Everyone with a three-year wireless contract will be able to break their agreement as of Wednesday without the hefty cancellation fees often mandated by carriers thanks to new regulations.
The Canadian Radio-television and Telecommunications Commission's wireless code took effect on Dec. 2, 2013, but will apply to all wireless contracts signed as of June 3, 2013.
Canada's wireless carriers attempted to prevent the code from applying to people with three-year wireless contracts that would not have expired by June 3. The carriers lost a Federal Court appeal in May when the court ruled that the CRTC can make the code applicable to those contracts even if it interferes with the rights of mobile carriers.
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While all customers will be able to walk away from their three-year contracts as of Wednesday regardless of when they expire, some will still have to pay a small cancellation fee if they choose to do so.
"Most customers on three-year contracts will not be required to pay cancellation fees," the Commissioner for Complaints for Telecommunications Howard Maker said in a statement. "And, if they do, the amount they will have to pay has been limited by the code."
Contracts started before June 3, 2013
People with three-year contracts that have lasted more than two years can cancel their plans without paying any cancellation fees, according to CCTS. This applies to anyone who signed a three-year contract before June 3, 2013.
The wireless code mandates that carriers can't charge cancellation fees after 24 months.
Contracts started June 3, 2013, to Dec. 2, 2013
However, not everyone has held their contract for more than two years.
People who started their contract between June 3 and Dec. 2, 2013, can cancel their contracts. But they will have to pay at most $50 to do so.
The carrier will calculate 10 per cent of "the minimum monthly charge for the remaining months of the contract," according to CCTS.
Contracts started after June 3, 2013, with a device subsidy
Some individuals may have contracts that came with a device subsidy, meaning the carrier offered a cellphone at a reduced price and built payments into the contract to make up the difference.
Carriers are able to recover some of the remaining device costs from people who want to cancel their contracts that were signed between June 3 and Dec. 2, 2013.
The CCTS offers a formula for calculating that cancellation fee. Carriers will have to divide the original device subsidy amount by 24 months, which is the amount of time the code allows carriers to recoup a device subsidy. They will then multiply that number by the number of months the contract has already lasted, and then subtract it from the original device subsidy amount.
For example, a three-year contract started on Nov. 5, 2013 with a device subsidy of $240 cancelled on June 10 would cost the customer a $40 early cancellation fee.
Contracts started after Dec. 2, 2013
All wireless code protections already apply to people who entered into contracts after Dec. 2, 2013.
These protections, in addition to $0 early cancellation fees after two years, include allowing customers to:
- Cancel a new contract and return the phone at no cost (provided customers stay within usage limits) within 15 days if they are unhappy with service.
- Refuse changes to key contract terms and conditions, including services and prices, for the contract's duration.
- Get a plain language summary of services.
- Cap excess data charges above plan limits at $50 a month.
There are some concerns these changes may raise the price of smartphones in the short term. With customers being able to walk away from three-year contracts after 24 months without a penalty, there will be little sense in offering longer-term deals.