. Now, part of that has been some of the opportunities we've had with the deferral account funding in terms of we actually had a certain amount of money set aside for deferral account and we've worked with consumer -- with accessibility groups on all sorts of different projects and so on collectively with them. We also have regular meetings that are set up with them. And specifically in the wireless area, we actually have proposals that the accessibility groups support and have signed onto that are actually presently before the CRTC, waiting for you guys to review and hopefully approve.
7900 And in that sense this is something that we have been working all collectively together and I think the CRTC has a role and hopefully will approve those. And some of those initiatives do relate to sourcing and packaging of mobile devices and applications specifically for specific identified accessible needs, educational awareness, improvements to our website and mobile self-serve application to address accessibility issues. And customer care operation and support.
7901 Having said that and if I, I don't know, maybe anticipate your next question, we did have in the room, for example, yesterday several representatives from our company including an expert on our team who works with the accessibility groups. He met with them right after to discuss their presentation. And we've actually set up a meeting with them and invited other members of the industry to join for February 21st in order that we can work collectively with them so that when you've asked them to come up with concrete realistic examples, we would like to have an input in that and they've -- you know, we've agreed to work together so that rather than waiting and responding on March 1st, that we actually would work proactively with them.
7902 And quite honestly, this is something Bell has done and has been the leader of in a number of occasions of working with accessibility groups in that again. But is there more to do? Absolutely, and we will be pursuing that with -- to actually achieve the same objectives that you outlined, what can be done that's immediate, that really can make a big difference on that everyone could support by February 22nd.
7903 THE CHAIRPERSON: So what you'd be working on is perhaps a new part of the code that would deal specifically with Canadians with disabilities and how the code would apply to them? Is that -- am I to understand that?
7904 MR. DANIELS: I believe that was the request that you made for them.
7905 THE CHAIRPERSON: Yeah.
7906 MR. DANIELS: And the answer is yes.
7907 THE CHAIRPERSON: What you're helping on. Okay. As industry leaders then on this issue, have you considered things like à la carte options as well? Not -- you know, obviously going forward you're going to -- there's a regulatory aspect to it, but from a business perspective from the past how do you interact with Canadians that have an auditory or visual disability and might not, depending on what the disability is, need either text or voice?
7908 MR. DANIELS: We have a number of products available. We also have a -- our Accessibility Service Centre. I don't know if other carriers have this and so on, but we have one that is specifically designed to address people with special needs who can come in, call in and get specific advice and direction on the kind of devices that we have, the plans that we have and so on. And although I don't have all that information at my fingertips, I'd be happy to file the details of what specific offers and so on, programs we have available on -- by February 22nd, if you'd like, that can give you a sense of what's available from Bell to address this market. So, happy to do that.
7909 THE CHAIRPERSON: Right. You certainly can, but I'm also hearing that if you're an industry leader you have great best practices and you can have an influence on what others ought to do through this process.
7910 MR. DANIELS: Absolutely, but one thing I would just, you know, caution about. For example, we do have an application before you relating to part of our mobility accessibility project through sources. We work with the accessibility groups to come up with what specific special need handsets could we go and try to --
7911 THE CHAIRPERSON: My --
7912 MR. DANIELS: Sorry.
7913 THE CHAIRPERSON: -- my point is not about devices. My point is about the services. I get the handset, we've started work on that. I think the request is with respect to the services, much more than the handsets.
7914 MR. DANIELS: I think we will do the filing and I think you will find, so -- that we do satisfy those needs in terms of special services available, packages and whatever.
7915 THE CHAIRPERSON: All right. Okay. Did I hear you correctly that you charge 75 dollar fees for unlocking? Help me understand why others are able to do it for 35 or $50.
7916 MR. OOSTERMAN: I don't know why others are able to do it or choose to do it for less. I mean, we absolutely could do it for less. We choose not. But --
7917 THE CHAIRPERSON: Help me to understand why you do not.
7918 MR. OOSTERMAN: Yes. So we charge $5 for 10 hours of mobile TV. Others would charge $150. It's a different value proposition that we bring to the market, whereas I mentioned before we might be higher on some elements and much lower on other elements. We package the totality of that offering and consumers make an informed decision on I prefer this over this. And, you know, it's our risk if we get that wrong.
7919 THE CHAIRPERSON: The Competition Bureau is of course saying that the barriers to unlocking don't lead to fostering a more competitive marketplace. Certainly $75 is -- might be seen for some people as a barrier. It doesn't seem to be cost based is what I'm saying.
7920 MR. OOSTERMAN: Well, if you cherry pick an individual item where we charge fees and where we don't charge fees, perhaps you'd come to that conclusion. If you look at our total products and services and the total financial sort of implications of everything, I think you would find that of course we consider costs in setting our prices, we consider competitive dynamics, we consider differentiation opportunities, we consider a large variety of elements in coming up with our overall pricing strategies. And we are not committed to being cheaper on every single element in every single one of our competitors. We are committed to having what we believe is the best overall value proposition in the market.
7921 So if I can watch 10 hours of mobile TV and Bell and pay $5 and that same one -- you know, one month worth of viewing would cost me up to 150 with another, if I then decided to leave and paid Bell 75, I would have paid Bell a total of 80, I would have had paid my competitor a total of 150-plus, I think, somebody said $35 to unlock. So that's 185. So I think our consumer would have been better off with Bell than they would have in this example with a competitor. So I think it's, you know, false economics --
7922 THE CHAIRPERSON: Do you think consumers actually understand that? All they see is the $75 and they're shocked by that.
7923 MR. OOSTERMAN: Well, they're only shocked by it if they're not aware of it. This proceeding is about making sure that consumers make informed decisions. I think on the personal information form we talked about identifying items like that so that people would know. And so, I do think people are intelligent. You know, they're educated, they're informed. They know that on this element Bell is more expensive or less expensive than its competitors and they make decisions based on that.
7924 MS GILLIES: Mr. Chairman, if I may jump in on this one. I think there's been a number of questions throughout the week on, you know, what is the impact to a customer and their warranty, as an example, when their device is unlocked. And, you know, while, you know, Wade expresses our position on our ability to set pricing, there is an investment a carrier needs to make in order to unlock the device. And, you know, I use the example of the Apple iPhone, which, you know, in the fourth quarter we actually implemented the Apple mechanism to unlock their device. What that required for us was IT and systems investment, and also the training of all of our reps. So they were trained to do it properly, in which then the warranty was not voided. So it's very important if anybody unlocks a device through the carrier, their warranty is okay. You know, their warranty is intact with that one year manufacturer warranty. But from our understanding, you know, the manufacturers, if it's unlocked, you know, in other locations where it's not done under their prescribed approach or with their prescribed systems, it may void the customer's warranty, and I think that's something that Canadian consumers need to be aware of.
7925 MR. DANIELS: And I would just say ultimately if it's after a year, for example, so the warranty is over, then the consumer has other choices because there's nothing to protect in that situation. That's up to them. If it's within the year they have to make that decision, what we need to know is before they sign the contract if I do want to unlock what's my fee and that will be part of the personalized information summary because you have listed it out there and we support that.
7926 THE CHAIRPERSON: My last question. And we started a little later on this morning, which allowed me to read the paper copy of a paper that gets delivered to my house. It probably screwed up our being ahead of schedule though, since I was asking too many questions. Sorry about that. But I was reading the paper and I was struck by a few ads. And I was reading La Presse. You did have an ad but not about wireless. You did have it in The Global and Mail, but I read The Globe and Mail, so I didn't see the ads.
7927 But I was struck by the two ads by your competitors, one by TELUS and another one by Rogers. And if you look at it, the impression that you get is that wireless carriers in this country are now really in the device business. Is that where we are now, that it's all about the device? In fact, you know, anything about the services associated with the -- in your advertising -- I mean, I don't even think they -- the one from TELUS even mentions service providers, the actual network access in any way. It's all about the new -- the BlackBerry 10. Of course not surprisingly the Rogers ad also deals with it, but it's all about the device. And I'm wondering if isn't that the real problem we're struggling with here is that the business practices have strangely merged the device and the telecommunications services.
7928 MR. OOSTERMAN: Again, I think looking at an isolated ad is not representative of the whole. I also talked earlier about there is a -- an absolute coexistence between the network and the handset and the functionality you get from both and they both have to be there to allow the full functionality to exist. It is not surprising though that carriers who are enormously competitive and obviously want to maximize traffic to their particular locations or their particular service would leverage the excitement caused by the introduction of a new handset.
7929 And so in periods of time when a new handset is launched, the iPhone 5, the Galaxy 4, the BlackBerry Z10, they would leverage that.
7930 We also run ads that talk about the BlackBerry Z10. If you have seen our ads, though, they always focus on service elements, as well.
7931 So we heavily market our mobile TV functionality, because it is a very positive differentiator for us. If you see our TV spot, for example --
7932 THE CHAIRPERSON: I do see the one you have put in today in the Globe and Mail, on page A9. I would argue -- and maybe you disagree -- that it also focuses a lot on the device.
7933 MR. OOSTERMAN: Absolutely, we try to leverage the excitement caused by the introduction of a new device. That has been in all the papers. You know, lots of excitement. It's -- knock on wood -- a Canadian success, turnaround story, and that would be very positive, again, for this country.
7934 All carriers try to leverage the excitement and the greater awareness that comes from there is something new.
7935 Why do consumers go to a store for any product? It's something new, it's something on sale, a new functionality, what have you.
7936 So you have to leverage that excitement that exists to maximize your chances of traffic for your own business needs.
7937 So we do that, and I suspect that if the norm holds, TELUS and Rogers and ourselves would have fairly similar prices on the device itself. So why, as a consumer, would I choose your BlackBerry over TELUS' or Rogers'? That's when we absolutely get into the network functionality discussions. We talk about things like our network drops fewer calls than theirs, or what have you. We have mobile TV, they don't. Our rates are X for service; theirs are Y for service.
7938 Once you have the pitch for the great dress or the fantastic looking suit, or new shoes, or a new device, and that creates excitement to generate the traffic for you, then you quickly have the sales discussion move to the areas where you are different and, presumably, better than your competitors.
7939 THE CHAIRPERSON: It is, in a sense, more of a philosophical concern, but then it has considerable implications if it's all about devices.
7940 And I get that, that the essence of business -- and there are waves of these. Whenever the next shiny device comes out, you all leverage that.
7941 I get that, but it also suggests that, in essence, even though we got out of terminal equipment in other areas, strangely enough, terminal equipment has become the centre of telecommunications services going forward.
7942 MR. OOSTERMAN: I don't think it's fair to suggest that they have become that, I think they have always been that.
7943 THE CHAIRPERSON: Oh, I'm sensing a bit of recul over time, with wireless.
7944 MR. OOSTERMAN: Right, but that is because, without the network, the device won't work, and without the device, the network is useless. So they are inextricably linked.
7945 So I think they are just marketed together.
7946 THE CHAIRPERSON: Right. It does have, though, constitutional consequences.
7947 MR. OOSTERMAN: I think that I would reiterate my statements around: Let's make sure that we keep our eye on the whole ball, the trade-offs between consumer interests and wants and desires.
7948 And it does strike me, when I listen to a lot of the comments, and not surprisingly, that people would prefer to pay less. That's an obvious thing.
7949 I also get the sense that, if I could use a car analogy -- you know, I am in the dealership, and that's the entry-level model, and I would like to pay that price, but I would like that full-feature vehicle. So how do I get both?
7950 That doesn't exist.
7951 We have rate plans that don't include certain things, and we have other rate plans that do include those things, and they cost differently, and they exclude other elements, and consumers are given a choice. And, if they are informed, they make the choice that is best for them.
7952 I think there is absolutely nothing wrong with that. It does allow innovation and differentiation and fierce competition to drive a total picture of wireless in Canada that, as I said, my belief, and in my discussions -- and then you have some evidence that is third party that might support a lot of this -- is the envy of the world.
7953 Canadian consumers have a terrific value proposition. Canadian businesses benefit from the functionality that we deliver as networks, which allows them to compete, increasingly, on a global basis, in a digital world, to your point.
7954 So we are quite proud of all those things, and we should make sure that we don't lose sight of that.
7955 MR. DANIELS: Can I just understand something? When you said that it has --
7956 Maybe I misheard you. Did you say constitutional --
7957 THE CHAIRPERSON: I did, because I am saying that the terminal device that you are purchasing through a contract, which is the purchase of a moveable good, is, in fact, now quite linked to the telecommunications wireless business.
7958 MR. DANIELS: So we are talking about the issue of the device, as opposed to the service, which is, as I understand it, a federally regulated issue, as opposed to the device, which, if sold on a standalone basis, would be provincially regulated.
7959 Is that -- I am just trying to --
7960 THE CHAIRPERSON: Yes. I wasn't concluding anything, I was just --
7961 MR. DANIELS: No, no. In thinking about that, as you raised it, just so I would understand -- I think it really comes back to, fundamentally, the discussion we had about what we are, what we are doing, what we are trying to sell, how we see ourselves as a company, and, I think, as an industry, what we are providing, and why we are not interested in having separate contracts, one for the actual device, as opposed to a contract for just the service.
7962 I agree that if we just had a contract separately for the device, in the way that Apple sells -- in Commissioner Simpson's example, you can go to Apple and buy the iPhone directly from the store. That doesn't raise federal jurisdiction issues.
7963 When we put the two together, what is clear here is that we are a telecommunications company that is offering a telecom service, and we are using the device to subsidize as an inducement for the service.
7964 That is why we are focused on the service, which is the whole discussion that we had earlier.
7965 I think, if you look at that from the characterization, clearly, the fact that we include a device in it, I don't think affects -- at least it would be my submission to you for consideration -- affects the constitutional jurisdiction of the CRTC to regulate completely in this area. I don't think it gives room for the provinces, on the basis that --
7966 I mean, that is obviously our submission, and I just will leave it at that.
7967 THE CHAIRPERSON: And we will consider those when they are filed.
7968 Madam Poirier...
7969 COMMISSIONER POIRIER: Hello. My first question will be in English, the second one in French.
7970 You brought up, Mr. Oosterman, a link between the unlocking of handsets to offering specifics produced to your clients, like mobile TV, didn't you?
7971 MR. OOSTERMAN: I am not sure if I linked them. I said that we have different elements of the total value proposition that we deliver to consumers, and those discrete elements may have different price points from the elements offered by our competitors. I believe that consumers consider that in the whole, and make a choice as to which total package, with the associated fees, works best for them.
7972 COMMISSIONER POIRIER: Okay, because I was wondering, were you not asking for $5 to get that kind of app?
7973 As a client, if I want to watch 10 hours of mobile TV, I pay $5.
7974 MR. OOSTERMAN: Yes, that's correct.
7975 COMMISSIONER POIRIER: Okay. So it's not related to the unlocked amount --
7976 MR. OOSTERMAN: No, no, it has nothing to do with the unlocked. It's not tied together. You pay $5 for 10 hours of viewing, and if you wanted to unlock, you would pay us $75.
7977 And what you would pay for those two, discrete, unrelated activities with a competitor would be vastly different. You may pay more for mobile TV, and you may pay less for unlocking. It's different.
7978 COMMISSIONER POIRIER: What kind of mobile TV offers can the consumer access with that app, only yours at Bell, or all -- Netflix and CBC and You Tube mobile TV viewing?
7979 MR. OOSTERMAN: Again, it is a very complicated question, so I will try to give a simple answer.
7980 COMMISSIONER POIRIER: It's in the file. I saw it in Vaxination. They raised that issue because they were wondering why you probably offer mobile TV only for your own services, while they pay $5. So I want to check if that is the reality.
7981 MR. OOSTERMAN: I am not sure that I understand fully, but obviously our subscribers, the people who have service with us, would watch our television service, not somebody else's.
7982 Our competitors, to the extent that they offer mobile viewing, would have their own arrangements.
7983 People on our devices can, absolutely, watch You Tube videos. They would do that through their browser, just like any other internet-capable device. You can go online and watch videos.
7984 Our subscribers can watch television viewing through their browser, the way you would on any internet-capable device. You go online and look at television. But we have a special rate that offers, I think, 30 channels, that you can watch on a Bell mobile device.
7985 COMMISSIONER POIRIER: But the $5 app doesn't apply to --
7986 MR. OOSTERMAN: Only the 30 channels.
7987 MR. DANIELS: I was just asking my colleague Mr. Bibic, because I know he is closer to this, having worked on some of these issues.
7988 In terms of our app today, we offer Comedy CTV, TSN, RDS, which are Bell services, but we also offer Bite TV, which is a Blue Ant service, HBO, which is an Astral service, SRC/CBC.
7989 So there are a number -- ATN and more.
7990 It's not limited strictly to Bell services.
7991 COMMISSIONER POIRIER: Thank you, I wanted to clarify that.
7992 Are you ordering locked devices from your manufacturers?
7993 MR. OOSTERMAN: One hundred percent.
7994 COMMISSIONER POIRIER: Why?
7995 MR. OOSTERMAN: Because we want to (a) respect -- in the case where a supplier has distribution integrity that they are trying to protect, we obviously honour that.
7996 And, frankly, where a supplier insists that that's what they want to sell us, we just don't have the market power to change that.
7997 As a wireless company, we are obviously smaller than Rogers in Canada. I think you heard from them about the complexity of dealing with, for example, an Apple. If they can't do it, we certainly can't.
7998 Canada accounts for .6 percent of global volume, so we are a very, very, very small player in the global scheme.
7999 One hundred percent, let me say it again, of our suppliers are global. So they have distribution integrity that they try to manage.
8000 When a supplier does not insist that we buy unlocked phones, we do buy locked phones, because we want to protect ourselves from the financial exposure that we have until we are sure that the client is going to, you know, ultimately provide the revenue source for us to recover -- or in our total financial assessment we're comfortable with that financial exposure to them.
8001 I think you would all know the handsets cost a lot of money. They cost Canadian companies more than they cost other companies. So if other markets in the world can come to Canada, buy a heavily subsidized device and then ship it back home, that's a financial win for them.
8002 Do the other telcos do that? No. Do fraud rings do that? A hundred percent. So we must have the ability to protect ourselves against that kind of financial exposure. If we did not have it, hence the prices in Canada would be even higher still.
8003 COMMISSIONER POIRIER: So the suppliers are not requiring it?
8004 MR. OOSTERMAN: No, no. In some cases, yes --
8005 COMMISSIONER POIRIER: It's you the companies who are?
8006 MR. OOSTERMAN: No. In some cases the supplier requires it, and in each case --
8007 COMMISSIONER POIRIER: In some cases. What percentage?
8008 MR. OOSTERMAN: We will file that.
8009 COMMISSIONER POIRIER: I would love to know if it's mostly --
8010 MR. OOSTERMAN: Sure.
8011 COMMISSIONER POIRIER: -- most of the time if it's you requiring it or the suppliers.
8012 MR. OOSTERMAN: Yes. So let me say it again. In some cases the supplier does. Where the supplier does not we insist.
8013 COMMISSIONER POIRIER: You insist?
8014 MR. OOSTERMAN: We absolutely do and we will continue to do so --
8015 COMMISSIONER POIRIER: Okay.
8016 MR. OOSTERMAN: -- because it lowers the overall cost for Canadian consumers.
8017 COMMISSIONER POIRIER: But would there be a price between a handset ordered with an unlocked device compared to one that is locked? Do you pay an extra fee to get a locked device?
8018 MR. OOSTERMAN: No.
8019 COMMISSIONER POIRIER: No?
8020 MR. OOSTERMAN: I do not believe so.
8021 COMMISSIONER POIRIER: Have you checked the numbers? Have you ever looked at the bill if they were locked or unlocked? I'm wondering if there is a difference in the price when you buy it from --
8022 MR. OOSTERMAN: Right. Claire, you might know. I believe that there is no difference, there would be no difference if we said we'll take it unlocked versus locked.
8023 But, as I said, our normal practice is to order them locked, and the reason we do that --
8024 COMMISSIONER POIRIER: Because of the churn and the fraud?
8025 MR. OOSTERMAN: The fraud, yes.
8026 COMMISSIONER POIRIER: The churn too or the fraud?
8027 MR. OOSTERMAN: Well, I know that yesterday one of the participants talked about, oh, it's not so much the fraud, it's the churn, but the churn and fraud are ultimately the same thing.
8028 Churn is when somebody leaves you, and whether they leave you because they're unhappy or whether they left you because they are stealing --
8029 COMMISSIONER POIRIER: I hope I'm not frauding when I'm leaving Bell.
8030 MR. OOSTERMAN: No, no. No, no. But so, if -- well, I hope you don't leave Bell as well.
8031 MR. OOSTERMAN: But if you leave for any reason that's churn. One of the reasons people leave is because of fraud. So fraud is churn to that extent and we have to -- we have to have the ability to protect ourselves from that.
8032 So we have a policy that says if you pay full price for the phone, so we don't have financial exposure, we let you unlock the phone right away, and if we establish some kind of relationship with you and now we're pretty sure that it's you and not somebody who's trying to defraud us, we unlock after 90 days.
8033 And so that is necessary to protect ourselves from, you know, potentially catastrophic exposure where an organized crime ring comes after us to get these devices, ships them overseas, and that would be horribly expensive for Canada as a whole.
8034 MS GILLIES: If I may just impress upon the Panel. You know, we spoke earlier about what the risk is and I know Raj Doshi from Rogers spoke about this as well.
8035 I mean these devices are like jewellery and if you go on our website today you would see the iPhone 4S is zero dollars on a three-year term. It retails for $649, I think is our price on our website.
8036 If you allow customers to unlock in 90 days with that minimum of $50, the delta between $649 and $50 paid means those customers, really, they have to sell the device for $500. That's what they can make on that device, you know, when you think of that. And if you go on eBay, go on Kijiji and look at the open market, these devices are selling.
8037 So there's a real market today for unlocked devices and that's -- you know, we all talk about fraud because we're invested in the total Canadian picture, including that of our employees, and there is a significant amount of fraud ring and we are very privileged in Canada in many ways to be one of the first countries in the world to get these great devices. The Z10 is another perfect example where Canada has the device today. The U.S. does not.
8038 So when we start getting those devices it puts us at sort of a global risk if we go unlocking and I think you appreciate the larger picture of the financial risk that the carriers have when we start unlocking these devices.
8039 So I just wanted to impress that sort of pricing dynamic on the Panel.
8040 MR. DANIELS: So if I could just try to put this together as a package.
8041 I don't know because I'm not Apple but we were discussing, for example, would Apple have allowed -- if Canada had a rule that mandated unlocking, would we be one of the first countries to get the latest iPhone? I don't think so. I think they would want to launch it in other countries.
8042 I'm not saying that it wouldn't come to Canada. So I don't want to overexaggerate to say they wouldn't ever. What I'm saying is if we had a rule like that, I think it's going to put Canadians getting iPhones, the next generation iPhone later if it was a mandated requirement.
8043 Now, a customer comes to us, pays us the full amount on the day, for example, our proposal here is that they should have the right to unlock at that moment because there's not a fraud risk, and that's what Apple is concerned about. And we're saying, that's fine, you don't have to wait 90 days if you're going to pay the full amount.
8044 But this is one area where I would come back to the unintended consequences. We don't want Canada to fall behind. We've got the Z10, number two, I think, in the world after England and I don't know, I'm not speaking for RIM, now BlackBerry -- I don't know, but I suspect that they would not be so quick to deliver it to Canada -- maybe they would because of --
8045 COMMISSIONER POIRIER: Yes. But then my next question: Do you have the proof to affirm that? Could you get a letter from your providers that that's the reality or do you have the proof that this has been done elsewhere in the world, that the consumers lost because unlocking was mandatory? So I wonder if it happened elsewhere that some other countries asked for unlocked devices, so --
8046 MR. OOSTERMAN: I'm sorry, I'm not entirely following, but are you saying you would like us to give you the list of countries that do not today have the BlackBerry Z10 because they have mandatory unlocking?
8047 CONSEILLÈRE POIRIER : J'aimerais... et je vais le dire en français, si vous prenez vos appareils.
8048 Ça fait plusieurs fois que j'entends dire que les consommateurs seraient perdants si on obligeait l'ensemble des fournisseurs de services sans fil à vendre des téléphones déverrouillés, et l'argument qui est souvent amené est l'argument suivant. C'est qu'il y aurait de la fraude, et donc, les compagnies qui nous fournissent les appareils ne nous en donneraient pas autant, donc, les consommateurs seraient perdants.
8049 J'aimerais savoir si vous avez des preuves sur cette avancée de position. Ou bien ce sont vos manufacturiers qui le disent et vous avez une lettre pour nous le confirmer -- moi, je n'ai aucune preuve de ça devant moi -- ou bien vous avez des exemples dans des pays où c'est vraiment arrivé parce qu'on a interdit la vente de téléphones qui sont verrouillés.
8050 MR. OOSTERMAN: So, we will try to get a manufacturer to tell us they prefer to sell us locked devices or that in fact they sell us locked devices.
8051 MR. OOSTERMAN: But even if 100 percent of the manufacturers were willing to sell us unlocked devices, we would not be willing to buy them.
8052 I just want to be clear. We want to protect ourselves from fraud risk and from fraud exposure and the incremental expenses that come with fraud, and the end result of a higher cost base ultimately is one of two things, higher prices for consumers or lower investment by the carriers, neither one of which is good for consumers.
8053 COMMISSIONER POIRIER: And what about Apple phones, are they sold to you locked or unlocked?
8054 MR. OOSTERMAN: Apple phones are sold --
8055 COMMISSIONER POIRIER: To the consumer.
8056 MR. OOSTERMAN: All of our products that we buy are locked. So that includes Apple phones.
8057 COMMISSIONER POIRIER: So when you sell them to the consumer, they are all locked? You lock them?
8058 MR. OOSTERMAN: Yes. And then we unlock them if the consumer asks, if they pay the full price right up front or if we're allowed to establish that relationship where we know that it's really you and we're not exposed to a fraud expense.
8059 MS GILLIES: What I think is a really interesting point here, because I think Mr. Simpson earlier brought up the point about the Apple Store would sell you an unlocked device, when we launched the iPhone 5, and I believe it was September 21st, 2012, the Apple Store -- if you went to the Apple Store they would not sell that device unlocked. Three months after they launched the device, you know, so in other words it had expanded globally, then they started selling unlocked devices.
8060 So I think, you know, we'll certainly do as Wade suggested and look for proof but there is an example of where for the first three months they were only selling it locked.
8061 CONSEILLÈRE POIRIER : O.K.
8062 Je vais terminer avec le sujet des contrats.
8063 MR. DANIELS: Sorry, just one little quick thing.
8064 CONSEILLÈRE POIRIER : Oui.
8065 MR. DANIELS: I think we have one phone in ours that is sold unlocked and I can provide more details about that later --
8066 COMMISSIONER POIRIER: Yes.
8067 MR. DANIELS: -- but it's unique because that manufacturer insists on it in that area. But we'll file details on that.
8068 COMMISSIONER POIRIER: Okay. Thank you. Merci.
8069 Beaucoup de Canadiens disent qu'il y a une forme de discrimination géographique. Selon l'endroit où ils vivent, ils n'ont pas accès au même type de services.
8070 Et quand on parlait de contrats tantôt, vous avez dit, nous, on offre des contrats de trois ans ou une autre sorte de contrats, qui sont les contrats prépayés, nos compétiteurs peuvent, s'ils le veulent, offrir des contrats d'un an, deux ans, mais nous, ce n'est pas notre modèle d'affaires.
8071 Est-ce que vous avez une idée si, dans toute la superficie géographique que vous desservez, il y a toujours un compétiteur qui offre des contrats d'un an ou de deux ans?
8072 MR. OOSTERMAN: I know we compete against at least one and in fact almost certainly two other players in every market in Canada, and frequently that's up to four and five and six, but there is no market that I'm aware of we are by ourselves.
8073 I do not know if in markets where it's the three of us that compete, whether or not in each case consumers have an option on a one-year or two-year from those other competitors. They had with us up until 2011, I think, Claire, when we pulled them out due to lack of consumer interest in one- and two-year contracts.
8074 And again, if the Code is adopted, we have in fact one-month contracts, two-month contracts, three-month contracts all the way up to 36-month contracts because of the ability to leave at the point in time of your choosing.
8075 COMMISSIONER POIRIER: Okay.
8076 Alors, mon commentaire... You could keep them on, you know.
8077 Alors, mon commentaire, c'est si on laisse les libres forces du marché, ce n'est pas vrai que les Canadiens ont, en général, d'autre choix que d'avoir des contrats de trois ans dans certaines régions géographiques. Parce que vos compétiteurs ne l'offrent pas plus, ils n'y voient pas l'avantage, ça ne devient pas un avantage compétitif pour eux?
8078 MS GILLIES: I think, in fact, everywhere we sell Bell today we sell -- we also sell Bell pre-paid which would be on contract and we also sell the Virgin model which is SuperTab.
8079 So in fact, you know, it's not that customers are only limited to three year. You know, as always they have no term. They have pre-paid and they have the SuperTab model.
8080 CONSEILLÈRE POIRIER : Mais ils n'ont pas le choix du contrat d'un an et de deux ans, et ils n'ont pas le choix parce que vous ne leur offrez pas la majorité du temps et parce que l'offre n'est pas assez alléchante.
8081 Il est certain qu'une compagnie peut orienter les ventes vers ce qui est le plus intéressant pour elle, c'est-à-dire trois ans, en offrant la meilleure, je vais dire subvention, sur le contrat de trois ans. Mais sur celui d'un an et de deux ans, si vous n'offrez pas un forfait intéressant, personne ne va le prendre.
8082 Alors, ce n'est pas vrai que les Canadiens ont toujours le choix, et chez vous et dans bien des régions géographiques, ils n'ont pas cette possibilité de prendre un contrat d'un an ou de deux ans.
8083 MR. OOSTERMAN: Well, again, I would disagree with the conclusion that is drawn by the question because market forces eliminated one and two-year contracts. They were in place from 1985 roughly when wireless services launched until 2011. There was no demand for them. Market forces said there was no need for these. People aren't taking them.
8084 And then you say, "Yes, but if you offer the same subsidy on a two-year contract or a one-year contract that you do on a three-year contract, perhaps people would take that".
8085 And, yes, but that's again like my analogy. If I see the entry-level car but I really want the full-featured car and what we're asking for is can I buy that full-featured car at the price of the entry-level car, the answer is no. The financial models that we develop on average, you know, we need to -- obviously, we can't have 30 million individual consumer rate plans. We have a variety but not 30 million and they are based on averages.
8086 On average we deliver a value proposition that Canadian consumers seem to have accepted and enjoyed and liked, which is why churn rates in Canada are quite low. I know of people who have said, "Oh, no, the only reason they are low is because of contracts".
8087 But that's of course flawed math because, first of all, if 30 percent are not on contract that's 30 percent. And of the 70 percent, if they all have three-year contracts which, you know, would be the most conservative estimate, then you'd say, "Well, a third of 70 percent is lapsing every year". That means that at any one time 53 percent of Canadian consumers have a choice on what they want to do. So consumers have voted with their wallets they prefer three-year contracts. They prefer to pay less for the device.
8088 We now have a policy in place that says if for whatever reasons your circumstances change, and I accept that people's circumstances change -- you can get out.
8089 And, really, what should have happened then is we need to rewind the clock and say, "If you weren't going to make a commitment you should have paid $800 for that phone but you've only paid" -- I'm making this up, $200, so you owe us $600. It's kind of that, you know, as we talked about, the formula that's in question. And that seems fair to me.
8090 It means that consumers have a choice of contract length where the proportionate discount is applied mathematically. So you do have for consumers the choice to leave after one year. They would have gotten what they would have gotten if there would have been a one-year contract.
8091 And so again, I'm not sure what additional value it will provide to Canadian consumers. They voted with their wallets.
8092 COMMISSIONER POIRIER: Yeah.
8093 MR. OOSTERMAN: They don't want one and two-year contracts.
8094 COMMISSIONER POIRIER: Thank you. I was trying to reflect the consumers' voice and they got the answer.
8095 Thank you very much.
8096 MR. DANIELS: Well, if I could -- just one last thing to say. When you compare Canada to other countries, Canadians replace their phones more and quicker.
8097 This is the study we'll file. It will demonstrate that we have the fourth shortest handset replacement cycle of 14 countries. That means of the 14 countries, despite the fact that we have three-year contracts and other countries have two years as the norm, Canadians are replacing their phones mostly faster than other countries, and that's because of the lower handset subsidies and the inducements that happen and the ability to exit their contracts.
8098 So it's actually working for Canadians.
8099 COMMISSIONER POIRIER: Yeah, and does it show how much they have to pay to do that?
8100 MR. DANIELS: In here, as you can see, when we filed the study you'll see, yes. But, more importantly, that's changing because this is a couple years old study and now how much they have to pay is only the amount of the study. So definitely it's going to get even better for Canadians.
8101 THE CHAIRPERSON: Commissioner Duncan...?
8102 COMMISSIONER DUNCAN: I have just two quick questions.
8103 I just wanted to go back and get some clarification on the discussion that Mr. Daniels and Ms Gillies had with Commissioner Molnar about cancelling the BlackBerry contract.
8104 So as I understood, the equipment cost was broken into three components. Mr. Daniels explained that if a customer wanted to cancel one of those they could do that at that point, and so their incentive would be reduced accordingly. Did I understand that correctly?
8105 MS GILLIES: Yes, you did.
8106 COMMISSIONER DUNCAN: So then just to go back, Ms Gillies, to what you had said in the example that you gave, they would pay the -- have to pay the full cost or remaining unamortized cost.
8107 So would you agree we have to be careful in the wording to say that -- to refer to any remaining economic incentive because the calculation doesn't take that into consideration? I don't know how common it is.
8108 MR. DANIELS: That's a good point and we'll take that away.
8109 COMMISSIONER DUNCAN: Okay. Thank you.
8110 And the other one is just a simple -- probably simple. As you know, I live in Nova Scotia and I deal with Bell Aliant. So if I'm a Bell Aliant mobile customer would I deal with them directly, like do they customize the Bell Mobility offers or do I deal with Bell Mobility?
8111 MR. DANIELS: I'm going to hand this over, but I don't think that they're -- it's not a Bell Aliant mobile customer because it's Bell Mobility is the service provider. Bell Aliant does not have a mobility product in Atlantic Canada.
8112 COMMISSIONER DUNCAN: Okay.
8113 MR. DANIELS: You sign up with Bell, Bell Mobility.
8114 MR. OOSTERMAN: Yes.
8115 COMMISSIONER DUNCAN: So they don't add any features? I guess I'm picking up on where I'm going. I'll ask my question, maybe.
8116 In your undertakings will you reflect anything that's unique to Bell Aliant in your answers?
8117 MR. OOSTERMAN: Well, there is only something unique to Bell Aliant in the three small wireless operators they own; Kenora, Trident and I forget the last.
8118 MR. DANIELS: It came, yes, to NorthernTel and Télébec.
8119 COMMISSIONER DUNCAN: Good.
8120 MR. OOSTERMAN: Yes. So there is uniqueness there.
8121 And the rest of Atlantic Canada or in Atlantic Canada and Bell Aliant territory Bell Mobility is the service provider and it's Bell Mobility products and services that are marketed there.
8122 COMMISSIONER DUNCAN: Oh, okay. Thank you.
8123 MR. OOSTERMAN: Yeah.
8124 COMMISSIONER DUNCAN: Thanks. So then you would for the three small companies then, I guess, you would reflect it, if there was a need to.
8125 MR. DANIELS: Yes, we will.
8126 COMMISSIONER DUNCAN: Thank you. Thanks.
8127 That's it, Mr. Chairman. Thanks.
8128 THE CHAIRPERSON: Thank you very much. We have been a long time with you, but very useful to bill the records.
8129 So those are our questions and we'll take a break till 2:30. Thank you very much.
--- Upon recessing at 1309
--- Upon resuming at 1431
8130 LA SECRÉTAIRE : Alors, Monsieur le Président, nous débutons maintenant avec la présentation de Vaxination Informatique.
8131 Je crois que vous allez présenter en anglais, Monsieur Mezei. Alors, vous pouvez y aller. Vous avez 20 minutes.
8132 M. MEZEI : Merci.
8133 LE PRÉSIDENT : Juste pour être clair, quand on va vous poser des questions, either English or French?
8134 M. MEZEI : Les deux. Les deux.
8135 LE PRÉSIDENT : O.K. Bien, peut-être pas les deux, mais on peut faire une combinaison.
8136 M. MEZEI : Je comprends le franglais aussi.
8137 LE PRÉSIDENT : O.K. D'accord. Merci bien.
8138 M. MEZEI : Je vous remercie beaucoup de cette opportunité. Mon nom est Jean-François Mezei de Vaxination Informatique. Je suis un travailleur autonome. Donc, je parle en mon propre nom.
8139 Je fais le début en anglais parce qu'il y a des choses techniques, puis il y a plusieurs personnes en anglais, et la fin va être en français.
8140 In this hearing we've heard the incumbents pull some rabbits out of their hats and announce new features like unlocking and kinder features and stuff. I think it should be clear, especially by the timing, that this is really the result of the threat of regulation and not the result of market forces.
8141 Now, the Commission has seen thousands of complaints that they have gotten and I think based on your questions so far, I think you're aware there's a problem with competition in Canada and the goal is how to deal with this.
8142 In the past we've had what I call the new entrants version 1.0, which was Fido and Clearnet. They failed partly because the government just let them in and did nothing else. So the incumbents won and ended up buying them.
8143 You need to -- you know, right now we have a version 2.0 of the new entrants and in order to give them a fighting change I think there needs to be some competitive forces added to give them a chance, and the missing ingredient in this is what you guys have to do or what you can do with the Wireless Code.
8144 What we've seen in all the complaints that you've had, you know, the pricing, the bill shock and everything else, are the symptoms, and the problem is really insufficient competition.
8145 As the Canadian consumers group said, the incumbents control 92.5 percent of the stuff. That's three incumbents, 92.5 percent. So there's a problem there and I think my goal is to induce competition between those three as well as the new entrants, not just the new entrants.
8146 One thing I would like to add in the symptoms in here is a four-letter word called ARPU, and when you read the quarterly statements from the incumbents, they always brag about how they're able to raise ARPU on their mobile services.
8147 Bell recently raised it by 5.6 percent in a recent one, up to $56 or something, and also reduced churn. Bell is down to 1.3.
8148 So their goal as a company, their goal is to maximize profits and if there's no competition they will maximize profits, which is what they've been doing.
8149 And when I say Bell, I talk to all incumbents equally.
8150 Also in Canada there's no real MVNO market. Bell will only MVNO with friends, as they stated in a 2010 hearing here for the Internet. So there's very little competition. And their sub-brands are really sub-brands; they're not really competition.
8151 What the provincial laws have done is limit the amount of pain. That's all really their powers are. You have the power to attack the core and induce competition in the market and that's how I think you should tweak the Code, to focus more on enhancing competition.
8152 If you just mimic what the provinces have done, you're just going to do another dose of Aspirin to alleviate the pain, you're not going to solve the problem.
8153 If you take all the list of complaints from Canadians, the Code would be 200 pages long because you have to deal with every one of them. If you deal with the core, induce competition, a lot of these problems will solve themselves through competition and I think that goes along the lines of the policy direction for the Commission.
8154 What I propose is a three-pronged approach -- sorry, Bell; that was one of their plans on the Internet.
8155 As you've read, no contract for the actual wireless service, so month to month. There is no need. We don't have contracts for telephones; we don't have contracts for gasoline or whatever.
8156 Obviously, clarity of advertised prices, which is one of the goals in the existing Code, and I'll get into those later.
8157 And obviously, the current competitive handset marketplace, which includes unlocking, but also making them available as OEMS to any store to sell, so you don't actually have to buy them from the carrier.
8158 In terms of the no-contract wireless service, what's interesting here is that it solves -- it may be seen as a bold action, but when you look at your current Code and you look at all the discussions that we've had this week about all the dots on the "i's" and do we do this, do we do that, we go at 75 percent or at 85 percent, if you have no contract for the wireless service, no calculation of termination penalties, all of that thing, baggage goes away, a whole bunch of all these problems go away.
8159 So, it simplifies the Code, increases competition and obviously people will be a lot happier because they are not bound by the contract they can switch carrier to carrier.
8160 A lot had been said about the ETFs like in Quebec, for instance, the ETF that has been introduced with the Bill 60 is fairer than it used to be, but it hasn't spurred competition much because at the end of the day it's still a barrier to people switching. So, it's not as effective as going no contract for switching for the service itself.
8161 Sorry about this. Yes. Also, and more importantly, if you don't have a contract on the wireless service, especially in the terms of Quebec because Quebec is a service fourni à distance, if you don't have a contract with that, so don't conflict with it because there is no contract, so it doesn't actually touch. So, it's solves a conflict.
8162 Now, some of the other provinces actually specify wireless so you still have to deal with that.
8163 Now, more importantly in terms of competition, if you have no contract and you can switch your wireless service itself, you can change whenever you want and more importantly, right now, with the three-year contract, what really is happening is they lock you into a fee and you stick with that fee, no matter if there is a sale or not elsewhere and they only have to negotiate with you for lower prices once every three years.
8164 If you're no contract and someone else offers a new deal, they will lower their prices right away to keep their customers.
8165 So I think that's one of the big pluses in terms of competition of having no contract is because the three-year is really to lock people into a certain price and prevent them from getting a lower price, even from the same incumbent because you can't call to threaten to cancel because -- you know, you can only call to threaten to cancel once every three years. So, it saves on them having to lower the prices.
8166 Okay. In terms of clarity, the Quebec Law actually has this. It's not in the 214 paragraph; it's a little further down, but there is a clause, also applies to Air Canada and stuff, that has to make sure that all fees are imbedded and I am not sure that I actually saw this and if it is in there, it wasn't evident in the Code and that should be added.
8167 Any fee that is obligatory that you cannot get away from should be part of the base price because then you prevent false advertising of someone advertising the service for $20.00, but then you get a bill for $55.00, you know. And that's an important part.
8168 And here is the really nice one and it has been mentioned again. Even Bell said they didn't know what a kilobyte was. I'll give you an example of how they do their prices for roaming and for bill shot.
8169 You know, the price us in kilobyte, so for FIDO, for instance, if you're on postpaid, it's one cent for roaming to the U.S., if you're on prepaid, it's $0.05. Now, $0.05 per kilobyte, if you watch a movie for one gig, it will cost you $50,000.
8170 Now, if the Code actually stipulated that the wireless carriers had to specify in gigabyte, because this is the measure that we use in this decade or this century, if they had to specify they had to put the prices in gigabytes, you can bet that their Marketing Department would quickly change their roaming rates down to something that's a little less.
8171 I don't think there is a word to describe $50,000.00 for one gig but that's the price that FIDO charges for postpaid today.
8172 Now, Rogers I think has one at $6,000 per gigabyte. The one that they have announced is a little lower, much lower actually, so I think it's $157.00.
8173 In some of their prices, some of the packages that they have, you have to subscribe for three months. So, if you are only going for two weeks, you know, you are stuck with those rates that are -- you know, you can't get because you are not going for three months.
8174 There is also in the clarity of prices whether -- and that should be added to your stuff, whether they are billing by second, by minute. There is also "sent to end" or "answer to end", which is never mentioned, is when they actually start the billing period on their pod phones, it's "answered to end" when you answer. FIDO used to be "answered to end", it's now "sent to end" so the time that it takes to establish the call is actually billed to you. That's something that you should know as a consumer.
8175 And also an Education Campaign because -- and it has been mentioned here a few times and this is something the CRTC could do as part of the Code -- basically telling them a movie is one gig, downloading the Air Canada page is about one megabyte or the home page or -- you know, give them an idea of how much standard activities on Internet actually end up taking, so they have an idea of how much it costs.
8176 Okay. My suggestion is to unbundle the sale of the handset completely. This was done with iPad, for instance, which is not sold with a package. It's sold independently. And it should be done for all the handsets.
8177 It should be a separate transaction, at which point it's no longer a telecom transaction and so, if you have a contract for financing your handset it's no longer part of a « service fourni à distance » in Quebec and it could be argued it's no longer wireless.
8178 As a matter of fact, it should be, as Commissioner Poirier mentioned, it should be the same as selling a TV set or a refrigerator or a dishwasher and you can get financing from Future Shop of whatever. And by the way, Apple does offer financing; if you buy stuff from them, they have Apple Financing on and it's on their website, contrary to what Bell said.
8179 If you unbundle a handset, the prices will go down because there will be competition and right now there is a lot of play because the incumbents basically control the market with the pricing and they will go and negotiate with handset makers to make sure their retail price isn't too low.
8180 If you remove that, then you -- the Apple or Samsung, whatever, will have further incentive to lower their suggested retail price to compete and that's obviously a bigger picture, but I think you can spur a lot of competition, especially if stores can sell them.
8181 By the way, there used to be stores in Canada and the U.S. that sold handsets unlocked and they're gone now. So, that has to be re-established to provide competition.
8182 And the same thing -- you purchase a handset from a carrier or from a store, you get a contract for re-payment again in the same way as you would for any appliance or whatever. So, they still have that guarantee they will get paid to a contract, the same way that Future Shop gets a guarantee, you get paid for your TV set.
8183 In terms of unlocked handsets, it spurs a lot of competition because it's not only in Canada that you can switch from one to the other, but also when you travel if you can buy a cheap SIM card where you -- for instance, I was in Australia a couple of years ago, I paid $2.00 a day for unlimited data and unlimited voice.
8184 You can't get that in Canada even for normal service. And that's competition to the exorbitant roaming rates.
8185 Now, if all Canadians have an unlocked phone and when they travel they buy local SIM cards, then the incumbents here will have competition and they will lower their roaming rates, so you don't get the bill shock of $50,000 for a movie any more.
8186 And you could also test drive a carrier. You go and buy a SIM card from the carrier, you test to see if the reception is good where you live -- it's easy because your phone is unlocked -- and if you like it, you can switch. So, it really does ease and it removes a big barrier to switching and a big barrier to competition.
8187 In terms of the problem of re-selling and arbitrage and all that stuff, all they have to do is to limit the number of sales per customer and they can track the sales by customer by phone number or ID or whatever.
8188 Where there is a will there is a way. The incumbents have shown they don't really have a will so they came up with various reasons for not doing it, but they have done it in Italy, they have done it in Hong Kong, in Finland and I think other countries. It can be done and it doesn't cause the collapse of the whole economy.
8189 Also in the competitive environment, normally businesses like to sell as many handsets or as many devices as they can because they are profitable and I am sure it's quite profitable for Bell to sell an iPhone at $600.00 because they probably only paid about $400.00 for it.
8190 So, whether they sell an iPhone to one of the Bell customers or to a Rogers customer, they still make money out of it. So, there is incentive for them to actually sell it.
8191 As a matter of fact, at one point I bought an iPod from Telus. I wasn't a customer of Telus and they had no problem selling me an iPod. Why should they not have a problem selling me an iPhone or another phone? Same thing.
8192 And something that's funny, when you steal a telephone that you see an iPhone somewhere, you don't first check if it's locked or not, you steal it and then you check, so it doesn't actually reduce the debt. They may change the way that it's resold at the end, but it doesn't reduce the debt. So, I thought that was a funny one.
8193 Lastly -- oh! wait, there is still another one. There is a big change in the way that phones are being sold right now. This puppy from Apple is one of the first ones where Apple dictated that carriers could not put their own software on it and this is the trend that is going on.
8194 Samsung and all the others are following it because they don't want the carriers to cripple their phones with their bloated firmware and all that stuff. And going forward, the whole idea of a carrier putting their own software on it is not going to go with customers. They want to have the standard phone that they can upgrade the software and install the APS that they want, not the APS that the carrier wants.
8195 And so, by unlocking the phone and making sure there is no firmware from the carrier, that really increases the choice for customers.
8196 Now, if you do allow locking of handsets for 30 days or 90 days, the unlocking fee must not exist. It should be part of that purchase cost of the phone in the same way that's a hidden fee, that's a must-carry, because if the carrier cripples the phone by locking it and then sells you the phone and tells you it's yours, it's not yours until -- it's not fully yours until it has been unlocked.
8197 So, the actual contract of sale is when the unlocking happens and so, if that unlocking the price is not included in the base price it's false advertising, so it must not be a fee to unlock.
8198 If they want to charge $75 for unlocking, it has to be $75 more in the purchase price so that you know right off the bat that you will unlock for free at the end.
8199 Okay, yeah. One thing that's also interesting, you know, the carriers have said that some of the manufacturers force them to lock.
8200 Well, you know, if carrier A wants to have an exclusive agreement to sell phone X, well, obviously they will both agree the phone will be locked, you know. So there's some give and play here.
8201 When they say that some phones have to be locked, it's probably because they have an exclusive agreement for it and they don't want anyone else to have it.
8202 Whether that should be permitted or not is, I guess, a big question, but I think in the -- if it is locked, then consumers should know this is an exclusive to Bell and you can't use it ever on any other network.
8203 In terms of pre-paid service, there have been a lot of questions about this. And I think -- I hope I have a few solutions.
8204 In terms of no expiration, they've complained about a balance that would stay on forever and keep the phone number tied up. Well, you can achieve that very simply by having a monthly minimum spend. Let's say it's $5 or $10. So if you don't actually spend $5 in minutes that month, they will actually deduct your balance by $5. If you spend $2 in minutes, they'll deduct another $3 to the maximum spending.
8205 This way, your balance will go down over time and eventually they can disconnect the phone and release the phone number. So that's one way of doing it.
8206 Now, there's a lot -- pre-paid, if you look -- especially the new incumbents, they have monthly plans on pre-paid. And those balances do not expire because, again, every month they deduct so eventually they do.
8207 Now, I'm not known to be -- well, I'm known to be a little bold, so I will mention the word "refund". Let's say I deposit $100 in the pre-paid account and after a couple of months, I decide I no longer want it. I should be able to get the -- well, $60 back or whatever's that left.
8208 That balance that's left in the account, I should be able to get it back.
8209 Now, if they don't want to write a cheque back to me, maybe all they can do is issue me a credit in the form of pre-paid credit next time I subscribe with them. And this way, I can give that credit to a friend or reuse it in a year or two later.
8210 At least the consumer would have the value back even though it's not cash.
8211 Okay. Changing topics now. In terms of measuring, reviewing the effectiveness of the Code, if it takes more than three years to implement because you're waiting for all the contracts to expire and implement, if you do your review in three years, you may not have enough data to actually know, you know, what's really happening.
8212 I called -- as a consumer, I called the Office de la protection du consommateur and I asked them, "Do you have any data?" And then they referred me to the PR. And they said it's too early to have. And this was implemented in 2010 and -- because they haven't had the full effect yet.
8213 So you have to be careful -- when you plan your reviews and your stuff, you have to be careful to make sure your Code has actually gone into effect to see the stuff.
8214 You've asked about how to measure it. I've been involved with the CRTC with the gas service for wholesale internet. And although they're two separate, there's a competitive environment right now that's growing.
8215 We've seen Bell recently announce unlimited for their internet offering, which they said could never done, because the smaller ISPs are providing competitive forces and they're growing.
8216 What we're seeing is changing in prices and competitive spirit in measuring the prices. So it's not so much measuring the complaints that you get, but actually looking at the published prices that they advertise to see how much change there is to see if there's really competition because, at the end of the day, the Code, the way it's set out, is to let people switch from one to the other.
8217 THE SECRETARY: Excuse me, Mr. Mezei.
8218 MR. MEZEI: Yeah.
8219 THE SECRETARY: You have one minute --
8220 MR. MEZEI: Okay.
8221 THE SECRETARY: -- to conclude. Thank you.
8222 MR. MEZEI: I have -- I'll just conclude because a lot of the stuff you can ask as questions.
8223 I have some comments on unlimited -- a couple of comments on many things that you can see. Sorry. I tend to extend my time too much.
8224 And also, at the end, I have specific comments on each clause that are relevant from the stuff, so I thank you for the time and I'm -- and I'll just say that I went skating on the canal yesterday and so I'm not going to skate around your answers.
8225 THE CHAIRPERSON: Well, I'm glad you said that before I told you who'd be asking you the questions.
8226 So, Madame Poirier.
8227 COMMISSIONER POIRIER: I'm the winner.
8228 M. MEZEI : O.K. Vous pouvez les poser en français ou anglais.
8229 COMMISSIONER POIRIER: Oui. Thank you. I'll try to ask some in English and --
8230 MR. MEZEI: Okay.
8231 COMMISSIONER POIRIER: -- the others in French.
8232 And I want to thank you for providing us with extensive information on this file. It's really appreciated.
8233 We'll try to stick to the scope of this hearing --
8234 MR. MEZEI: Okay.
8235 COMMISSIONER POIRIER: -- because yes, I agree that competition is important, but that's not the real purpose of this hearing. It's to have a Code presented to the industry and the Canadians so they can have a better service.
8236 I know it's also related to competition, but let's keep it to the Code, okay.
8237 MR. MEZEI: Okay.
8238 COMMISSIONER POIRIER: So the government wants us to let the market force regulation apply as much as needed, but no more than needed. And it seems in your document you want us to intervene a lot in the industry.
8239 Don't you think it's going in the opposite direction from the government?
8240 MR. MEZEI: Actually, the opposite. I want intervention to be maybe a little stronger, but more focused into fewer areas.
8241 Later on, for instance, I say that the $50 cap is not actually necessary for you to specify the dollar amount. You can just say there needs to be a cap and the carrier is responsible for any use after that.
8242 And in this way, you don't have to mandate the number or whatever. It's more of a vague regulation, and the carrier is stuck paying the bill if they don't do -- take steps to limit overages.
8243 So they will have the motivation to find a way to reduce those overages.
8244 COMMISSIONER POIRIER: Okay. So the Code will induce more competition.
8245 MR. MEZEI: I'm hoping it is, but there's ways to change the Code and certain ways to reduce the regulatory burden. And I think Bell alluded to it as well in terms of if you get too specific on the Code, you reduce innovation and stuff.
8246 So there's ways at one point to deal with the problem and just sort of in a general way, a general principle way as opposed to going to specifics of you must send an SMS message at 25 percent, 75 percent, 80 percent and 100 percent, you know.
8247 If you tell them, look, you must publish -- you must send -- 100 percent, you must send an SMS, that I would agree. But you must find a way to help your customers understand. And if they -- for instance, one thing I would like to see is when you roam, they send you an SMS to tell you that you roam.
8248 But what they should do is they should wait for you to reply "yes", right, I'm willing to pay. And then you're paying. Something like that.
8249 And this doesn't have to be at the regulation level. It could be just -- the regulation could just say unless the customer agrees to the fee, you can't charge him. And this way, each carrier can find their own way of implementing it. And that will provide differentiation and competition.
8250 COMMISSIONER POIRIER: Okay. Let's move to the three recommendations you're doing in this document.
8251 The first one is no contract wireless services.
8252 MR. MEZEI: Yeah.
8253 COMMISSIONER POIRIER: Wouldn't a pre-paid service be equivalent to that?
8254 MR. MEZEI: The problem in Canada is the pre-paid is charged at a premium compared to post-paid except for some of the new entrants where it's the same. But for the incumbents, they charge it as a premium because they want to move pre-paid to post-paid, so they charge more, which is why Fido, for instance, charges $50,000 per gig when you roam on post-paid versus 10,000 when you're on pre-paid.
8255 So yes, it would be nice, but the idea of a post-paid is you can go to the U.S., for instance, and spend and you get the bill at the end of the month versus having to, you know, pay ahead of time.
8256 There's lots of advantages to post-paid. And if you -- if the handset is unbundled, there is no subsidy to repay. There is no need for a contract on your service in the same way there's no need for a contract on your phone service.
8257 I'd like to remind you, there's a precedent for this. It's called POTS because many years ago you guys separated the phone from the landline from the phone service, and it seems to have worked pretty well because people buy phones everywhere and there's competition in the phone market.
8258 COMMISSIONER POIRIER: Okay. Let's move to the consumer aspect.
8259 This morning, Bell and most of the other big wireless service providers told us that the consumers want a three-year contract.
8260 Do you disagree with that? It seems to that it's the best way for them to access new handsets, to -- you know, to enjoy wireless -- the wireless system in Canada, so -- and that's why they don't offer one and two-year contracts because it's not providing the best service to the consumers.
8261 MR. MEZEI: The answer to this is, as a party followed by a hangover, they provide you with an enticing offer, zero dollar down or $50 down for a fancy iPhone or something, and then, of course, you see this with the big flashing lights and the arrows and all the publicity. You get into this and, after, that you realize oh, I'm stuck in a three-year contract. And then you get all these thousands of complaints.
8262 I don't think people want three-year contracts. They're stuck because that's all that there is on the market. And that's why removing the contract altogether, I find, is a simpler solution because the regulation becomes a lot simpler because you don't have the termination fees, et cetera, and you provide more competition between incumbents, which I think is important.
8263 I know that it's sort of outside of the scope, but the reason I mention this is I would like you, as a consumer and as someone who understands the policy direction, I think -- I would like you to shape the Code with that in mind and when you take decisions, you know, to try to use the Code to spur competition.
8264 COMMISSIONER POIRIER: Yesterday, the consumer of Canada told us we should change the vocabulary. Instead of talking about subsidies, we should talk about loan and repayment.
8265 And this morning, I heard something different from Bell because they said the discount on a device in return for a term of contract is not a loan, it's not a repayment schedule. There are no fixed fees associated with paying it back. Our pricing is our pricing.
8266 So there is really a conflicting situation there.
8267 What's your solution to that? Who should win?
8268 MR. MEZEI: The solution really is that incumbents love the current status quo because they make a lot of money. Consumers are hurt because we pay a lot of money for that. And low income people are stuck. Because I have some friends who have a used BlackBerry. They can use data, but it's locked on Rogers and they're on post-paid, sorry, prepaid. And they can't move to another provider, because they're stuck on Rogers, because their phone's locked.
8269 And so, you know, there's the whole concept of the phone being tied into the subscription and locked to one carrier. It's hurting a lot of Canadians and low income people. You know, if you had a market, an open market for used phones that are not locked and low income people can buy the used phone and get any service they want.
8270 And, again, without a contract on the service, on the monthly contract, then, there's no problem with the deposits or credit rating or whatever, because they can cut you off after a month; you don't have a contract, you don't have a termination fee, because you have your own phone. So there's a lot of advantages to it. So, really, the incumbents are happy in the status quo. And what they really, the reason that we're here today is that they don't want further provincial regulations. And a reason I'm here as a consumer is I want to see some of the problems in the wireless industry in terms of lack of competition tackled with this code.
8271 COMMISSIONER POIRIER: M'hm.
8272 MR. MEZEI: Because, you know, we're at opposite ends, because the incumbents want the opposite. They're comfortable in the current one where they can announce higher ARPU every quarter and they're very happy with this. I'm not.
8273 COMMISSIONER POIRIER: In today's presentation, you said, "If we unbundle the price and..."
8274 MR. MEZEI: Yes.
8275 COMMISSIONER POIRIER: ...and the service, that the handset price will go down. On what do you rely to say that? Do you have any proof of that?
8276 MR. MEZEI: In general, if you look at the telephone sets for land line, it used to be Bell Canada only, well, in Québec and Ontario and you had to buy from them or rent at their price. And now, it's a completely open market. And, if you have the combination of unbundled and unlocked, Apple in Canada for instance, when they sell... And by the way it was not three months after the phone, iPhone 4 was announced, it was a matter of a week or two before an unlocked version became available.
8277 If you have an open market, Apple right now sells almost all their phones to carriers. So they have deals with carriers. So the suggested retail price is high so that carriers can make a lot of money. Because, you know, as I said, they don't pay the 675 or whatever, they pay a lower price, but the subsidy that they declare is based on the 675. So the higher the suggested retail price for the phone that they announce, the more that we pay in our monthly fee because it's the subsidies included in it.
8278 Look, there is no question that the cost of the phone is included in the cost of the wireless service today. Whether it's called a subsidy, or a loan, or embedded, or whatever, the fact is they're not willing to cancel your contract until your subsidy's been paid; right? If it wasn't the case, they would gladly retroactively the code to existing customers because there'd be no reason, you know, they couldn't cancel the contract. They don't want them to cancel the three-year contract, because they want to wait until they've paid off their loan, which is really, we're talking about a loan that, you know.
8279 CONSEILLÈRE POIRIER : Um-hum. Je vais vous parler un petit peu en français.
8280 M. MEZEI : O.K.
8281 CONSEILLÈRE POIRIER : Je sais qu'on a fait beaucoup de liens entre le verrouillage des appareils et la fraude, O.K. Et vous dites : « Bien, il y a d'autres moyens que de verrouiller un appareil pour lutter contre la fraude, en limitant -- comme vous le dites -- ... »
8282 M. MEZEI : Oui.
8283 CONSEILLÈRE POIRIER : ... le nombre d'appareils vendus par les fournisseurs de services sans fil. Est-ce que ça a déjà été essayé? Est-ce que ça ne se fait pas déjà?
8284 M. MEZEI : Bien, écoutez, regardez Apple, quand ils ont lancé le 5, au début, c'étaient juste les téléphones qui sont attachés à un carrier, un... je ne connais pas le...
8285 CONSEILLÈRE POIRIER : Un fournisseur de services.
8286 M. MEZEI : Un fournisseur de services, excusez.
8287 CONSEILLÈRE POIRIER : Sans fil, oui.
8288 M. MEZEI : Et, une semaine après, parce que, bon, évidemment, ils avaient... Ça prend beaucoup plus de temps. Quand Apple, en fait, les téléphones iPhone qui sont dans le magasin ne sont pas verrouillés. Quand tu viens l'acheter et que tu veux un service avec Bell, ils prennent l'appareil et le verrouillent à Bell sur le site avant de te le donner.
8289 Donc, pour eux, en fait, c'est un travail supplémentaire que Bell doit faire aussi, de verrouiller à son propre réseau. Et donc, il n'y a pas vraiment... les arguments des compagnies, c'est vraiment pour protéger leur business model en ce moment.
8290 CONSEILLÈRE POIRIER : C'est plus empêcher le roulement de leurs clients...
8291 M. MEZEI : Non, bien, écoutez...
8292 CONSEILLÈRE POIRIER : ...qui leur coûtent cher à aller chercher à la base ou... J'essaie de comprendre à ce moment-là pourquoi on ne règle pas le problème de la fraude avec certains moyens. Et, en fait, si, finalement, on conclut -- et c'est ça que vous sembliez dire tantôt -- que c'est plus le churn, là, le roulement de clients qui...
8293 M. MEZEI : Oui, oui, bien, écoutez, écoutez, leur but premier, c'est de faire de l'argent. Et c'est ce qui est normal. C'est une corporation. Ils ont des droits à donner à leurs actionnaires. Et, s'ils ont une solution, comme le verrouillage, qui réduit le churn, réduit la fraude et augmente le revenu parce qu'ils gardent leurs clients plus longtemps, bien, ils prennent ça. Si, vous, vous dites non au verrouillage, c'est sûr qu'ils vont trouver des solutions alternatives, mais ils seront moins contents parce qu'ils vont faire moins de profits. Donc, de leur point de vue, c'est normal qu'ils vont trouver toute excuse possible pour garder leur droit de faire le verrouillage même si c'est juste pour quatre-vingt-dix (90) jours.
8294 CONSEILLÈRE POIRIER : Um-hum. Vous avez parlé tantôt qu'on devrait obliger ou en tout cas préciser dans notre code que, une fois que l'appareil, la « subvention » -- et je le dis bien entre guillemets -- est complétée, qu'on devrait déverrouiller gratuitement les appareils. Mais, pour eux, ce n'est pas une vente d'appareil. Alors, comment vous concilier votre point de vue avec le leur? Ils ne se sentent pas nécessairement toujours obligés de déverrouiller les appareils une fois que c'est terminé.
8295 M. MEZEI : Écoutez, si ce n'est pas une vente d'appareil, on devrait retourner nos appareils à la fin de notre abonnement; n'est-ce pas? Si je garde l'appareil à la fin de mon abonnement, ça veut dire que ça a été une vente. Puis je pense que le code devrait peut-être inclure ça, que, quand un appareil reste dans les mains du client après son départ, c'est une vente d'appareil. Et la façon de financement que c'est fait, qu'ils l'appellent subvention ou quoi, c'est un financement à l'achat...
8296 CONSEILLÈRE POIRIER : Oui, mais ce n'est pas comme, par exemple, un magazine, je peux m'abonner à un magazine et pour stimuler l'abonnement au magazine, on va me donner une montre? Alors, c'est sûr, je garde la montre, mais tout ça a pour but de créer ce besoin-là de m'abonner au magazine. Est-ce que ce n'est pas un peu comme ça que les compagnies fonctionnent; ça devient presque un don pour un service rendu?
8297 M. MEZEI : Oui, mais vous vous abonnez au magazine et vous pouvez appeler pour canceller votre magazine n'importe quand.
8298 CONSEILLÈRE POIRIER : Et je ne redonne pas la montre.
8299 M. MEZEI : Et vous ne redonnez pas la montre.
8300 CONSEILLÈRE POIRIER : Il y a une certaine logique, j'avoue. Alors, pour vous, toute ces demandes-là qu'on a eues, ces discussions-là qu'on a eues aboutissent au moins au fait que, quand on a fini de payer sa subvention, au moins, on ne devrait pas payer pour avoir notre appareil déverrouillé?
8301 M. MEZEI : Oui, ça, ça devrait être...
8302 CONSEILLÈRE POIRIER : Un minimum.
8303 M. MEZEI : ...the bare minimum, absolument. Il n'y a pas... Et, comme je vous dis, même selon la loi du Québec, je pense que les compagnies, les fournisseurs devraient être... il devrait y avoir un challenge sur ça, parce que, s'il y a des frais qu'on doit payer à la fin pour obtenir la propriété totale de notre téléphone, ces frais-là devraient être inclus dans le coût d'achat du téléphone...
8304 CONSEILLÈRE POIRIER : Parfait.
8305 M. MEZEI : ...selon la loi. C'est l'article 230, si je me souviens bien.
8306 CONSEILLÈRE POIRIER : O.K. One of the element we didn't have time to discuss, and it's in your document, page 15, the last paragraph, you say talking about caps, okay, because it's been an issue here --
8307 M. MEZEI: Yes.
8308 COMMISSIONER POIRIER: And I do understand that some consumers would want to have a cap, but at some point they don't want to have the cap when they're having a discussion with someone and suddenly the connection cuts.
8309 MR. MEZEI: Okay.
8310 COMMISSIONER POIRIER: So it's ambivalent, okay, it's difficult to --
8311 MR. MEZEI: When I first subscribed with Fido, back when they were Fido in the 90's --
8312 CONSEILLÈRE POIRIER : Yes.
8313 MR. MEZEI: -- you could not go to the US and get service. You had to call Fido and say, "I'm going to the US, I would like you to activate my roaming. It wasn't difficult. It takes fives second. Similarly with the cap, you can call before you leave and say, "Look, I'm going to be spending a week, I'd like to have, remove the cap and let me talk."
8314 Or if you do reach the cap and they cut you off, then you can probably just send an SMS, say, "Please activate my service again and they reactivate and you can spend over." But at least that way you get, you know that you've reached that limit and you agree to pay the extra. So you remove the surprise that you're going to get a big bill.
8315 COMMISSIONER POIRIER: Okay.
8316 MR. MEZEI: There's technical ways of doing it. And, you know, when there's a will, there's a way. And incumbents -- And what I've noticed at the CRTC is very often they will answer questions but they won't volunteer new solutions.
8317 COMMISSIONER POIRIER: Okay so talking about bill shock then --
8318 MR. MEZEI: Yes.
8319 COMMISSIONER POIRIER: -- what do you support in the code to prevent bill shock, because there are many different possibilities we can go in. And I was wondering is ceiling caps one of them, or unlock prices, or what do you support to diminish that occurrence of bill shock?
8320 MR. MEZEI: Look, the $50 cap exists as a pain prevention. The real solution is to lower those overages so you don't get the $50,000 bill, or 10,000, or whatever, you know, those horror stories.
8321 COMMISSIONER POIRIER: Yes.
8322 MR. MEZEI: That's the real solution is to have lower -- Now, you've made it very clear you're not going to regulate rates.
8323 COMMISSIONER POIRIER: M'hm.
8324 MR. MEZEI: So the only way to achieve this is -- I'm sorry to say -- is through competition. And we've seen efforts over the last few years -- and it has to be noted -- that the incumbents have lowered their data rates and their roaming rates are going down, maybe not fast enough, but there is a downward trend.
8325 One of my suggestion is having all those roaming rates expressed in gigs so that they actually see the real price is -- you know, when you know, if you use your Fido prepaid and you know it's $50,000 for the first gig when you go to the US, you know you're going to use it or you're going to call Fido and try to find another answer. Education is probably a good one.
8326 I like the idea of the cap, because for general people, it's sort of a preventative measure.
8327 COMMISSIONER POIRIER: M'hm. But could it be an opt-in thing the consumer does when he signs his contract? You opt in in a cap or...
8328 MR. MEZEI: No, I think the way Fido had done it originally is the proper way. It's not opt in, it's opt out, basically. You get the cap. They let you spend $50 in the US. And if you want to spend more, you call them. And, you know, if you're going to the US, if you're a businessman and you travel often, you just call them and say, "Remove the cap permanently please." Right? And the businessman knows what his average use is going to be. He knows he can't watch movies. Or he may actually subscribe to a data package for roaming which makes it more affordable.
8329 Where the problem lies is with the casual travellers who are not used to the roaming fees and they don't realize that watching that Netflix movie is going to end up costing them $50,000.
8330 COMMISSIONER POIRIER: M'hm. You're bringing today many code comments. I won't go through all of them.
8331 MR. MEZEI: Okay.
8332 COMMISSIONER POIRIER: One particularly I'm interested in is implementation of the wireless code.
8333 MR. MEZEI: Yes.
8334 COMMISSIONER POIRIER: For many reasons, retroactive application of contracts cancellation would be very desirable, but it seems difficult for companies because some companies don't even have the contracts of their clients, okay. So wouldn't it be better applying certain provision of the wireless code to existing contracts on a going forward basis?
8335 MR. MEZEI: The best would be retroactive, because then you'd have your code implemented and all Canadians would benefit, maybe not today, but, you know, in a year or so. Having to wait that long -- And you're going to have also in terms of complaints -- just as alinéa -- the CCTS could actually expect an increase in complaints, because when half the people are under the new code and the other half on the old code stuck on those old contract with a high termination fees, that half is going to complain a lot more because they're going to be jealous of the first half that are under the new code. So you got to be a little careful with that. Retroactive would be the best.
8336 Now, if you cannot achieve that, obviously, you're going to have to find the right middle ground on this on how to do this. And, you know, there's stuff incumbents and --
8337 COMMISSIONER POIRIER: M'hm.
8338 MR. MEZEI: Well, most of the incumbents who have contract, because the new entrants generally don't, there's stuff that you can maybe talk to incumbents and see what they could do. Maybe you can bring them to a hockey game some time and they could... You know, you could have a good discussion on what they could do. All the incumbents who operate in Québec have been tracking the subsidy since 2010. They've implemented it so they have those already. And they would have been prepared probably I would assume nationally, they would do that.
8339 All the incumbents who have contracts -- let's say a three-year contract -- but they know exactly when you can call and get a new phone; right? Because, when you call, "Am I eligible for a new phone after two years?" Right? And they say, "Not yet, sir, but wait another couple of months." It seems to me they have some idea of when the subsidy's going to end even if it's an averaged time or an averaged sort of -- even if they don't know the actual cost of the handset at the time that I got it, they have an average somewhere that it takes, you know, over two and a half years, or two years, or so many months that the average consumer's repaid its subsidy. They could use that for the existing customers. You know, there's ways --
8340 COMMISSIONER POIRIER: M'hm.
8341 MR. MEZEI: Again, where there's a will, there's a way.
8342 CONSEILLÈRE POIRIER : Mais est-ce que vous êtes d'accord qu'au Québec, ça a quand même pris jusqu'à deux ans pour implanter la plupart des éléments de la Loi de protection du consommateur et que les compagnies ici nous disent : « Bien, nous aussi, on pense que ça va nous prendre deux à trois ans pour arriver à faire cela »? Alors, est-ce que vous n'êtes pas d'accord qu'il faut être réaliste aussi, ça prend du temps?
8343 M. MEZEI : Oui, écoutez, c'est sûr que ça prend du temps. L'idée là-dedans, c'est de faire bénéficier le plus de Canadiens le plus rapidement.
8344 CONSEILLÈRE POIRIER : Et sur quoi devrait-on les faire bénéficier dès le départ? Qu'est-ce qui, pour vous, est le minimum qu'on devrait s'assurer qui est implanté en partant pour tout le monde, peu importe la date d'implantation du code?
8345 M. MEZEI : Écoutez, il y a bien des choses que même les compagnies de titulaires ont dit, comme les cartes de 50 $, et caetera. Ça, c'est quelque chose qui est implémenté au point de vue système. Ça, ça peut bénéficier à tout le monde tout de suite. Dans cette optique-là, il y a beaucoup de clauses dans le code qui peuvent être implantées tout de suite. Le plus difficile, le plus contentieux, c'est les frais de terminaison. Parce que c'est un contrat et je ne sais pas, comme Bell l'a dit, Bell a dit que vous n'avez pas la juridiction sur ça; moi, ce n'est pas à mon niveau. Mais c'est vraiment une question, je pense, les frais de terminaison. Et c'est selon les commentaires que vous avez, les contrats de trois ans, les frais de terminaison, c'est une des grosses plaintes.
8346 Donc, ça serait une façon, si vous pouvez trouver une façon de l'implanter le plus rapidement possible pour le plus de monde possible, que ce soit, disons, des contrats... Écoutez, si ça prend deux ans à l'implanter et que vous dites aux compagnies titulaires aujourd'hui « Commencez à tracker les achats d'appels aujourd'hui », bien, peut-être que vous pourriez faire ça rétroactif à 2013, même si ça prend deux ans à... Donc, dans deux ans, les personnes qui auront acheté des achats depuis 2013 au moins pourraient bénéficier des frais de terminaison selon la nouvelle formule.
8347 CONSEILLÈRE POIRIER : Le dernier grand sujet que je veux aborder avec vous, c'est celui, vous l'avez appelé « Coopération... »
8348 M. MEZEI : Oui.
8349 CONSEILLÈRE POIRIER : « ...entre le fédéral et le provincial ». On a eu toutes sortes de point de vue. On a entendu que le code canadien devrait supercede, devrait être au-dessus de l'ensemble des lois provinciales qui sont déjà votées; d'autres ont dit « Il faudrait tout simplement suspendre -- c'est la position de Quebecor -- suspendre dans les provinces le code canadien quand les provinces veulent que leurs lois aient préséance sur notre code. »
8350 Vous, vous allez pour vraiment la position qui est en plein centre. Vous dites : « Ils devraient coexister; ils devraient aussi se compléter. »
8351 M. MEZEI : Oui.
8352 CONSEILLÈRE POIRIER : Alors, pourquoi cette avenue-là à votre avis serait la meilleure pour les consommateurs?
8353 M. MEZEI : Eh bien, écoutez, premièrement, votre code amène des bénéfices que le code du Québec n'a pas. Le cap de 50 $, par exemple, ou il y a quand même beaucoup d'aspects dans votre code qui sont meilleurs que le code du Québec. Le code du Québec au point de vue légal a des forces beaucoup plus grandes. Comme ils sont capables d'amener une compagnie en cour jusqu'à 100 000 $, et caetera. Mais c'est vraiment en se complétant qu'on a le meilleur deal. Parce que, si, au Québec, on n'a que le code du Québec et qu'on ne bénéficie pas du code fédéral, on ne gagne rien. Et, si vous réussissez à convaincre le Québec par miracle de soulever, de suspendre leur code pour mettre le vôtre, alors on a des moins grandes protections au Québec.
8354 Et j'aimerais juste dire que les compagnies depuis 2010 ne se sont pas vraiment plaintes que le Québec était différent du reste du Canada. Et d'ailleurs, les provinces ont toutes chacune des petites subtilités différentes dans leur code de protection des consommateurs quand vient l'achat des bidules, et caetera. Je pense qu'ils sont capables de vivre.
8355 Le code du Québec est peut-être un peu différent, mais il n'est pas drastiquement différent. Je ne pense pas qu'il y ait des grands conflits. Et, quand il y a conflit, s'il y a un conflit, moi, je vous appelle à aller rencontrer les ministres et peut-être travailler, je ne sais pas si vous avez le droit, mais, en tant que citoyen, je m'attends à ce que le fédéral...
8356 CONSEILLÈRE POIRIER : Et le provincial.
8357 M. MEZEI : ...et le provincial travaillent pour réparer des conflits. Ce n'est pas des gros conflits, j'imagine, qu'il y a entre les codes provinciaux et le code proposé fédéral. Réparez-les.
8358 Au Québec, comme, par exemple, l'idée que le contrat doit être fourni sur papier, le code du Québec date de quand même plusieurs années. Peut-être qu'il serait le temps de le revoir puis dire : « Écoutez, sur papier, ou PDF, ou d'une autre façon. » Je ne pense pas que ce serait une grosse chose pour le Québec d'admettre que, O.K., c'est le temps de faire une mise à jour. S'ils font une mise à jour, peut-être de l'ajuster un peu avec le code fédéral ou peut-être même d'intégrer les portions du code fédéral dans le provincial pour qu'il y ait la juridiction au point de vue légal qu'ils peuvent actionner les compagnies en cour sur les transgressions.
8359 Alors, il y a moyen de moyenner. Puis je pense que, si ce n'est pas vu comme une bataille constitutionnelle et que c'est vraiment un point de vue pour protéger les consommateurs... Vous, vous avez la juridiction sur la télécom. Eux ont une juridiction sur -- je ne sais pas c'est quoi le terme exact -- on va appeler ça protection du consommateur. Ca peut, ça devrait se complémenter. Je ne voudrais pas voir de batailles entre les deux.
8360 CONSEILLÈRE POIRIER : Est-ce que l'aspect punitif de la Loi de protection du consommateur est quelque chose qui le distingue et qui fait que ça devrait rester complémentaire puisque, nous, en fait, les plus grosses punitions ou amendes -- appelez-le comme vous voulez -- penalties sont de 5000 $, ce n'est pas beaucoup, est-ce que vous pensez que c'est un des avantages qu'il y aurait à garder chacune des lois provinciales? Parce que, en Nouvelle-Écosse, je pense les pénalités peuvent aller jusqu'à 300 000 $.
8361 M. MEZEI : Exactement.
8362 CONSEILLÈRE POIRIER : Au Québec, ça peut aller jusqu'à 100 000 $. Au Manitoba, je ne m'en rappelle pas. Et l'Ontario a un projet aussi d'aller dans ce sens-là...
8363 M. MEZEI : Oui.
8364 CONSEILLÈRE POIRIER : ...avec des... Et, ce matin, ça a été assez surprenant, le ministre Bhullar de l'Alberta disait : « Effectivement... »
8365 M. MEZEI : 500 000.
8366 CONSEILLÈRE POIRIER : « ...500 000 $ serait ce qui est le minimum qui devrait se faire tant qu'à nous. » Alors, cet aspect-là, bien sûr, rebute aux fournisseurs de services sans fil. Il n'y a personne qui veut être obligé de payer une amende d'un demi-million, mais est-ce que c'est un aspect qui est à considérer pour garder les deux réglementations en mode complémentarité?
8367 M. MEZEI : En mode complémentarité. Imaginez un scénario où les 10 provinces passent une Loi de protection des consommateurs, chacune avec leur 100 000, ou 200 000, ou 300 000, ou peut-être même 500 000 $ qui n'intégrerait peut-être pas le code fédéral, mais qui permettrait les punitions quand il y a des transgressions au code fédéral. Les compagnies titulaires à ce moment-là, ils auront un peu plus peur qu'une...
8368 Un 5000 $, écoutez, quand on regarde Bell qui fait son super marché qui dépasse 3.2 milliards juste pour acheter Astral parce qu'ils veulent, 5000 $, je pense que ça ne paraît pas dans leur budget. Ce n'est pas vraiment une punition. Mais aller en cour avec le gouvernement du Québec ou avec n'importe quel gouvernement, il y a des frais légaux, ça prend beaucoup de temps et tu as la punition finale. Alors, ça, se fait remarquer plus.
8369 Et j'aimerais noter que, quand j'ai appelé l'Office de protection des consommateurs, j'ai demandé justement s'il y avait eu des actions légales d'entreprises. Et ils m'ont dit : « Après deux ans, c'est trop tôt, monsieur. » Le processus, premièrement, d'investigation puis de voir si la compagnie est prête à changer, ce n'est pas encore terminé. Donc, ils n'ont pas encore amené de compagnies en cour parce que le processus prend du temps.
8370 CONSEILLÈRE POIRIER : O.K. So my last question, because I know you've been following this hearing --
8371 MR. MEZEI: Yes.
8372 CONSEILLÈRE POIRIER : -- since the beginning, okay, and I can see that, on Twitter, you're very active and every sentence said, you note it and you add to it. So I was wondering, because of that overview you have about what's been said here, what pleased you the most and what shocked you the most after hearing what you heard here?
8373 MR. MEZEI: I have to say I've seen enough of the incumbents that nothing they said shocked me and nothing of what they said surprised me, because they said basically what I expected them to say. They're very good at providing -- or skating around answers, basically; I am sorry.
8374 I don't think anything really surprised me that much. I was a bit disappointed that I was the only one with a different idea, especially since the Competition Bureau seemed to support my view, maybe the only ones. But, no, there is nothing that surprised me, but perhaps because I am used to the process and we have to wait for your decision to see what the real surprise is going to be and I'm hoping you are going to surprise me.
8375 COMMISSIONER POIRIER: Yes. So, do you think companies keep -- they keep on telling us that they heard the consumers, that they are there to serve the consumers. So, should we trust them or should we go with a Code that is tough?
8376 MR. MEZEI: You need a tougher Code and I have given you the reasons as the word "competition".
8377 Look, they have responsibilities to their shareholders, they have control of the market with 92.5 per cent. They can raise the prices and they have, and they make money. They are not hurting.
8378 And you have the small incumbents, if you want to give those a chance, if the whole competition aspect is based on those small incumbents, you have to give them a fighting chance. And that's one of the reasons in no-contract -- I mentioned that, because without a contract, people can switch easily.
8379 COMMISSIONER POIRIER: So, thank you for not skating here today. Keep on skating on the Canal only.
8380 MR MEZEI: Yes.
8381 COMMISSIONER POIRIER: Thank you.
8382 MR. MEZEI: Thank you.
8383 THE CHAIRMAN: Just to clarify, we can obviously meet with all Canadians, including members of Provincial Governments. The thing is once we're in a hearing, we tend to prefer to do that because we are obliged to do that by Law and the Minister of Law, to do it in open process.
8384 So, some of the provinces have intervened and we listened to them through that. It's unfortunate some weren't able to participate in the oral phase, but they are parties. So, thank you for your appearance and do you have questions? Yes? Okay. Commissioner Molnar will have some questions for you.
8385 COMMISSIONER MOLNAR: Good afternoon. You're normally bold and you didn't really disappoint this time either, so -- and your focus is upon competition and as Commissioner Poirier pointed out, it's not really the primary purpose of this proceeding, but the purpose inform and empower out customers to be informed and empowered.
8386 MR. MEZEI: Yes.
8387 COMMISSIONER MOLNAR: But certainly it is not our intention in any way to impose anything in this Code that would have any detrimental impacts upon competition.
8388 Do you see anything here in this Code that you would be concerned would have any kind of unintended consequences in that way?
8389 MR. MEZEI: Big picture? No, but they're -- in the Code and at the end of my presentation, which I didn't get to, I have a whole bunch of comments and some of them do have some competition aspects.
8390 And you know, like fixing the $50 cap, for instance, the $50 shouldn't be specified in the Code. It should be specified that the carrier provides a CAP and gives its consumer what is that amount and let carriers be different and provide different CAPS.
8391 It's that type of sort of fine tuning where your intervention is maybe a little too strong on that and you can sort of withdraw and give them a little bit more leeway on that. It's sort of at that level.
8392 I mean, I don't see big picture. Your goal doesn't interfere with competition that much.
8393 I just saw the potential by going bolder to really help competition and that's why I am sort of here.
8394 COMMISSIONER MOLNAR: No. I understand that. You've probably heard all of the wireless service providers tell us, "don't do anything that will remove the choice from the market, don't". You know, we've heard it over and over. Allow innovation and allow greater flexibility, allow choice and don't do anything in this proceeding that will remove an option that today is available to consumers.
8395 Do you have any concerns with that?
8396 MR. MEZEI: At the regulatory level, I agree with their call. As strange as it may sound that I would agree with the incumbents, I agree at the regulatory level you should not take steps to hinder that and I gave you the example of specifying in the Code a specific amount.
8397 On the other hand, because they control 92.5 per cent of the market and because they each follow each other basically fairly closely, there is very little differentiation. So, even if you don't give them some freedom on the CAP for instance, I am not sure they will differentiate that much and you are not going to see that much innovation because they all follow each other.
8398 But you may see the new entrants provide much differentiation. So, at that sense, if you want to help the new entrants --
8399 COMMISSIONER MOLNAR: And let
8400 me --
8401 MR. MEIZEI: -- you don't want to stifle them either.
8402 COMMISSIONER MOLNAR: Exactly. Particularly as it relates to not removing the opportunity to provide contracts, but the other thing that has been discussed throughout this hearing is potentially restricting the length of those contracts. What's your thought on that?
8403 I mean, that certainly takes away what is an option for consumers today?
8404 MR. MEZEI: Well, restricting the length of the contract I am not sure will make much of a difference. It will look better. It looks better when you only have a two-year contract versus three. But if you buy a phone worth $600, you again end up paying that phone at $600 one way or another, whether it's over two years or four years or one year or if you buy on the spot.
8405 The two-year contract, obviously the termination fees are going to be higher because your balance may be higher or it depends. I would rather -- I think it would be bolder to have no contracts at all because then you don't have to decide on the length and then you don't have to deal with termination fees and stuff.
8406 Your contract is better, but I don't know that it will solve many problems. If you look at the U.S., they have two-year contracts and there is many, many, many complaints as well, but AT&T and Verizon being a duopoly and raising prices and, you know, when Bell says it's more expensive in the U.S., it's not because it's a two-year contract. It's because there is a duopoly there who charge a lot.
8407 So, you can't -- you know, you have to be careful about the cause and effect here because the comparisons are a little different. If you do this, it may have good PR. I don't know that they will have a big impact, to be honest. And maybe some people will hate me for saying this, but again, no contract would be the best aspect to split the phone off, but if that's off the table --
8408 You know, with a proper termination fee, like in Quebec, for instance, I think you should look. I haven't seen statistics from your website, whether the complaints about termination fees, whether they came -- if any of them came from Quebec or if they all came from other provinces, and that would be something interesting for you to know because if none of them came from Quebec, then you know that putting a Quebec style termination fee will reduce a lot of pain. But if you continue to get them from Quebec, then there is some questions about it.
8409 COMMISSIONER MOLNAR: Thank you.
8410 THE CHAIRMAN: Thank you very much. And just for the record, I have no problem with back-to-back copies, okay. I know you were worried about that in the process.
8411 MR. MEZEI: It was a mistake by Staples, by the way.
8412 THE CHAIRMAN: No. It's okay. It's okay.
8413 Merci beaucoup.
8414 On va entendre la présentation des autres -- c'est Public Mobile? So, Public Mobile, but I am going to ask you to do your presentation and then we'll take a break right after that before we get into questions. So, please come up.
8415 THE CHAIRMAN: So, welcome. Try to set yourself up, perhaps a glass of water, and when you're ready, please go ahead, remembering to identify yourselves, which you probably are familiar with.
8416 MR. BORON: Good afternoon. Bonjour, monsieur le Président. Commissioner, Commission staff.
8417 I would like to introduce the Public Mobile panel. My name is Bob Boron and I am a Senior Vice President and the General Counsel at Public Mobile. With me here today, to my immediate left is Bruce Kirby, Public Mobile's Chief Financial Officer and Senior Vice President of Strategy & Business Development, and to Bruce's left is Jamie Greenberg, our Manager of Legal & Regulatory Affairs.
8418 Public Mobile is very pleased to have the opportunity to present before the commission today in this proceeding to consider whether a federal Wireless Code of Conduct should be implemented across Canada.
8419 By way of a quick overview, and as you may know, Public Mobile is a new entrant mobile wireless telecom provider, carrier actually, offering services on our own wireless network in some of the most densely populated areas in Canada. In 2008 we purchased spectrum covering approximately 19 million Canadians, essentially in the Quebec City to Windsor Ontario corridor. We launched services in Toronto and Montreal in the Spring of 2010, and since that time we have expanded our 3-G CDMA-based network to cover approximately 10 Million people in Ontario and Quebec.
8420 All our services are currently provided on a pay-in-advance, unlimited usage basis, and never with term contracts. Our customers can place and receive calls under simple and affordable flat-rate monthly service plans for as low as $19.00 a month.
8421 We also offer inexpensive voice and data roaming services anywhere in Canada and the U.S. for no more than $0.15 per minute, and the cheapest domestic, North American and Overseas long distance rates of any Canadian wireless carrier.
8422 We offer a selection of Android smart-phones and unlimited 3G data for as low as $35 a month. Our "Siren" music service is unprecedented in the Canadian market, permitting customers to download unlimited music from a selection of millions of songs.
8423 Public Mobile focuses on the so-called value-conscious wireless customer segment. This is largely defined by people who do not have the credit status to purchase a post-paid service, or who otherwise cannot afford or who do not wish to pay for a post-paid or pre-paid service from the incumbent carriers.
8424 The issues that we solve for our customers on a day-to-day basis include the following: High wireless prices, long-term contracts and the related credit requirements associated with those contracts, confusing calling plans, lack of predictability regarding the customer's total monthly bill and significant restrictions on service availability and usage. None of these annoyances apply to Public Mobile's services.
8425 Public Mobile was founded on the basis of putting the customer first. It is absolutely fundamental to our business strategy that if a customer is not happy for any reason they can choose to simply stop being our customer. They can choose to stop being our customer without any hassles, without any cost and without any waiting.
8426 It is clear from the vast majority of the comments received by the Commission in this proceeding that the wireless carriers that need to be disciplined by a Wireless Code of Conduct do not really include Public Mobile or the other new entrant wireless carriers, rather, it appears very clear that Canadian consumers' complaints are largely directed at the terms and the costs of service imposed by the dominant incumbent carriers, predominantly Bell, Rogers and TELUS.
8427 Public Mobile has taken the position in this proceeding to support the implementation of a Federal Wireless Code of Conduct, a Federal Code of Conduct that applies uniformly across the country makes the most sense.
8428 However, we also believe that a Federal Wireless Code of Conduct need not and should not apply to the type of unlimited pre-paid services offered by our company. This is not because we are somehow scared of being held to account to our customers. As I have already mentioned, our business strategy is entirely focused on being accountable to our customers.
8429 We give our customers absolute choice to decide for themselves whether they are satisfied with our services and whether to stay with us or not.
8430 Public Mobile's approach to the wireless market is to earn our customers' loyalty each and every month. We have consciously decided not to lock them in through term contracts.
8431 We believe that a Wireless Code of Conduct is not necessary to provide discipline to the types of services that we provide today.
8432 We are also very concerned that the Commission and other policy and decision-makers may be convinced that a Wireless Code of Conduct is all that's required to discipline the market generally. The reality is that nothing, nothing of a regulatory nature and nothing short of real and sustainable competition can discipline the market that is dominated by the incumbent carriers.
8433 In this proceeding, the three issues that we are most concerned with are as follows:
8434 First, that the Commission and others not be convinced that a Wireless Code of Conduct is a proxy or substitute for real and sustainable wireless competition; it's not and it never will be.
8435 Second, we are concerned that if a Federal Code were to be imposed on pre-paid services it cannot and should not be done in a way that fetters Public Mobile's ability to continue to offer flexible and low-cost services to our value-conscious customers.
8436 We believe Public Mobile is the most consumer friendly wireless carrier in Canada, that's certainly our intention. Therefore, it would be a tragic irony if a Wireless Code that is intended to protect consumers were to have as an unintended consequence the lessening of competitive choice among -- or available to consumers because it affects the low-cost structure that we and other new entrants have designed and that is essential to the services and the low rates that we offer to our customers.
8437 Third, we are also concerned that the Commission should give its particular attention to the most critical anti-competitive practices currently in the marketplace that impact consumers' choice.
8438 These issues are reflected in the lion's share of the consumer complaints in this proceeding and include the issues of long-term contracts and the prevalent practice of price gouging for roaming, long distance services and other services.
8439 We will address these noted categories of issues in order in our presentation.
8440 A Wireless Code of Conduct is not a substitute for real and sustainable competition. Again, Public Mobile supports the implementation of a Federal Wireless Code of Conduct, but we caution the Commission to not take a dangerous and retrograde step and act as if a code is capable of being a substitute for the discipline provided by a truly competitive market.
8441 A code, no matter how well designed, will never justify or support a re-monopolization of the wireless market back to a three-carrier market.
8442 If this were to happen, it would be a very bad day for Canadian consumers and a bad day for Telecom competition policy in this country.
8443 I would now like to hand the presentation over to my colleague, Bruce Kirby.
8444 MR. KIRBY: Thank you.
8445 Public Mobile's position has been consistent, both in terms of the provincial consumer codes that exist and with respect to any future Federal Wireless Code of Conduct and that these codes do not need to be and should not apply to the types of unlimited pre-paid services that we offer.
8446 The current provincial codes that are in place do not apply to Public Mobile's pre-paid services.
8447 To be clear, we're not trying to argue that a code should not apply to Public Mobile or other new entrants of our type, however, the types of services that we offer are currently designed to be completely and effectively disciplined by market forces already.
8448 Our customers have complete freedom and choice. No financial or legal requirements ties a customer to stay with Public Mobile if they choose not to. The only thing that ties our customers to us is the fact that they continue to be satisfied customers.
8449 Further, our services have clear and predictable costs. With unlimited monthly plans, there is never a need to worry about how many minutes or text messages are left for the remainder of the month and there's never a need to fear excessive overage fees and charges.
8450 With some of the lowest rates in the industry, we don't get complaints about unpredictable and extremely high roaming and long distance fee charges either. None of these types of issues simply apply to our services.
8451 To be frank, our greatest concern is that the Commission will create a Federal Code of Conduct and then end up applying it to pre-paid services such as ours to address the sins of other carriers,
8452 Our low-cost operating structure could, unintentionally or not, be impacted in a way that precludes or structurally changes our ability to continue to offer affordable services to the very cost-conscious Canadian consumers who can't afford the services offered by the incumbent carriers.
8453 It would not serve Canadian consumers to adopt rules that effectively force us into business practices and policies that mirror the incumbents.
8454 This does not mean there should be a different set of rules for incumbent carriers and new entrants. In the future, if we choose to offer more traditional pay-per-minute pre-paid services, like those of the incumbents, or if we choose to offer post-paid services with term contracts, again, like those of the incumbents, then clearly the Wireless Code of Conduct that is in force at that time should apply to those services in the same way it does to any other carrier.
8455 However, in the event that you decide that certain elements of the Code should be applied to pre-paid services, there are a few areas that we consider particularly important not to be applied to services such as ours. Their impact could make it extremely difficult, if not possible for Public Mobile to implement the items in the context of our current systems and our low-cost operating model.
8456 First, the requirement to provide paper bills. As we said before, our approach would be a very simple, low-cost provider. Part of this is operating virtually entirely in an electronic environment, we try to be as paperless as possible in any of our dealings with our customers.
8457 Many of our customers, in fact, choose not to provide us an actual mailing address which we can send a bill to even if it was demanded and many of our customers can't afford to have their own home Internet service and, so, we cannot communicate with them by email.
8458 While we do provide our customers a paper account summary when they sign up, done through one of our stores, and this outlines their monthly plans and prices and information on their phones and our terms; further communication beyond that point is almost entirely by SMS.
8459 This includes, we provide them updates and notifications of when their payments are coming due, giving them advance warning of when their next monthly bill is up, however, with our flat monthly fees, we just don't have the complexity of billing and statements that might require some kind of information on paper. To do so would be both expensive and would be unnecessary and will not serve our customers in any way.
8460 The second item is this notion of providing metered minute notifications. As I said before, with unlimited plans there's simply no need to provide metered minute usage because you can never go over the usage on your unlimited plan.
8461 In addition to not providing value to some of our customers, and many of them in fact, do not appreciate getting excessive text messages from us updating them on what they have.
8462 However, I want to be clear that we do in fact provide notifications to our customers related to our metered services. So, for a small set of our services such as roaming and some international long distance where we charge customers on a per-minute basis, they pay their fees up front by depositing a wallet into their account. That in itself caps the amount that they can spend by what they've spent.
8463 In addition, we provide them notifications by a text message when that wallet gets down to $2 and even provide in-call whisper notifications should their wallet be getting low and they're at a risk of cutting off a phone call while they're using up the final amounts that are available to that.
8464 The third item is the requirement to notify customers of any change in service. Under the provincial codes that are in force already where we currently operate, which is really the Province of Quebec, Public Mobile provides proactive notification to our customers by way of SMS, as we do with other form of communication.
8465 For many of our customers, it's the only direct means we have to communicate with them. To impose other requirements would be both difficult and infeasible from what information we have on our customers.
8466 And, finally, the mandatory notice period prior to the suspension of services. As a monthly pre-paid service provider, our customers are not required to provide us any notice to cancel their services. They effectively cancel their service by not showing up to pay their bill for the next month.
8467 However, our policy for those that don't show up is fairly strict. If you don't pay your bill at the start of the month, we suspend your service. This is important, it's part of our business model which is based on pre-payment from our customers and, in the case of the customers, the customers have paid for and received the full month of unlimited service based on the previous month.
8468 If we are forced to provide notifications ahead -- sorry, we do provide notifications ahead of this date to remind them that payment will be required, but we cannot provide any notice for non-payment for suspending service once they have not actually paid for the service that is being suspended.
8469 These are the most important issues that if applied to Public Mobile could impact our ability to provide the low-cost wireless services to Canadians that we do today.
8470 They should not be harmed inadvertently by a Federal Code of Conduct, where we generally support the Code itself.
8471 I'd now like to ask Jamie Greenberg to provide a few comments on certain specific aspects of the Commission's Draft Code of Conduct.
8472 MR. GREENBERG: Thank you, Bruce.
8473 It seems conspicuous by its absence that the Draft Code does not address wide-spread consumer outrage with long-term contracts.
8474 The argument that low-income consumers are best served by three-year contracts because they cannot afford to purchase a phone outright is flawed.
8475 Public Mobile and other new entrants offer low-cost phone options without term contracts. Canada should line up with the long-standing policies in Europe and elsewhere to prohibit the anti-competitive practice of contracts with terms longer than two years.
8476 We believe these restrictions would be both beneficial for consumers, but also for competition. In the current context, three-year contracts serve to limit customer choice and competition. The existing customer is constrained by these contracts, most of whom had no real alternative when they made the commitment are penalized should they attempt to switch to another carrier. Worse, the limited lifespan of handsets and practice of rolling contracts through early upgrades creates an economic lock-in for consumers.
8477 In addition, Public Mobile submits that the CRTC should ensure that carriers cannot continue to gouge Canadians with exorbitant roaming rates. The Commission should focus closely on the roaming rates charged by the dominant incumbent carriers to consumers, both directly and indirectly, through the rates charged under new entrant roaming agreements.
8478 Public Mobile supports the CCTS as being best suited to administer a Federal Code, it already has a structure in place to do so.
8479 And, lastly, Public Mobile believes that the effective date of a new code should be at least six months from the date of a decision. This will allow carriers to adapt systems and materials to any new requirements the Commission imposes.
8480 Certain requirements may involve IT changes or even new training for sales associates.
8481 Public Mobile would like to thank the Commission for this opportunity to comment on the establishment of a national Wireless Code of Conduct and we would welcome any questions that the Commission may have.
8482 Thank you.
8483 THE CHAIRPERSON: Thank you, gentlemen.
8484 As I said, we'll take a break now just until four o'clock and then we'll start in 10 minutes and then we'll start questions after that.
8485 Thank you.
--- Upon recessing at 1549
--- Upon resuming at 1601
8486 LE PRÉSIDENT : À l'ordre, s'il vous plaît.
8487 Thank you again for that presentation. Commissioner Duncan will be starting off the questioning.
8488 COMMISSIONER DUNCAN: Good afternoon. We have heard a lot of information and I appreciate your submission, which I have read, and your presentation here today which follows along on that and I would just like to concentrate on a number of issues.
8489 First of all, I would like to discuss the fact that you don't feel that the Code should apply to prepaid services. One of the reasons that you gave in your submission was that it would impose upon you costs that you are not otherwise incurring.
8490 I think it would be helpful if we could have an idea of specifics on those costs and the magnitude of them. I don't know if you have that with you here today, but we would like to know how big a problem it is.
8491 So February 22nd is fine or if you have them we can discuss.
8492 MR. BORON: Maybe just a question of clarification to you, if I can.
8493 COMMISSIONER DUNCAN: Yes.
8494 MR. BORON: I guess in Bruce's part of the presentation we put forward a number of things that we said that if a Code were to apply to prepaid services, unlike the provincial Codes that are out there today, there are certain things that we feel should not, either logically or from a cost perspective apply.
8495 Should we focus on those elements or what should our assumption be?
8496 COMMISSIONER DUNCAN: At this point right here I'm talking about the costs, the added costs that you referred to if you had to provide paper bills.
8497 MR. BORON: Right. So it's those elements that we had talked to?
8498 COMMISSIONER DUNCAN: Those kinds of things, yes.
8499 MR. BORON: Okay.
8500 COMMISSIONER DUNCAN: So anything that you can identify and the costs related to it so we can get some appreciation of the magnitude of that cost in relation to your revenues or your other expenses.
8501 MR. BORON: Yes. I don't think we will be able to speak to that specifically here and now. I don't know if we want to provide any additional colour, but --
8502 MR. KIRBY: Yes. We generally haven't tried to figure out what some of those are and I think we will try to get as best a guess as we can get at that.
8503 A lot of that -- I mean, for example, we just have no mechanism set up to generate, produce, print, ship or mail a paper bill because we don't do it at all in any fashion. So some of those, figuring out the costs will be somewhat of a -- even just to estimate the costs will be a bit of a challenge even.
8504 COMMISSIONER DUNCAN: Okay. Well, just talk about that. Maybe just sort of flow -- well, I don't want to go into there just yet, but where in the Code does it say that you have to give a paper bill? It talks about paper contract if somebody requests that. I mean, I just wonder --
8505 MR. BORON: I guess the paper bill and the comment on paper generally was addressed by us just because, as Bruce said, we are not set up to do that today and the communication that we use today, just because it is the best way of communicating with our customers given the types of customers that we have and the types of devices that are at the disposal of our customers, which for many of our customers is really the public mobile handset because a high percentage of them do not have home Internet service, a lot of them don't even have home phone service, so SMS is the best way to communicate with them.
8506 And we have gotten comfortable with --through discussions with provincial consumer protection folks, as well as looking at this from sort of a legal requirements perspective and we get comfortable that we are within our rights and, frankly, doing our customers the best service possible by communicating with them via SMS.
8507 And I guess we just wanted to sort of put out there that however a federal Code, if it is implemented and how it is ultimately designed, would permit us to continue to do.
8508 And then I guess to maybe get to your point that if that were not the case and we had to communicate through some other means -- and paper is sort of the old-fashioned way -- that would be very difficult and costly for us.
8509 So if that is sort of the scenario and the premise, we can get back to you on that basis.
8510 COMMISSIONER DUNCAN: I guess one of your arguments is, and it seems to be a main argument, that it shouldn't apply to you because it would add costs to your business structure, then we need to know the magnitude.
8511 MR. BORON: Sure.
8512 COMMISSIONER DUNCAN: So you can decide how you want to present that.
8513 MR. BORON: Yes. Yes, and that's fine.
8514 Again, I'm not trying to be argumentative --
8515 COMMISSIONER DUNCAN:. No, that's okay.
8516 MR. BORON: -- but I guess our ultimate argument is that it shouldn't apply at all, but then I guess we wanted to give sort of a fallback position --
8517 COMMISSIONER DUNCAN:. Okay.
8518 MR. BORON: -- that if the Commission had decided ultimately that elements of the Code do apply to prepaid, then we wanted to be sort of specific.
8519 COMMISSIONER DUNCAN: Okay.
8520 MR. BORON: So we can make an undertaking to get back to you in that regard.
8521 COMMISSIONER DUNCAN: Okay.
8522 So just to proceed on with that, if I am a customer I'm paying the month in advance, so my payment date -- I presume everybody goes if you start on the 18th your month starts on the 18th, not the 1st. Is everybody due on the first or a month from the day they start?
8523 MR. KIRBY: Yes, it is usually a month from the day you start.
8524 COMMISSIONER DUNCAN: Okay.
8525 MR. KIRBY: So if your bill date, as it were, was the 18th, on the 18th of the month you pay for the next month until the 18th of the following month.
8526 COMMISSIONER DUNCAN: Yes. And do you take that by debit to people's bank accounts automatically? I doubt that. It doesn't sound like it.
8527 MR. KIRBY: No. Most of our customers can come in and they can pay through our stores.
8528 COMMISSIONER DUNCAN:. Yes.
8529 MR. KIRBY: They can pay sort of online through a credit card-type payment and they can set up a preauthorized payment so that they don't have to worry about it every month and making that payment.
8530 COMMISSIONER DUNCAN: So obviously there is a viable business case here for you, it's not a problem that -- would you disconnect me on the 20th if I didn't pay on the 18th?
8531 MR. KIRBY: If you didn't pay on the 18th we would disconnect you on the 19th.
8532 COMMISSIONER DUNCAN: Oh, you would?
8533 MR. KIRBY: Yes. You have to pay at the start of the month for the month of service and if you don't pay, we don't provide you service.
8534 COMMISSIONER DUNCAN: So people quickly learn that lesson and it works?
8535 MR. KIRBY: Yes.
8536 COMMISSIONER DUNCAN: And it works, okay.
8537 MR. KIRBY: And if you show up on the 19th we will reconnect you and you can start -- you will get your service for the month.
8538 COMMISSIONER DUNCAN:. And when you reconnect in that instance, do you have to pay a charge, a reconnection charge?
8539 MR. KIRBY: No. If the issue is that you failed to pay on the day it was due and you are suspended, you can reconnect and you will get the rest of that month.
8540 COMMISSIONER DUNCAN:. Okay. But there is no additional charge, you have just lost that days' service?
8541 MR. KIRBY: Yes.
8542 COMMISSIONER DUNCAN:. Okay. All right.
8543 So I noticed n your written submission, and you probably said it again here today, that you fully support and abide by the Québec Code. And you are only operating, at this point at any rate, in Québec and Ontario because I understand you are in that Windsor to Québec corridor?
8544 MR. BORON: That's right. Our licences are only in areas in Quebec and Ontario.
8545 COMMISSIONER DUNCAN: So if the Code is to apply to you, then because you are already in compliance with the Québec Code, it's probably not going to be a terrible imposition then.
8546 Am I right in concluding that?
8547 MR. BORON: Assuming the federal Code is sort of consistent or not inconsistent with the Québec Code --
8548 COMMISSIONER DUNCAN: Okay..
8549 MR. BORON: -- I guess that's fair.
8550 COMMISSIONER DUNCAN:. Okay. So you are just throwing it out -- okay.
8551 MR. BORON: That's right.
8552 COMMISSIONER DUNCAN: Because you are already in compliance, okay.
8553 MR. BORON: That's right.
8554 COMMISSIONER DUNCAN: So when Mobilicity was here -- I don't know if you heard their presentation the other day -- I believe they identified -- they were asked who their competitors were and it seems to me, from what I heard then and here, that they would be a competitor of yours offering similar services.
8555 MR. BORON: Over our overlapping areas in Ontario, correct --
8556 COMMISSIONER DUNCAN: Yes.
8557 MR. BORON: -- because they do not have licensed territories that cover the province of Québec.
8558 COMMISSIONER DUNCAN: Okay. But I guess in the nature of the service is what I was thinking.
8559 MR. BORON: Correct.
8560 COMMISSIONER DUNCAN: So they suggested in their presentation -- and again, I'm sorry, did you follow it or see it?
8561 MR. BORON: Jamie was here and we debriefed.
8562 COMMISSIONER DUNCAN:. Okay.
8563 MR. GREENBERG: Yes, I was here
8564 COMMISSIONER DUNCAN:. Okay.
8565 So what they did is, they went through the Code and they identified the sections that would apply to them. They felt there should be one Code -- not two Codes for prepaid and post-paid, but one Code -- and they identified for us the sections clearly in their Appendix "A" that would apply to them and then they went through and discussed why others wouldn't.
8566 So it would be very helpful if you would do the same thing and be sure to provide your explanation, if you don't feel it's going to work for you, why.
8567 And I would stress again the cost, because you can't just say no, you have to have a reason and if it's cost-relation you can't just say it's because of cost, we need to have some idea of magnitude or the basis for the statement.
8568 MR. BORON: Yes. No, we are happy to do that as part of our reply comments, if that's appropriate.
8569 COMMISSIONER DUNCAN: Okay. That would be great.
8570 And I'm happy to discuss any further point on that right now if you have any questions on that where you did hear their presentation, but if you want to just take it away and do it, it's --
8571 MR. BORON: Yes. I think, similar to Mobilicity, we would be of the view that it doesn't make sense to have multiple Codes out there, but it may well make sense, and I guess it's out view that it would make sense, that the Code in its entirety doesn't need to apply --
8572 Actually, our initial position is that the Code need not apply really at all to the types of services that we provide just because it is so highly disciplined by the market, in that a customer, if they choose not to continue to buy services from us they can do that without any hassles, any time, any cost, et cetera.
8573 But we are happy to go through with a fine-toothed comb and make our submission to you specifically as to what elements of the Code could apply to --
8574 COMMISSIONER DUNCAN: It is interesting, when I was preparing I went on your website and saw your terms of service, which was -- you know, you can't just print it off, but that's because you don't expect me to be using paper. At any rate, I did get it in larger print, but there are a lot of things there that people -- that you are telling people in your Terms of Service that I think would be addressed in a Code.
8575 I mean you are doing it now, like it's not a great imposition to do it. You recognize that.
8576 MR. BORON: And, frankly, I guess as the guy in the company who is responsible for things of a legal regulatory nature, if we could simplify our Terms of Service by pointing customers to sort of a Catholic or universal Code of Wireless Consumer Protection, that might be a good thing in that ourselves and our competitors as well as the incumbents have to line up to.
8577 So yes, I can see an opportunity there.
8578 COMMISSIONER DUNCAN: I noticed when I was reading that you mention that if somebody does ask for a contract, or a copy of a contract, when they sign up, you will give them a copy.
8579 So you do have paper.
8580 MR. BORON: Yes. Your choice of the word "contract" is interesting, because it seems like the vernacular in this industry, when somebody uses the word "contract", they sort of think of things in terms of a term contract.
8581 So we often say that we don't have contracts because we do not have term contracts. Customers do not sign up for any period of time, where they are locked in to have to buy services from us.
8582 But there is an arrangement between ourselves and there is an understanding between ourselves and our customers for the provision of services.
8583 I guess, at one level, there is a contract between ourselves and our customers, but there is not a term contract between ourselves and our customers.
8584 COMMISSIONER DUNCAN: All right. I think I am using it in a sort of general sense.
8585 MR. GREENBERG: I think, in the Commission's language, it is more of a personalized information summary.
8586 COMMISSIONER DUNCAN: That's where it leads to, because the summary sheet in the personalized information form --
8587 Do you have any comments on what is proposed in the summary part of it?
8588 Because I see that you don't take phone numbers, for example, or people don't want to give you e-mail addresses, but to the extent possible, are there reasons that you couldn't have something like this?
8589 MR. BORON: The account summary that we do have is not dissimilar to what has been included in the draft code of conduct from the Commission.
8590 However, our business practices today are not to demand that information from customers. We ask for it. If they decide to provide it, we take it from them, but we don't demand it.
8591 The other thing, which I think we touched on in our presentation, is that, because of the demographic of our customer base, a lot of our customers simply don't have home phones. They don't have e-mail addresses because they don't have internet connectivity.
8592 So, in many instances, that information just doesn't exist.
8593 COMMISSIONER DUNCAN: I don't think that we are intending that you demand it if they don't give it to you. That's fine, that's your practice, that's understandable.
8594 Although I thought, when I became aware of that, that you might want to be interested in -- what do they call it -- retention selling, that you might want to make some attempt to contact those people and save them --
8595 MR. BORON: Oh, exactly, and that's a debate that goes on in our company. Our marketing folks would love to have that information for every one of our customers. However, for the reasons that I just mentioned to you, it's impossible to get that information.
8596 And from a business model perspective, we decided, sort of as a business philosophy going in, that we weren't going to demand it, because, at the end of the day, if you demand it and they don't give it to you, are you not going to provide these folks service? I don't think so.
8597 COMMISSIONER DUNCAN: I guess the thing would be to the extent applicable, because you have a similar document now.
8598 MR. BORON: Yes. We would be happy to file it as part of the reply comments.
8599 COMMISSIONER DUNCAN: All right. All of those would be for the February 22nd --
8600 MR. BORON: For the undertaking, sure.
8601 COMMISSIONER DUNCAN: Now, on locked devices, I am curious -- you sell low-priced units to people. Are they locked or unlocked?
8602 MR. GREENBERG: We offer service on a CDMA network, and the phones are not locked.
8603 But, unlike the context of a lot of the discussion that you have heard over the course of this week, which I think was sort of -- it was a GSM-centric discussion, where you have a SIM card, the SIM card being sort of the intelligence, so that the phone can be transferred from phone to phone.
8604 The concept of locked versus unlocked is different in a GSM world than it is in a CDMA world.
8605 COMMISSIONER DUNCAN: So you don't have SIM cards in your --
8606 MR. GREENBERG: We don't have SIM cards. CDMA technology does not have SIM cards.
8607 COMMISSIONER DUNCAN: So locked is not an issue.
8608 MR. GREENBERG: No.
8609 COMMISSIONER DUNCAN: Okay. Fine, thank you.
8610 What about buyer's remorse? I guess you are stuck with it for the month. You pay for the month upfront. If you don't --
8611 Is there a buyer's remorse period?
8612 MR. BORON: For the handset?
8613 COMMISSIONER DUNCAN: Oh, yes, that would apply to the handset.
8614 MR. BORON: Yes, because we do not subsidize handsets, so the value proposition that we have with our customers is that we have a selection -- a relatively limited selection, but a selection of cost-effective -- relatively low-cost handsets, and we have promotions on those.
8615 But, in essence, customers pay for those handsets, not on a subsidized basis, and then they pay for their service separately, similar to the model that the gentleman -- before we joined the panel here, he was suggesting that it should be for all carriers, but that is just the business practice that we have.
8616 COMMISSIONER DUNCAN: So you wouldn't have an instance where somebody would sign up and come back a few days later: This isn't what I want.
8617 MR. KIRBY: Yes, we have a buyer's remorse policy. I would have to check on the exact details, but I believe it's 7 days, with a maximum of 30 minutes. That gives someone a chance to -- if they want to take the phone home and test it, they can kind of do that.
8618 And if you bring it back with that policy, we refund -- we don't charge you either for the month of service or for the handset, we refund the whole thing.
8619 COMMISSIONER DUNCAN: Oh, you do, okay.
8620 Now, I think we are talking about it in terms of a cooling off period of 15 days.
8621 You do 7, so you wouldn't have an issue with 15, if that was the standard?
8622 Or, you could explain why it should only be 7.
8623 MR. BORON: If we could, maybe we will get back to you in our comments, just because the cooling off period might be different in the context of a prepaid service than a post-paid service.
8624 COMMISSIONER DUNCAN: Okay. I was curious, I noticed on the CCTS website that you have a very small percentage of their complaints. So, not necessarily the nature of the complaints that go through CCTS, but, in general, what types of complaints would you be dealing with?
8625 MR. BORON: We have sort of combed through the complaints -- like you said, we had a very small number of complaints, but we looked at the complaints -- and I would argue that this is because we are a new carrier building out our network, but most of the complaints that we had had to do with coverage, just because people who maybe live close to the border of our network coverage bought the phone, and maybe they commuted to work outside of our coverage area, and they are expecting to get coverage at their home location as well as their work location, and maybe it wasn't as good as what they thought it might be at their work location, things of that nature.
8626 It was mostly coverage issues.
8627 COMMISSIONER DUNCAN: Explain to me, then -- because you have unlimited roaming, right, in Canada?
8628 MR. BORON: Our roaming is 15 cents a minute for voice. So it's the cheapest roaming in Canada, but it's not unlimited. It's pay as you go.
8629 COMMISSIONER DUNCAN: So for those customers, then, is that part of the wallet?
8630 MR. BORON: It is. Now, you don't have to have a wallet as a customer. As the customer, you make the decision whether to create a wallet, and how much money to put into that wallet, and then you also have to decide to turn roaming on on your telephone.
8631 So if you don't do one of those things, or all of those things, then you cannot roam. So you have to make a conscious decision whether to potentially incur the costs of roaming, but also have the benefit of roaming.
8632 COMMISSIONER DUNCAN: So, as a customer, would I, more likely, just turn it on?
8633 Then it's on if I need it. It's not something that you would make a decision about every day.
8634 MR. BORON: Frankly, I'm not sure. I guess it's really on a customer-by-customer basis.
8635 I guess, if a customer tends to need to use roaming, they might just leave it on. If a customer tends --
8636 Most of our customers, you know, unlike a lot of people, again because of the demographic of our customers -- a very high percentage of our customer base lives, works and plays very close to home, so they tend not to need or want roaming.
8637 But, then, other parts of our customer base, another percentage of our customer base, do want roaming services.
8638 COMMISSIONER DUNCAN: Just discussing the mobile wallet, you can put in $250. That's the maximum you can put in.
8639 MR. BORON: That's the maximum.
8640 COMMISSIONER DUNCAN: If somebody were to disconnect, the way I read it, they would not get the money back, if there was any surplus left over.
8641 MR. BORON: That is the stated policy that we have, just because, again, being a low-cost model, we tell customers when they create the wallet and are explaining to them how the wallet works that, when the wallet is set up, should they choose to no longer be our customer, they will not get the money back from the wallet.
8642 However, if they reconnect or re-engage with us as a customer, they can continue to use the money that is in the wallet.
8643 Also, practically speaking, our customers tend to put relatively low amounts of money into their wallet. I mean, we have $250 as the maximum so that we don't get into issues where there are significant amounts of money in the wallet.
8644 But I think the average amount that is put into the wallet -- I probably shouldn't -- we might want to do this on our undertaking and provide it to you confidentially, but it's a relatively small amount of money that people put into the wallet.
8645 COMMISSIONER DUNCAN: Again, I noticed that is described on your terms sheet. So people are aware.
8646 MR. BORON: Yes, that's correct.
8647 COMMISSIONER DUNCAN: How many outlets do you have, given that people have to come in and pay -- retail outlets.
8648 MR. KIRBY: We have about 200 dedicated retail outlets, which are a combination of corporate stores and third party dealers that operate our stores, and about another 400 retail outlets of various kinds, where we have phones and/or the ability to make payments through other kinds of things, from retail chains like Loblaws and No Frills, to the Gateway Newstands in Toronto, and so on.
8649 COMMISSIONER DUNCAN: So if there are sections of the code, then, that apply to you, would it present a problem to educate the people selling your service?
8650 MR. KIRBY: No, we do a fair amount of ongoing education with our dedicated staff.
8651 It's a little more complicated in some of the third party retail outlets, which is more of a grab-and-go kind of purchase model. Like, in a Walmart store, it's on a shelf, you pick up a phone and there is some information provided, but the staff in the store may not be well educated on that.
8652 But, when you come into one of our stores, the staff, whether it is corporate run or it's run by a third party, are well educated on the plans, the processes, everything.
8653 COMMISSIONER DUNCAN: Do you mind if I ask how many employees you have?
8654 I'm just kind of curious. It's not necessary.
8655 MR. KIRBY: There are 400 or so employees within the company itself.
8656 COMMISSIONER DUNCAN: That's large.
8657 Okay. I just wanted to understand how the business operates, because you are not operating in Nova Scotia, where I live. So that's helpful, and it does give customers a choice.
8658 And I can understand why you are advocating, I guess, against term contracts. Because people have to pay a lot of money to get out and to switch to your service, it would probably be a fair thing to say.
8659 I noticed, on how the code should be promoted, I believe you suggested the CRTC would pay for a promotion campaign to the right party? Have I got the right party? Just hold on a second. Or while I'm looking for it maybe you could tell me how you felt it should be promoted.
8660 Here it is here, "A one-time promotional budget should be allocated from the CRTC to the CCTS to inform consumers on the CCTS expanded mandate." And I just wondered -- you know, we don't have funds to do that as the CRTC, but I just wondered why that wouldn't be an industry cost.
8661 MR. GREENBERG: I mean, our entire philosophy of business is don't spend money where we don't have to, and we deliver cheaper services to consumers by doing so.
8662 COMMISSIONER DUNCAN: There's no harm in asking, right?
8663 MR. GREENBERG: And so, like, I think certainly from our perspective spending that much money promoting a wireless code that's designed to, you know, impose some discipline on what much, much larger carriers do seems a little unorthodox or unfair.
8664 COMMISSIONER DUNCAN: Well, you know, probably what would happen if CCTS were to level such a thing, if they were to do it, they'd level it and in proportion to revenues or something and so it would be adjusted in that respect. Who knows. Okay. I just was curious.
8665 MR. KIRBY: We'd prefer it on the proportion of the number of complaints that had been received against you.
8666 COMMISSIONER DUNCAN: Okay then. I noticed you were at -- and I should have said that earlier because you were at .15 percent or something of the complaints CCTS had, I believe it said on their report, so not very many.
8667 Okay. So, Mr. Chairman, I think those are all my questions. Thank you.
8668 THE CHAIRPERSON: Commissioner Molnar.
8669 COMMISSIONER MOLNAR: Thank you. Just a couple questions. Have you, since you've been in operations, instituted any price increases? And let me just ask the rest of my question. I was going to ask you how you notified your customers of price increases and it occurred to me perhaps you hadn't had any price increases, so ...
8670 MR. KIRBY: Yeah, the simple answer is we've never increased a price on an existing customer. So we've never had to communicate it to them.
8671 COMMISSIONER MOLNAR: Okay. So where there is an -- in the proposed code it says that any increase to prices on month-to-month services, which is essentially what this is, whether you pay it in advance or post-pay it, it's a month-to-month service arrangement, would require 30 days advance notice to customers. Does that seem reasonable to you?
8672 MR. BORON: The way I would answer that question is that the consumer protection legislation that we are required to adhere to now, where we operate in Ontario and Quebec, has similar type of notification requirements for certain types of changes to non-term contracts. And I guess similar to the -- my attempt to answer the question from Commissioner Duncan is that in talking to those provincial consumer protection folks and interpreting, making legal interpretations of the legislation and the regulations, we are okay with it so long as we can communicate with our customers in the way that is most optimal given what our customers' communications tools are, which for us at this point given our stage in development is SMS. So if we can -- I think if -- the short answer to your question is if we can communicate with our customers via SMS, I think we're okay with that.
8673 COMMISSIONER MOLNAR: Okay. When you don't have payment, how long do you keep those accounts suspended but active?
8674 MR. KIRBY: We allow accounts, I believe, up to 30 or 60 days, at which point we deactivate the account.
8675 COMMISSIONER MOLNAR: Between 30 and 60 days?
8676 MR. KIRBY: It's a bit of a process. So we suspend your account when you don't pay. The next pay period, if you haven't paid yet, we actually deactivate the account.
8677 COMMISSIONER MOLNAR: And reuse the phone number?
8678 MR. KIRBY: We don't reuse the phone number immediately. We then -- we -- I believe it's -- I have to check -- we'll get you the precise. I believe it's another 60 days we hold the phone number in abeyance. You can come back and reactivate later on within that period, and then the phone number is released. You can't recover as a customer that phone number. And it goes back into the pool and eventually gets reused.
8679 COMMISSIONER MOLNAR: Okay. Thank you. Those are my questions. Thank you.
8680 THE CHAIRPERSON: That's it?
8681 MR. KIRBY: Okay.
8682 THE CHAIRPERSON: Okay, thank you very much. Those are all our questions. Thank you.
8683 MR. KIRBY: Thank you.
8684 MR. BORON: Thank you.
8685 THE CHAIRPERSON: Thank you. We'll move right away into --
8686 THE SECRETARY: SaskTel, Mr. Chairman.
8687 THE CHAIRPERSON: Welcome. Take your time to set yourself up and when you're ready please go ahead. And by the way, I'm conscious this is Valentine's Day and people want to get out of here at a reasonable time.
8688 MR. ANDERSON: Mr. Chairman, commissioners, I am Mike Anderson, SaskTel's Chief Financial Officer. And sitting with me here today on my right is Bob Hersche, our Senior Director of Regulatory Affairs, and on my left is Katrine White, Director of Wireless Marketing, and Glenn Vorrieter, Manager of Regulatory Affairs.
8689 First, prior to addressing the draft code, I would like to point out that SaskTel's competitive advantage in our small marketplace has always been customer service. Our large dealer network, located in urban areas, such as Regina and Saskatoon and in rural areas, in towns as small as 250 people, has always meant we have been close to our customer.
8690 Our status as a Crown corporation has also meant that by definition we remain close to our owners, the people of Saskatchewan. As a result, we have been recognized nationally by J.D. Power & Associates for our customer service, and the CCTSC's few customer complaints about our wireless service in proportion to our size.
8691 Unlike other parts of Canada, there has been limited customer outcry or mounting political pressure to introduce special legislation to protect wireless customers. In many respects we are being caught up in a regulatory process to solve problems being felt in other parts of the country.
8692 We believe that SaskTel already adheres to the vast majority of the principles outlined in the draft code or have recognized where we need to be. We have already taken steps to institute some of the actions as outlined in the CRTC draft code, such as unlocking phones and implementing roaming notifications.
8693 SaskTel had no qualms signing up to the original CWTA voluntary draft code and will continue to work for the customer because it's part of the core values of our company, not because of regulation. As we have said in our previous written comments, SaskTel believes that clarity and transparency in our customer relationship is essential.
8694 We are one of many wireless providers in Saskatchewan. We have maintained the majority of our market share because we have retained our customers' respect through honesty and integrity in our dealings with them, and we do not intend on changing that.
8695 All that being said, we would like to bring forward some of our experiences as a small company that focuses on customer service. We believe that customers tend to focus on two things, convenience and price. As you make your final decisions on the code of conduct, we would also ask you to focus on those two objectives.
8696 Unfortunately in our view consumer groups are trying to address every conceivable problem confronting consumers through a draft code. This is not practical or possible. Care must be taken that 99 percent of customers are not inconvenienced in order to ensure that 1 percent of customers feel satisfied. Concurrently, I believe it is in all our best interests to ensure that the overhead costs to provide this safety net do not expand to such an extent as to further raise the overall cost of what is increasingly becoming an essential service for our residents. In its current form the draft code does increase our cost of doing business and allow me to explain.
8697 First, I would like to give some examples on what the full implementation of this draft code would mean for the day-to-day convenience to our customer. Today, after talking directly with one of our dealers or employees, our customers walk out with their activated phone, a one-page contract, their rate plan and our Walk Out Ready form, which is a simplified version of the Commission's personalized information summary form. The customer walks out happy, knowing where she can get further information in less than half an hour. If they have a problem, we will help them.
8698 On the other hand, following all the steps the Commission has outlined in this draft code, the customer will need to be walked through the following: the rate plan information; a four page information form; the main elements of an eight to 10 page language contract; a description of the code; our fair use policy, and privacy policies. After about an hour the customer will walk out of the store with 30 pages of materials that she is never likely to read. In addition, the consumer is unhappy because they just wanted to learn how to operate their new cell phone and two other customers are unhappy because they had been waiting in line while all of this is going on.
8699 Some portions of the draft code as written does not make us more efficient or effective. Rather, it is going to have the opposite effect. The immediate answer one would give to SaskTel of course is to hire more staff to help these other two customers that are waiting in line. The fundamental question remains how far are customers willing to bear the additional costs to protect their interests?
8700 Let me give you another example where practicality must prevail.
8701 The Commission's draft Code would demand that we suspend service to our customer when they have reached a $50 limit over the monthly costs in their plan unless they have specified some other limit. This could have huge unintended consequences for our customers. This could mean that you could be unable to call a tow truck in a snow storm or, less dramatically, halfway through your YouTube video the telephone company shuts you off and you need to reapply for your service to be opened up, presumably through another phone on another plan that is still operational.
8702 SaskTel is not adverse to giving customers all the information they need to manage their own lives. However, customers must be treated as intelligent people that, given sufficient information, will do what is in their best interest. The overall purpose of promoting the existence of multiple carriers is to give customers choice.
8703 Lastly, referring to the innumerable notifications outlined in the draft Code SaskTel has found that consumers are ambivalent about notifications. Some want them; some don't. As many of the presenters in this hearing have pointed out, under the draft Code consumers will get multiple notifications when they use a new service, when they reach a certain percentage of their usage with each of their services as notice of their contract progresses.
8704 There is a risk of notification overload. Customers are going to become very annoyed with on-going messages. At a certain point and frequency these messages become spam in their minds and just become ignored.
8705 Our suggestion is that the Commission review these notifications with a view to the average consumer: What is essential? Do we really need to notify the customer three times before they are automatically moved to a month-to-month contract?
8706 We also ask you to review what is necessary for the customer, as opposed to nice to have.
8707 As another example, the draft Code calls for real-time notification on costs and usage when a customer is in the U.S. or in other International locations. It is possible to notify them of the rates, but the real-time usage for us is problematic.
8708 SaskTel may not get notified of the usage and actual bill from a company such as Sprint for as much as two weeks after the usage in the U.S. actually occurred. Usage costs are even more likely to miss the monthly billing cycle as opposed to real-time notification.
8709 The wireless industry is just not set up to accommodate this request and Canada, and more notably SaskTel, is unlikely to be able to make those changes.
8710 Aside from some aspects of the draft Code creating more inconvenience and ultimately more costs for consumers, the draft Code provided by the Commission causes some consternation for SaskTel.
8711 Today, SaskTel does not have the capability to undertake real-time billing in our wireless systems. We simply do not have a system which directly and immediately decodes data from our switches into our billing system. This means that we are unable to make the majority of real-time notifications without some significant development.
8712 As I mentioned earlier, we know that we have to provide many of our customers the types of initiatives that the Commission outlines in its draft Code. We recognized this some time ago. As a result, SaskTel is now in the process of implementing a new billing system to replace our existing legacy system. This is one of our top priorities in the company and, coincidentally, implementing the elements of the draft Code of Conduct will also be one of our top priorities.
8713 I am sure that you will recognize that implementing a totally new billing system for a small company such as SaskTel is a tremendous drain on both our staff and our financial resources. This must be done while maintaining services to our customers.
8714 As I indicated, putting in a new billing system takes time. But we have already started and the first services are planned for the second quarter of 2014 with a complete conversion slated for December of 2014.
8715 At this point, we do not believe that our current billing system would accommodate all of the requirements outlined in the draft Code. We know that we could not do it in six months, regardless of the resources or the time available for this project. Additionally, we note that we also remain dependent on third-party suppliers to complete this task.
8716 In our estimation, the end of 2014 is a reasonable target for SaskTel. SaskTel will undertake to make any policy and procedure changes required by the Commission on its draft Code which do not impact the billing system. Such changes include updating our marketing materials, unlocking, cancellation charges, contract renewal, and contract modifications.
8717 SaskTel as a smaller carrier just does not have the capability to change with the same dispatch as potentially some of the larger carriers. As we stated in our written comments, we would ask that the Commission consult with each carrier in terms of the level of implementation that is required for them to be compliant with the draft Code, and adjust implementation timeframes for specific carriers accordingly.
8718 SaskTel has a number of other individual concerns with the draft Code as you have presented it to us.
8719 First, in making your final ruling on the Code termination or, sorry, contract termination, we urge you to consider the cost to the company of acquiring the customer.
8720 With the new draft Code, agents or dealers will be spending a significant amount of time setting a customer up with his new device. Yet, the customer can leave within 30 days by essentially paying out the remainder of the device subsidy. While only paying out the device subsidy may seem a reasonable amount to some customers, it truly will not cover even the initial cost of over $200 involved in acquiring a customer. Customers who may not be churning frequently, will ultimately bear the costs for those customers who switch providers frequently.
8721 SaskTel would also take issue with the description of how and when a service provider can change the contract. We agree that should the service provider make a significant change in accordance with the contract terms that the customer should be allowed to cancel their contract without cost or penalty other than paying the outstanding balance owed on the device.
8722 SaskTel does not agree that the customer could refuse the change and remain on their old plan. If every plan were to be grandfathered in this manner, even a small company such as SaskTel would eventually end of up with dozens of plans that would have to be maintained and tracked. Over time this would be extremely inefficient and costly.
8723 Lastly, I would like to address the option outlined in the draft Code that the Code could apply to all existing customer contracts. With respect to that proposal, we were concerned that this might be retroactive ratemaking, and we have taken the liberty of obtaining a legal opinion which we will file on March 1.
8724 The conclusion of the opinion is that with respect to Option 1 of B2, the Commission lacks jurisdiction to apply the wireless Code retrospectively to pre-existing contracts. The application of the Code to contracts already in existence would be a retrospective order in that it would alter the legal consequences of those past transactions going forward.
8725 SaskTel's concern with retroactivity is that we have over 600,000 existing contracts with our customers by which we sold to each of them a package of services with a certain set of terms attached to that package of services. To now apply a different set of terms and conditions to those contracts via the wireless Code, without the opportunity to reconsider the rest of the contractual relationship, may leave a gap between the totality of what we thought we had contracted for and what would then be in place.
8726 This does not mean that existing customers would be left with no benefits. Existing customers already have access to new services as they are developed such as notifications through our roam-ware or unlocking policies.
8727 All that being said, we would note that existing contracts do not last long. Many of our existing customers upgrade their phones prior to the end of their three-year contract and consequently have a new contract.
8728 All we ask is the ability to manage the transition with our customers.
8729 Despite our concerns on timing, costs and customer convenience, SaskTel continues to support the major elements of the consumer Code as drafted by CRTC.
8730 Overall, SaskTel is asking the Commission to consider a number of items when deciding on its final Code of Conduct:
8731 First, smart regulation is always a balance between effectiveness and efficiency. The Government of Canada and virtually all of the consumer groups want the monthly cost of cellular services to go down.
8732 As we implement all of these changes and how we do business there will be a cost. More agents, more dealer time, more systems to maintain and more notifications to customers all equate to more costs. These costs will be proportionally higher for a small company such as SaskTel but, regardless of the size of the company, these costs will translate into either higher rates or at the very least fewer reductions.
8733 We are also asking for more clarity in the wording of the regulations. As we have seen over the last few days, interpretation of what the Commission has suggested that we do on a daily basis varies considerably. Given that this causes confusion amongst service providers and consumer groups, we would suggest that this would have a negative impact on the customer themselves. The last thing anyone wants in this hearing is to create another issue of interpretation between customers and their providers.
8734 SaskTel also asks that we be allowed to manage our existing customer base in the transition to the end state outlined by the draft Code. The draft Code cannot be automatically applied to contracts signed before the Code comes into force.
8735 Lastly, SaskTel requests that the Commission consider the individual capabilities of various carriers, especially small carriers such as ourselves when creating its implementation timeframes.
8736 SaskTel is committed to giving top priority to obtaining the dollars and the human resources to implement the final Code requirements. Those aspects of the draft Code, especially those demanding real-time interfaces between the switch and the billing system, simply cannot be done with our legacy systems.
8737 We have started down the path of changing out our systems with a projected completion date of December of 2014 and we ask that we be allowed to continue down that path.
8738 With that, I would close and thank you for your kind attention. We await any questions that you may have.
8739 THE CHAIRPERSON: Thank you very much for that presentation. I'll have a number of questions for you.
8740 The first one: You suggest at paragraph 49 of your presentation today that there are areas of clarification required in the working document at this point.
8741 Other parties who have appeared before us so far have brought along some actual drafts of clarifications. That may not have been possible for you at this stage, but I was wondering, unless I'm missing it -- that I'm not missing anything, would it be possible for you to actually provide that at some point?
8742 MR. HERSCHE: We have done one and we'll do it on the 22nd.
8743 THE CHAIRPERSON: Excellent! Thank you very much. That always helps for us to follow because I take your point that the last thing we want is something that's unclear just to create more problems.
8744 As we look at the numbers of CCTS complaints you have, and it's around 50, that -- sorry. Yes.
8745 MR. HERSCHE: That's actually -- we have 50, but only 26 of those are with wireless.
8746 THE CHAIRPERSON: Ah-ha, even better. I was about to ask you because I noticed there was only about 50 but the vast majority are resolved before you even get to the investigation stage.
8747 So it's not divided up into wireless, non-wireless. So do you have a sense of how many of those complaints even get to investigation on the wireless side?
8748 MR. VORRIETER: I don't have an actual number at the top of my head. However, it's very few that go to investigation. We clear most off at the pre-investigation stage.
8749 THE CHAIRPERSON: Okay. But there's no reason to think those that go to investigation are more likely to be on the wireless side than the wireline side?
8750 MR. VORRIETER: No.
8751 THE CHAIRPERSON: No. So tell me -- I know you say you're customer-focused, you're client-focused, you're owned by the customers in a certain sense. Beyond that, you seem to have a standard of success in being customer-focused. So if we're looking at you as the best practice, what do we distil from you as an operator?
8752 MR. ANDERSON: Well, we are a small company in a very competitive industry. We have all the large competitors with various plans available to our customers and we have to ensure that we're providing competitive options to our customers. So we are extremely focused on making sure that our products, our services and our prices are price-competitive but we focus more so on the customer service aspect.
8753 So we recognize that for us, you know, we can't always step up with the same kind of capabilities as some of the larger players can. So for us, we try and differentiate ourselves on the basis of customer service.
8754 The other thing playing into that, and you referred to it, is the fact that we are a Crown corporation. So, you know, I do believe a large segment of our customer base do believe that they are owners of the company, appreciate the investment that we make in the province and support us for that reason.
8755 But also, our customers have other avenues open to them when they have issues with SaskTel. So they can go to their minister, whether it be the government itself or even opposition ministers, and certainly, our customers have many avenues to express any discontent that they would have with SaskTel on its products and services and its policies and its customer service.
8756 So, you know, we hear about that quite openly, quite easily through our customer base, through a number of different avenues, and we work very hard to address issues before they turn into major problems.
8757 So, again, I believe we are very focused on the customer and we believe that's, you know, our success equation.
8758 THE CHAIRPERSON: And because you have competitors in your marketplace, you offer the same broad spectrum of plans out there, three years, I take it, fixed term as well as some prepaid?
8759 MR. ANDERSON: We have prepaid and post-paid. We also have one-year, two-year and three-year contracts available for our customers.
8760 THE CHAIRPERSON: Okay. Well, that's interesting. I had a question later on but now that you've mentioned it, some have suggested that people aren't interested in one year and two years.
8761 MR. ANDERSON: We would suggest that our experience probably bears that out. I believe over 90 percent of our customers that are on contracts are on three-year agreements. I believe about 1 percent of our customers are on two-year agreements and 2 percent on one-year agreements.
8762 THE CHAIRPERSON: You're missing a few percentages there.
8763 MR. ANDERSON: And the rest are on prepaid.
8764 THE CHAIRPERSON: Oh, I see. I see.
8765 MR. ANDERSON: Yes.
8766 THE CHAIRPERSON: I thought you meant of the total population of your clients.
8767 MR. ANDERSON: No, sorry.
8768 THE CHAIRPERSON: Okay, I see.
8769 MR. ANDERSON: Now, we actually have actual numbers if --
8770 THE CHAIRPERSON: That would be useful if you could in terms of the post-paid marketplace and how they divide between one, two and three years currently.
8771 MR. ANDERSON: Sure. We could provide that.
8772 THE CHAIRPERSON: That would be very useful.
8773 Let me now turn to the personalized information summary and I take your point that you have a walkout-ready document. Just so I understand that, is it a document that's part of the contract or is it separate?
8774 MR. ANDERSON: Katrine will take that.
8775 MS WHITE: Sure. The walkout-ready program and document is not part of the contract but it is one element that we ensure that our customer service reps and our deals go through with our customers and that we have the customer tick off that they have received all of the information in the walkout-ready collateral.
8776 THE CHAIRPERSON: Is it used in the pre-contractual phase, that is, is it a document that then, because they have all this, they could actually go to your competitors across the street and compare their offer to what you're offering?
8777 MS WHITE: No, it doesn't include information around rates or what we would charge to unlock a device or anything along those lines.
8778 It's more around how to get their device set up, information about -- asking about anything else that they would like to learn about their device as part of the actual sale. There's information on the back that tells them about how to reset their device if they have a problem, how to look at -- where to go get information about tracking their data, information about roaming. There's a variety, a number of topics there.
8779 THE CHAIRPERSON: Right. So it's more information about how to get started?
8780 MS WHITE: Yes, how to get started.
8781 THE CHAIRPERSON: And to use it?
8782 MS WHITE: Exactly.
8783 THE CHAIRPERSON: So it's not so much focused on the essential elements of the contract? Let's say it's a fixed-term post-paid contract, it doesn't focus as much on that; is that correct?
8784 MS WHITE: Correct. Not in terms of rates and what would be included.
8785 THE CHAIRPERSON: Right. So in a sense, it's somewhat different than a -- I'm not saying it's a bad idea, but it's somewhat different, am I correct to understand, than the personalized information summary?
8786 MS WHITE: Correct. It would be different, yes.
8787 THE CHAIRPERSON: Some have suggested that it would be useful to have the personalized information summary -- it doesn't mean you couldn't do what you're doing now -- as a short this is the essence of your financial arrangements you're about to make possibly for a three-year period.
8788 Do you feel that that's worthwhile? I take your point about the volume of contracts somebody might be leaving the store with, but is it something that you're against or you just prefer your document?
8789 MS WHITE: We would support the personalized information summary as well as a tool that a customer could use to do their comparison shopping in terms of looking at rates. We're not opposed to it.
8790 We do believe that the walkout-ready program and information would also be a supplementary piece that we would continue to use.
8791 THE CHAIRPERSON: Sure. Well, our intention was not to remove anything from anyone, I don't think. It was to provide more informed --
8792 Would you see -- if we were to do a personalized information summary, do you see it as being eventually -- some people described it as, you know, at the top of the contracts when it is a written contract?
8793 MS WHITE: Do you want to take that, Bob?
8794 MR. HERSCHE: Yes, we did talk about that and we do believe that when the Code were to come in that we would try to blend that in with our contract as well. Again, the personalized information item is in some instances, we think, a bit excessive. It's because people don't ask for that kind of thing as long as they have an avenue to where they can get the information and how they can get the information.
8795 Again, I forget who said this earlier in your hearing, is the customer comes in and they're all excited about getting the iPhone 5, they really don't want to spend that much time with our dealer to do a whole checklist. We can hold them down for a while, but they want to get gone and show their friends and do their stuff.
8796 But no, we have no problems with adding that to the contract.
8797 THE CHAIRPERSON: Okay. I understand. And you're going to make comments on the detail. If there's anything you think that is in the personalized information summary, would you also suggest what might be removed from it so that we don't overload folks?
8798 MR. HERSCHE: Can I give you just a funny example that just comes to my head as we look at this?
8799 THE CHAIRPERSON: Yes.
8800 MR. HERSCHE: You say location. Well, I don't know if we need that in Saskatchewan terribly much. I mean, you know, is it really -- you know, if it's in Kindersley, does it matter? As we begin to do some of those kinds of things, I think we can streamline --
8801 THE CHAIRPERSON: Okay. Well, if you could provide us what information you think is excessive and why as part of your 22nd reaction to the draft, that would be very useful.
8802 THE CHAIRPERSON: Just so I understand, in your presentation you suggested that most people were in your owned and operated stores, but I take it you also work through agents?
8803 MS WHITE: We have 10 corporate stores and we also have -- we have a total of 140 dealer locations across the province. So we partner with a number of independent businesses who sell our products and services in the major centres and neighbourhood locations as well.
8804 MR. HERSCHE: Sorry, if I may add something. That's an important feature for us because so many of our people do go through these dealers. As we ask our dealers to spend more time to do and train them to do all these kinds of things, that also is a cost to us in terms of our commissions, other kinds of things. So we're actually expecting that as we go forward it's going to be part of the process.
8805 THE CHAIRPERSON: Right. Because too, as I keep referring to these front-line people, within your organization it's perhaps a little easier, but people in these distribution networks become ambassadors of the Code, and I take it what your point is though, you will pay for that? Yes, of course. That's the nature of everything. Nobody does anything for free anymore.
8806 You mentioned in your walkout document that you do provide -- you were explaining the pull tools that you provide to track. Could you explain to me a little bit more what exactly -- the pull tools you have available?
8807 MS WHITE: We have an online website tool that you can go and take a look at your usage to understand where you are at in terms of how much voice and data you have used. That tool is also available to be downloaded onto your device.
8808 THE CHAIRPERSON: Okay. So voice. Does it do text?
8809 MS WHITE: Yes.
8810 THE CHAIRPERSON: Data and roaming as well or not?
8811 MS WHITE: I'm sorry, it is for data only, it does not include your voice and your text. I'm sorry about that.
8812 THE CHAIRPERSON: So you don't have voice and text, but it does data?
8813 MS WHITE: The data. Yes, it does.
8814 THE CHAIRPERSON: Does it do domestic roaming?
8815 MS WHITE: The data that would be included would show your data as a whole, but it doesn't split it between how much data you have used in Canada versus how much you have used in an international location.
8816 THE CHAIRPERSON: Okay. So it's a total amount regardless of whether you have --
8817 MS WHITE: Correct.
8818 MR. HERSCHE: If I may, just to add on that, again I have to stress it's not real time, because there is a gap between when our switch gets it they know you are -- and when we are able to put it, get it through our billing system and know exactly how much you have used.
8819 THE CHAIRPERSON: I was getting there.
8820 MR. HERSCHE: Sorry.
8821 THE CHAIRPERSON: It's okay. It makes it simpler at the end of the hearings when people ask the questions and answer them at the same time. It's actually quite efficient.
8822 I was wondering, so I take your point that when the data information comes from outside your network it takes a little longer.
8823 When it is within your service network, it's not real time, but how near is near time?
8824 MR. HERSCHE: I believe, and Katrine will correct me, but I believe it is within 24 hours.
8825 THE CHAIRPERSON: Twenty-four hours.
8826 Have you ever gotten -- since you are customer-focused, are people satisfied with a 24-hour turnaround? Have you gotten surprises that you have heard about?
8827 MS WHITE: Surprises, in terms of...?
8828 THE CHAIRPERSON: Bill shock. Somebody has been monitoring and the 24-hour delay has resulted in a bit of a surprise?
8829 MR. ANDERSON: We have certainly had bill shock, particularly with customers that have been roaming internationally.
8830 Now, again, I'm not sure at the time we had some of those tools in place when we started to see some of the initial bill shock from customers roaming, but absolutely we have had some of those issues and we have dealt with our customers accordingly on those so in most cases we have written off those amounts and not ended up charging the customer.
8831 THE CHAIRPERSON: You have discussed --
8832 MR. ANDERSON: That is part of the reason why we put some of the tools in place as well.
8833 THE CHAIRPERSON: Right.
8834 MS WHITE: One other pull tools to mention is that we do send our customers notifications via SMS once they travel outside of Canada. So we sent them an SMS message notifying them that they will be paying -- what their rates will be for voice, text and data.
8835 THE CHAIRPERSON: Okay. Now, you mentioned, and we will get more into it, that you are updating your legacy system. Once that system is updated, will it provide more of the pull tools to deal with voice and text going forward?
8836 Is that part of the parameters?
8837 MR. ANDERSON: You know, I'm not sure at this stage.
8838 We are into doing detail design. You know, the timing of all this is good for us because it gives us an opportunity to ensure that when the final Code is in place we can build all of those parameters into the system.
8839 You know, I personally have not heard a lot of issues or concerns around voice and text messaging in the past, more so around data. I know we are very focused on that, but I can't tell you for certain today whether it deals with voice and text messaging or not, but we can certain get back to you with that.
8840 THE CHAIRPERSON: Well, certainly it would appear that the concern often is, because it's less intuitive with data and perhaps with roaming --
8841 MR. ANDERSON: Yes.
8842 THE CHAIRPERSON: -- voice roaming, but what I'm asking is that some parties seem to suggest that not -- I will get to push tools in a second, but maybe it would help if pull tools were available in the spectre of the whole spectrum of voice, text, data and roaming. I was just wondering -- and maybe you want to get back to me for the 22nd -- as to whether it is in your intentions right now that your pull tools would cover all four of those areas when you replace your legacy system?
8843 MR. ANDERSON: We will definitely clarify that for the 22nd.
8844 THE CHAIRPERSON: So let me now move to push tools and, as I said, we hear a lot about data because it's not as intuitive and people say they don't know what a gigabyte and a kilobyte is, but they know it bites, and so it could bite the wallet in some certain circumstances.
8845 So what do you currently offer and what do you intend to offer once you have upgraded your system in terms of push tools?
8846 MS WHITE: So from a push perspective on the data side, we send out SMS messages to customers once they reach 80 percent and 100 percent of their threshold where we would slow down their service.
8847 So customers who were on an unlimited plan where we do not charge them anything extra for their data usage, we do have a fair use policy in place where will slow you down at 10 gigs of usage. So we sent out SMS messages to customers when they are at 80 and 100 percent -- 80 percent and at 100 percent of that threshold.
8848 When they are travelling in the U.S. we also send them an SMS message once they reach a 200 megabyte threshold where we would be slowing them down.
8849 At this time we are not sending out any messages to customers notifying them that they are reaching a monthly usage limit within their plan itself at a dollar figure.
8850 THE CHAIRPERSON: And is that a constraint of your current legacy system?
8851 MS WHITE: Yes.
8852 THE CHAIRPERSON: All right.
8853 MS WHITE: Yes.
8854 THE CHAIRPERSON: So once the legacy system -- you are in the planning phase, we maybe help you develop the specs for it, and so when you will go down that road what is your intention in terms of push tools? What are you foreseeing as being available?
8855 MS WHITE: As Mike mentioned, we are still mapping out all our requirements from that perspective, but ideally we would like to be able to notify customers once they meet a specific threshold or limit, or also send a push notification to customers asking them -- once they have crossed the border whether they do want to incur roaming charges and give them the ability to opt in to do that or to opt out.
8856 THE CHAIRPERSON: Now, I know you are not fully enamoured with some of the provisions in terms of usage tools that is provided in the current working document, were you to have to do it, let's say that were the standard, would it be manageable within -- I'm sure there are costs, we will talk about that in a second -- would it be manageable within the redesign of your current legacy system to be able to provide those?
8857 MR. ANDERSON: I guess I would have to say it would be manageable. It certainly doesn't make any sense to us so we would have to re-divert precious resources into putting a fix into an old legacy system that we fully intend to turn off within the next two years. So we would be --
8858 THE CHAIRPERSON: I'm sorry, I am talking about the replacement system.
8859 MR. ANDERSON: Oh okay, I'm sorry.
8860 THE CHAIRPERSON: Is it feasible? Technically, yes. Does it make sense however is a separate question in terms of both consumer reaction --
8861 MR. ANDERSON: As far as I know today, it is feasible and, in our view, it makes sense. So the more information that we can give our customers to help them make decisions on what is right for them and their plans, we fully support that.
8862 THE CHAIRPERSON: Okay. So it's just your particular challenge is that you are updating --
8863 MR. ANDERSON: We don't want to do it in a legacy system that we are trying to replace, yes.
8864 THE CHAIRPERSON: Perhaps I can get to the timing of the legacy system. Obviously these things take time, they are important, they are the core of your business in many respects, and your future business probably.
8865 The timing of our decision will have an impact on your ability to get on with your project, would it not?
8866 MR. ANDERSON: I suppose technically, yes, but I mean we have a pretty good sense with, you know, just in what we know on the Code today kind of what is important to consumers and customers, maybe what may be important to the Commission from a legislative perspective, so we have enough that we can start in our initial detailed design to build some of these parameters into our technical specifications now.
8867 THE CHAIRPERSON: So you are planning assumptions around -- when you say end of 2014, already take into consideration our decisional process and when things would come out and you have planned, in a sense I guess, the "worst-case scenario"?
8868 MR. ANDERSON: Yes, that is probably a good way of putting it.
8869 THE CHAIRPERSON: Okay. I put "worse-case scenario" into quotes because some people would say it would be the best-case scenario --
8870 MR. ANDERSON: Yes.
8871 THE CHAIRPERSON: -- depending on which side of the issue you sit on in these issues.
8872 Let me now turn to caps. I take your position is clearly against the $50 cap.
8873 Could you help me understand, others have said that they provide other tools to help current customers or would-be customers to manage the bill shock. Presumably you do prepaid, which is one tool. What other offerings do you have that allow customers to manage their financial flexibility?
8874 MS WHITE: Definitely prepaid is an option if customers are looking to limit their spend.
8875 If they are a contracted customer with us in terms of other tools that we have, the online "my usage" tool to monitor your data is the tool that we have for them to understand where they are at. They can call into our call centre and understand how much they have used. Those are the main tools that we have for them today.
8876 THE CHAIRPERSON: So if it's a family group for instance that's in a plan, and assuming the parents are monitoring but the kids aren't, the idea would be the parents would see whether or not the children in the plan are gobbling up the plan too quickly or even getting to a very expensive point. The push tool would be the -- I'm sorry, the pull tool would be a solution for them?
8877 MS WHITE: They would be able to look at the data usage and compare that to how much they have for that month as an aggregate.
8878 THE CHAIRPERSON: Right.
8879 MS WHITE: Yes.
8880 THE CHAIRPERSON: Right.
8881 MS WHITE:. Yes.
8882 THE CHAIRPERSON: But it's not necessarily converted into dollars?
8883 MS WHITE: Correct.
8884 MR. HERSCHE: If I may, just on that -- I mean, Katrine is really describing some of the things that we do today and some of the items why we're launching a new billing system and we know we have to do some of those kinds of things. And we are looking at how to do it better. Some of the things we're unhappy with would be -- turn on some of the kinds of notifications or other things, just the sheer number to the customer and otherwise.
8885 The other is -- and when we start talking about caps or other kinds of things, it's really the -- once you have an informed customer, if we can do our billing system, give them the kinds of push tools or pull tools that they need to be an informed customer, then they're an intelligent person, they'll make up their mind whether they want to suspend more money at that point or not. They don't need a cap at that principle.
8886 THE CHAIRPERSON: Well, I understand maybe under your legacy system there's less capability to do that. In your new platform will some form of cap -- I take your point that a 50 dollar cap might be a bit too low, people have mentioned that. Others have said they have other offerings to help people manage not so much data, which is not intuitive as to how much it costs, but, rather, doing it on a dollar basis. Will that be part of the solution?
8887 MR. HERSCHE: At this point, and Katrine will correct me, I'm sure, as we go forward we really don't want to customize our rate plans for every -- you know, for different levels for every single different customer, for every single customer's wants. I don't know if we could handle that, but Katrine may have something to add.
8888 MS WHITE: To add, I would say that our future road map is that we want to ensure that the customers have the right tools in place to empower them to make the decision as to if they want to consume more or if they wanted to stop. That will be through some type of notification, which we would like to deliver at potentially a specific dollar threshold. Or, like I had mentioned before, if a customer is roaming in another location and we are aware that they are roaming and we can send them an SMS to say, you know, would you like to continue with your service, here's what the rates will be, or would you like to, you know, discontinue service. And those are the types of tools that we'd be looking to put in place.
8889 THE CHAIRPERSON: Okay. You may not like the 50 dollar cap, but would it be technically feasible under your new platform to actually be able to do whether it's a 50 dollar cap or another cap?
8890 MR. ANDERSON: I have to believe, knowing the capabilities of some of the new technologies around billing systems, that it is probably capable of being able to be done.
8891 THE CHAIRPERSON: And what would be the barriers? I realize your point about it's very costly to have specific caps for a number of consumers, but beyond that.
8892 MR. ANDERSON: Beyond that, just the cost of developing it, I guess.
8893 THE CHAIRPERSON: Okay. You might want to address that in your -- if you have specific numbers, you might want to address that --
8894 MR. ANDERSON: Sure.
8895 THE CHAIRPERSON: -- in your comments.
8896 MR. ANDERSON: Okay.
8897 THE CHAIRPERSON: It's hard for us to assess the economic impact of these decisions unless you help us.
8898 Perhaps I can now turn to another issue and that is this notion of significant changes. In your presentation you referred to significant changes to a contract. Do you have a sense of what you mean by "significant"?
8899 MR. ANDERSON: I'm sorry, which particular ... paragraph?
8900 THE CHAIRPERSON: Oh, gosh. I bet I didn't even circle it. And at one point you said that if there are amendments that are -- sorry? Forty. Paragraph 40. Yes, this is the grandfathering issue. You talked about "significant". No, it's not. No, no, it's -- I am talking about contract changes, but there's -- 39 and 40, yeah. Yes, 39. "We agree that should the service provider make a significant change ..." What's a "significant" change?
8901 MR. HERSCHE: Oh, I'm sorry, what -- I finally --
8902 THE CHAIRPERSON: Sorry, we --
8903 MR. HERSCHE: -- realized what you were -- what we were talking about here. Significant. We have a number of contracts. But if we were going to make a significant change, by that I mean a significant change in terms of let's pretend we were going to change our fair use policy to what you had or we were going to change your rates or the kinds of services we were going to provide to you that were already listed in the contract. And I'm not talking about add-on things like voicemail or whatever, that's individual choice. But any of those kinds of things that change the base of the contract would actually, and we do that now, require a change in -- or a new contract, if you will, and it becomes a new contract at that point.
8904 THE CHAIRPERSON: All right. So which opens the door now to this discussion about how we're going to implement this and I think everybody wants to get this going as quickly as possible. You've made -- will be making a legal argument about retrospectivity. Let's put that aside for now, right? I understand that you'll make that.
8905 Let's say we were looking at prospective implementation. Well, no, let's split it -- before I get to prospective. Assuming there's no legal barrier. I know it's a tough -- because I want you to tell me more, rather than providing me a legal argument, which clauses actually create a business impediment, as opposed to -- because you're casting it as a very large we can't change any -- can't get involved in any existing contracts retrospectively and you have a legal argument for that, fine. But on top of that, what are the business? Which parts of the working document create in particular a challenge from a business perspective? I take it it's the termination fees. Is there anything else?
8906 MR. ANDERSON: Change in rates, I suppose. It would be some of the more substantive elements of the contract. So we don't want to end up in a -- I can't imagine this happening, but if we had a rate increase for some example, you know, and -- you know, we would -- you know, we're disadvantaging the customer, so we could understand they would want out of the contract, but -- and then this is hypothetical, I'm not even sure this is going to work, but to then have to leave customers in place under the old agreements would cause us then to have to grandfather a brunch of rate plans, which costs us time, effort and money. Every time we need to change rate plans, you've got to go back and test all the other rate plans that are in place. So it just complicates our systems and time and effort in terms of trying to manage some of those. So it's the more substantive elements of the contract that would be what would concern us.
8907 THE CHAIRPERSON: Fair enough. In fact, when we discussed with Bell, they suggested, yeah, notwithstanding -- because they were making, I believe, a similar argument from a legal perspective, they said notwithstanding that it makes sense for other portions to go forward because there's no business impediment to them going forward. Are you able to identify which parts of the working document fall under ...?
8908 MR. HERSCHE: Yes. For example, some of the ongoing forward basis, when we -- we will be putting in -- when we put across the board kinds of policies in the company, we do not and will not be -- as we said in our paper, we're not going to be distinguishing some of those between old contracts, new contracts. As an example, when we opened up and started our unlocking, everybody got in line. The same rules applied across the company. We're just not big enough to say, oh, you don't get unlocked but you get unlocked. When we -- if the cancellation policies were to -- as you've described them, were to come in, then that kind of policy would go across the board because that's -- you can't -- we can't treat the customer that differentially, if you will, but -- so going back to Mike's statement, it's when you start dealing with the rates and the other kinds of things that may be affected that are core to the contract that we really don't want to have --
8909 THE CHAIRPERSON: Would it be possible for you to identify for us, perhaps for the 22nd of February, which portions of the working document create particular impediments to you from a retrospectivity perspective? Notwithstanding the legal argument, which still stays there. I mean, I really want to know from a business perspective what it means.
8910 MR. HERSCHE: Sure. Absolutely.
8911 THE CHAIRPERSON: So, as I understand, you have about 600,000 contracts that are churning, I guess, and renewing at different rates. You may have been present when I -- we asked questions of other companies to be able, maybe through an undertaking, to tell us in your normal course of renewing those, assuming a prospective implementation, how much of those contracts within after one year, two years, three years would eventually have been switched over to a fully implemented code?
8912 MR. ANDERSON: We will see if we can provide some accurate numbers for the 22nd, but I've got to believe intuitively -- again, we see a large percentage of our customers upgrading plans prior to the three-year term because they want to get the new devices. So intuitively I've got to believe even if you didn't have that phenomena, you've got probably one-third of your customer base every year is upgrading to a new contract anyway. So after two years you've probably got two-thirds of the customer base not allowing for any churn, competitive activity or customers that just simply want to upgrade for the new device. So I've got to believe after two years you're going to get a significant percentage of the customers that will be onto a new contract, but we will try and see if we can quantify that a little better --
8913 THE CHAIRPERSON: Right.
8914 MR. ANDERSON: -- for the 22nd.
8915 THE CHAIRPERSON: You understand that the combination of your new platform, 2014, plus churn over year makes me a bit concerned -- not to suggest that there's a huge crisis in Saskatchewan, but it may suggest to me that it may take a little longer and I'm a bit concerned about that, of how fast the code would be available for people in Saskatchewan.
8916 MR. HERSCHE: But, if I may, we're not talking about all aspects of the code not being applied at any one given time. There may be some aspects, as we talked about in terms of the notifications, we just -- we can't do.
8917 THE CHAIRPERSON: Right.
8918 MR. HERSCHE: So that it's not -- it goes back to other discussions. It's sort of what can be phased in over that time period. So we're not actually saying all or nothing in December.
8919 THE CHAIRPERSON: Right. And a couple of these undertaking answers will cross over in terms of figuring out how fast this will occur, I understand that, and we'll try to figure it out. And if you can help us try and figure it out, that would be more helpful.
8920 Now, you were saying that people are upgrading devices. We've heard some evidence. I'd like to have your view on this about the life cycle of devices, some suggestion that, you know, in fact they are obsolete or broken after two years.
8921 I was wondering what is your experience and if you were looking across your customer base, I know people want the new shiny thing, but if you look across some people don't. They are very happy with their old flip Motorola and they last a little longer. What is your experience in terms of the life cycle of devices?
8922 MS WHITE: Customers are turning over their devices in the second to third year. We have introduced an early device upgrade program in October of last year which gives customers the ability to upgrade their device at any time. Since we have implemented that program we've seen customers upgrading after about 17.5 months.
8923 THE CHAIRPERSON: And the drive for those changes is more because people want the new devices? It's not because the old device somehow isn't working anymore or broken or obsolete?
8924 MS WHITE: Exactly. Exactly.
8925 THE CHAIRPERSON: Okay, it's more the desire for the new than the non-functionality of the old.
8926 MR. HERSCHE: Excuse me, if I may add to that?
8927 Just, once we -- as Katrine talked about, we are a new device program. We are taking in all these devices. We do refurbish a whole range of devices and essentially give them away.
8928 For example, I have one stat here. We do -- we've got 34,000 phones that we're giving out for what we call our Fresh Start program which is women in difficulties and such things.
8929 So it's not that these devices that people are turning in are unworkable and whatever. It's just you can't re-sell them for all intents and purposes.
8930 THE CHAIRPERSON: They're not cool.
8931 MR.. HERSCHE: They're not cool, yeah.
8932 THE CHAIRPERSON: Unlocking. You said you have -- what are your policies and is it a new policy recently instituted? Why, and what are they?
8933 MR. ANDERSON: I can answer part of it. I'll ask Katrine to respond to the other parts.
8934 We do allow customers to unlock the phone. There is a $50 fee for that. And I believe it was last year we turned it up but I can't remember the exact timing. Maybe Katrine knows that.
8935 MS WHITE: Yeah, we launched our unlocked program in December of last year. So we allow our customers to unlock their devices for a $50 fee. As long as they are a customer with an active account with us they can do that on day one.
8936 THE CHAIRPERSON: When they --
8937 MS WHITE: Yeah, if they come in and sign up for service on day one and we do allow for that for a $50 fee.
8938 THE CHAIRPERSON: Explain to me, if you could, what was the business --
8939 MS WHITE: The business driver behind offering an unlocking program was feedback from our customers that that is something that they were looking for. The majority of the rationale from the customers' perspective was more around being able to take that phone and use it when they travel.
8940 THE CHAIRPERSON: And what was the business driver for, $50, and the on-going relationship?
8941 MR. ANDERSON: The $50 fee is a fee that is determined just based on a number of factors, one being our costs of providing the service and, second, just looking at competitive prices around an unlocking service with our competitors. So a couple of factors that go into the pricing.
8942 THE CHAIRPERSON: Right. And some have suggested on the $50, on whatever the cost is, it's driven perhaps for other reasons. But yours is largely driven by what others are offering and we've heard everywhere from $35 to $75. I guess you're a bit in the middle. And others are using it in fact to keep clients, in a sense, to avoid people coming in and taking devices and taking them over the border.
8943 MR. ANDERSON: Yeah. I would say, though, that you know we need to stress the point the service is available to customers that we have an existing relationship with. So we are -- as some of the other companies have commented on, we are certainly worried about fraud as well.
8944 So you know, if there is a high risk situation we may not unlock it. If we've got a customer that we've had a longstanding relationship with then we know there is no risk of potential fraud, we will certainly unlock the phone.
8945 THE CHAIRPERSON: It's been suggested that arbitrage or potential run-on devices would be a driver for locking. Do you agree or disagree with that? Like, if I showed up in one of your stores and wanted to buy 50 to 100 devices how would you react?
8946 MR. ANDERSON: Well, if you weren't a business customer we would probably do some research.
8947 I do agree with the comment. We have had situations in our organization where there has been theft of devices, people are trying to resell on eBay.
8948 THE CHAIRPERSON: Right. I take it the devices sometimes come unlocked but your policy, you do it as is.
8949 Do you ask for them to arrive locked from your suppliers -- your OEMs?
8950 MR. ANDERSON: Yeah, we are too small of a carrier to really ask or demand anything of our suppliers. So in our case we get our -- the vast majority of our devices come through one of the other carriers.
8951 THE CHAIRPERSON: Okay. And in terms of -- do they come locked or unlocked?
8952 MR. ANDERSON: They come locked.
8953 THE CHAIRPERSON: For the vast majority?
8954 MR. ANDERSON: All of them.
8955 THE CHAIRPERSON: All of them.
8956 MR. ANDERSON: Yeah.
8957 THE CHAIRPERSON: Okay. And the need for -- that it be based on an existing -- there be an on-going business relationship is to prevent the fraud situation?
8958 MR. ANDERSON: Correct.
8959 THE CHAIRPERSON: Okay.
8960 We heard earlier this week representations from Canadians with disabilities. I was wondering what your perspective would be on their request to have, and perhaps you already offer this, more a la carte type offerings, obviously because if there is a visual disability they may not be interested in the full gamut, the same thing if they have got an auditory disability.
8961 How have you dealt with those sorts of issues?
8962 MS WHITE: We offer a variety of different rate plan options for customers whether you -- and for customers who are just interested in a texting option, we do have a plan for $13 a month that customers can use just for texting if voice isn't something that they are interested in.
8963 MR. HERSCHE: We have been working very extensively with people with disabilities in Saskatchewan. I mean, I have got a list here. I won't read it out to you, but just recently you allowed us to use our deferral account money to start working with people with cognitive disabilities. So how does it help them stay in the community? What kinds of things do they need?
8964 We're working. But again, with most of those we like to work through the organization themselves because we are not someone who can necessarily assess what needs to be done. But we do work with the organizations.
8965 For example, again, most of the Saskatchewan organizations; a request from the Saskatchewan Hard of Hearing. So we tested the vibration levels for all of our phones that we have and our Smartphones to say -- and we could tell them, "This, you know, vibrates more than this one".
8966 One of my staff did that. It was pretty interesting.
8967 MR. HERSCHE: But you know, so we have done a lot of those kinds of things and of course we're always -- we're involved in other programs, text to 9-1-1 that's going on, the voice to text. So we have a great number of programs that we are dealing with disabilities and so on.
8968 THE CHAIRPERSON: If I were disabled or had special needs of that nature, would I have to deal with the general customer service folks or would you direct that person to a special office or a special -- somebody particularly trained for that?
8969 MR. ANDERSON: We have a specialized group of employees that deal with our special needs customers.
8970 THE CHAIRPERSON: So they could go to that kiosk or that window --
8971 MR. ANDERSON: Yes.
8972 THE CHAIRPERSON: -- I'm not sure what it looks like or where it is or how you get in contact with it.
8973 MR. HERSCHE: Essentially, you would have to ask. I mean, again, given the dealers and how we are disbursed they are not -- we don't have large numbers. But if you were to ask then we can make sure that you are in contact with the people who know what kinds of things.
8974 Our general frontline person wouldn't necessarily know that this is the kind of -- the best device for you or be able to talk you through that.
8975 THE CHAIRPERSON: Right. But would those retailers be trained to point the person in the right direction?
8976 MR. HERSCHE: I hope so. They should.
8977 THE CHAIRPERSON: They should, okay, they should. At least you agree with that.
8978 The suggestion was that there be a portion of the Code that would address that specific sub-group of Canadians that may have disabilities that there may be particular obligations. Nothing exists yet and nothing has been proposed.
8979 Would you agree in principle that there might be a portion of the Code dealing with Canadians with disabilities?
8980 MR. ANDERSON: Certainly, to the extent that we have abilities to find solutions to step up to those Codes, absolutely. We have been very focused on --
8981 THE CHAIRPERSON: Right. It's my understanding that certain carriers have already engaged a conversation with the groups that appeared earlier this week to see what could be the content of those special paragraphs in the Code for people with disabilities. Perhaps you would want to become aware of that?
8982 MR. ANDERSON: Yeah. No, a fair comment. You know, we would certainly support any of those kinds of initiatives. You know, where we would have some difficulty for example would be, you know, if we have customers suggesting specific devices that they may need.
8983 Again, we have very little ability to influence a lot of the equivalent suppliers. You know, we can certainly pass on concerns that we hear from the customer base but really, again, very little, very little ability to influence their ability to manufacture specific devices.
8984 THE CHAIRPERSON: Right. I think the concern here was not so much about the devices which is one issue. It was more about the offering, exactly what's being offered from your perspective, your service offering.
8985 And as well, the customer care once they become customers, you know what tools do they have? Like, the pull tools are fine but they may not work for visually impaired Canadians and that sort of thing.
8986 MR. ANDERSON: Yeah. No, we would support those kind of initiatives where clearly we have an ability to impact.
8987 THE CHAIRPERSON: Great. A couple of final questions before I ask my colleagues if they have questions.
8988 What is your position on the co-existence of the Wording Document Code with existing provincial legislation? It's not something you live directly because you don't have provincial legislation yet, but what is your perspective?
8989 MR. ANDERSON: Well, I can't speak on behalf of the Province of Saskatchewan, but I have to believe that the province would deem consumer protection to be within their jurisdiction.
8990 I have to believe that the province would reserve the right to enact legislation if they felt they needed to.
8991 So, based on that assumption, I think our position would be that we would support both federal regulation, as we acknowledge the CRTC has got jurisdiction over telecommunications and certainly not limit the ability of the province to also enact legislation, and we would support the position that the customer should have the advantage of the most favourable terms from either legislation.
8992 THE CHAIRPERSON: Which is in the current Working Document, so, you're supportive of that position?
8993 MR. ANDERSON: Yes.
8994 THE CHAIRPERSON: So, all right, thank you.
8995 A Minister from Alberta earlier today talked about the reality of migration within Canada, I think particularly out west that happens a lot, people leaving Saskatchewan to go to Alberta I guess and vice versa, and now they're coming back.
8996 THE CHAIRPERSON: And now they're coming back, but it means that the reality is that people are very mobile now and how the legal framework applies to them, in a sense, just happens where they live.
8997 I was wondering if you had a particular view about the advantage, therefore, of having one national standard and the risk of allowing different provincial levels of protection to perhaps create confusion in the area in the minds of very mobile and migrant consumers?
8998 MR. HERSCHE: May I just divert for one second?
8999 THE CHAIRPERSON: Sure.
9000 MR. HERSCHE: The one thing that struck me with the Minister from Alberta is his one statement where he said, well, I think we should have a national code, but if you don't go far enough we'll just enact something at a higher level.
9001 That's not exactly the words, but that's what I heard.
9002 THE CHAIRPERSON: I heard something quite similar, yeah.
9003 MR. HERSCHE: So, I don't think that's -- if they do that -- so, what we're really saying, again, we serve people in Saskatchewan. We would, as Mr. Anderson said, we would go to the highest level. If someone demanded that we serve them, or that the remedy be equivalent to yours and if that's what the customer wants, we would go to that.
9004 If they were in -- if the Government of Saskatchewan had something that demanded even more, as long as the customer is happy, you know, there would be no problems because we don't have -- again, it's easier for us to say that because the Government of Saskatchewan has not really occupied that space --
9005 THE CHAIRPERSON: Right.
9006 MR. HERSCHE: -- in doing wireless contracts. So, we don't -- we don't really see this as the same level of problems that Rogers or Bell or others have done on that.
9007 THE CHAIRPERSON: Because of the nature of your footprint?
9008 MR. HERSCHE: Yes.
9009 THE CHAIRPERSON: Yes, okay. That's good.
9010 Thank you. Those were my questions.
9011 I'm wondering if other Commissioners...
9012 COMMISSIONER MOLNAR: Well, I'll just ask one.
9013 THE CHAIRPERSON: Yeah, go ahead.
9014 COMMISSIONER MOLNAR: I apologize if you have covered this with our Chair, but I'm trying to fully understand your position as it relates to the early termination fees.
9015 You're concerned with the formula as proposed in the Working Document; is that what I understand this to say?
9016 MR. ANDERSON: So, our concern was with the notion of, I think it was the lesser of 10 percent of the monthly balance or the $50 fee.
9017 Again, our concern there is that there is a significant cost to us in terms of customer acquisition costs so, you know, we would like to try and recoup some of those costs, particularly for customers that are going to churn and we have other lines of business where we see significant churn, in lines of business where, for example, there are no contracts like our IPTV service. So, churn is a big factor for us.
9018 So, you know, our position is, you know, at a minimum we would like to see at least the $50 fee so that we are recovering some of our cost of acquisition.
9019 COMMISSIONER MOLNAR: So, your concern is with the month-to-month and --
9020 MR. ANDERSON: Our concern is fundamentally --
9021 COMMISSIONER MOLNAR: -- on a fixed term where there's a device subsidy, the proposal is that it's the unamortized amount of the device subsidy that would be the termination fee?
9022 MR. HERSCHE: Exactly.
9023 COMMISSIONER MOLNAR: You're okay with that?
9024 MR. HERSCHE: No.
9025 COMMISSIONER MOLNAR: No.
9026 MR. HERSCHE: We agree that the -- I mean, I think we perhaps know where it's going, but what we're saying is, yes, we should get back the dollar amount that we have given to you for a device.
9027 So, if you're a customer, you come into my store and next month you decide that you're going to terminate your contract with me, all you have to pay back to me is the device subsidy.
9028 I've just spent two hundred and some dollars acquiring that customer, all the stuff we talked about before, the people in the store, all of that kind of stuff and I have no recompense for that.
9029 So, all we wanted to do is say that there is a cost to having this -- or getting rid of these -- or having these kinds of cancellation fees and essentially what it does is, with these cancellation fees is having essentially, other than the device, no other deterrent, the contracts really don't mean anything anymore.
9030 You know, there's debates here for the last number of days talking about 36-month contracts, other kinds of contracts, you can get out of that now with that cancellation fee within 30 days or less as that goes forward.
9031 So, we've just spent a lot of money on this customer and they decide, you know, that I just like TELUS better or whatever, if you have a reason, then that would be okay, but just to -- for no dollars at all, we're not that happy about that.
9032 COMMISSIONER MOLNAR: So, you're not happy about it, but there are other providers in your province that you compete against who have already, I understand, implemented this early termination fee formula.
9033 So, whether we mandate it or not, do you see this as something you may have to follow?
9034 MR. HERSHE: Yes.
9035 COMMISSIONER MOLNAR: Okay.
9036 MR. ANDERSON: I just wanted to raise that it does cost us money to do that.
9037 COMMISSIONER MOLNAR: Okay, thank you.
9038 THE CHAIRPERSON: And we're cognizant of that, you know, it's...
9039 Commissioner Simpson.
9040 COMMISSIONER SIMPSON: Good afternoon. Thank you again for taking the time and the effort to, and the cost to participate in the hearing.
9041 I just have one question. I've been the silent shopper all week and I've been looking at device prices and one of the preoccupations I've had is the device is becoming more and more a driver of the purchaser's decision.
9042 And in your comments you admittedly said that you're -- I'm paraphrasing -- that you're a mid-sized company but you're an incumbent and you are a full service cell phone provider.
9043 But could you give me a bit of an insight as to what the increase in the customer's desire and their perceived value of the handset is doing to your business?
9044 Where I'm going here is that these phones, we don't know what they cost the carrier but we see that as I go across the country carriers are pretty much put in a situation where they have to be on parity at the retail level with the handset.
9045 But are you finding it getting tougher to be competitive because of the handset cost?
9046 MR. ANDERSON: We certainly are. I can tell you that the costs of the subsidies is now approaching about 10 percent of our overall operating costs inside our organization, so it is a substantial line item for us.
9047 You're absolutely right, it is ultimately what the customers are looking for, it's what drives the customers to look for service plans with us.
9048 We have to be competitive, you're absolutely right there. I mean, customers are very savvy in comparing device costs, so we have to keep competitive, hence, that's why we have had to form a relationship with another carrier to be able to get handset costs to keep ourselves as competitive as we can relative to the larger players, but it is a significant line item for us.
9049 THE CHAIRPERSON: That's it. So, thank you very much.
9050 So, we're adjourned for the day until, I'm going to say 8:30 tomorrow morning because I know that some Commissioners who might prefer to get home earlier rather than later, so even if we end early, I think that's best.
9051 Thank you very much.
9052 À demain 8 h 30, s'il vous plaît.
--- Whereupon the hearing adjourned at 1746, to resume on Friday, February 15, 2013 at 0830
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