Why has all this negative sentiment toward telecommunications companies come to a frothing boil over the past year? Consumer groups say it's the result of a push by successive governments for deregulation.

"Deregulation is giving carriers even more chutzpah than they normally have," says the Public Interest Advocacy Centre's John Lawford. "This is what you get. It's the chickens coming home to roost."

The Liberals started the ball rolling in 1995 when then prime minister Jean Chrétien abolished the cabinet position of Minister of Consumer and Corporate Affairs. The position's duties were folded into the new position of Industry Minister.


John Manley was the last minister of consumer affairs before the Liberal government abolished the position in 1995. ((CBC))

The Conservatives followed up by issuing a policy directive to the CRTC shortly after taking office in 2006 that effectively declawed the regulator. Following recommendations made by a Liberal-appointed industry review panel, then minister of industry Maxime Bernier told the CRTC to avoid regulating proactively. The agency should get involved in an issue only after a problem had been clearly established, he said.

The Competition Bureau, meanwhile, has been loud and clear that it is against intervening in the market. "I believe that regulation should always be viewed, not as a first step, but as a last resort," Competition Commissioner Sheridan Scott, a former Bell Canada executive, told the annual Telecom Summit in June.

The result today is that there is no consumer voice on a national level, Lawford says, which stands in stark contrast to the United States, where the Federal Trade Commission is a strong and well-respected rights protector.

"There's nobody at the cabinet table to say, 'Just a minute, people are angry,'" he says. "Deregulation is all well and good but you have to make sure people don't get trampled on the way."

Bernier pushed further last April when, against the advice of a Parliamentary committee, he ordered the deregulation of local phone markets, which freed telephone companies such as Bell and Telus from CRTC rules so they could ostensibly compete better with cable providers such as Rogers, Vidéotron and Shaw Communications Inc.

Little evidence of lower phone rates

Bernier promised the move would boost local phone competition and lower prices, but there has been little evidence of that, consumer groups say. In fact, Rogers raised its phone prices earlier this year while Telus was rebuked by the CRTC in April for introducing a new long-distance access fee to customers using call-around services such as Yak.

Consumer groups say the government's deregulation push — without enacting suitable protection for customers — was a serious mistake.

"It was really an error," says Anthony Hémond, telecommunications analyst for L'union des consommateurs. "I don't understand why the government chose to go in this direction."

Before switching positions last summer to become Minister of Foreign Affairs, a move that ultimately ended in disgrace and his resignation from cabinet, Bernier did take a step toward protecting consumers by ordering the industry to police itself. The result was the self-governing Commissioner for Complaints for Telecommunications Services, which began taking consumer gripes on deregulated services, including cellphones and internet access, last July.

Few Canadians, however, know the agency exists. The CCTS fielded more than 5,000 inquiries across Canada in its first year. Quebec's provincial equivalent, the Office de la protection du Consommateur, by contrast had more than 14,000 inquiries related to telecommunications issues in 2007. Meanwhile, its Australian counterpart, the Telecommunications Industry Ombudsman, fielded more than 100,000 complaints last year.


Maxime Bernier sped up Canada's move toward telecommunications deregulation when he was minister of industry. ((Tom Hanson/Canadian Press))

The CCTS, which is run by three directors from telecommunications companies and four independents and is overseen by the CRTC, has yet to come up with a plan for how it will advertise its services, a fact that galls consumer groups.

"That would take some of the pressure off, like a release valve for people who have the biggest problems," Lawford says. "It would really save [the companies'] bacon."

Some service providers, however, say the heightened consumer awareness has little to do with deregulation since many of the services that are receiving complaints — wireless and internet access, for example — have never been subject to CRTC rules.

"You're talking about segments of the industry that have been deregulated forever," says Bell's head of regulatory affairs Mirko Bibic. "That has nothing to do with deregulation at all."

Rather, the growth of high-speed internet access means customers have more ability to find information and communicate with each other. The media, Bibic says, has also played a role.   "As the comfort level on consumers with those services increases it takes on perhaps more prominence," he says. "A lot of attention is being focused on those issues by the media."

Rogers and Telus, Canada's other telecommunications giants, declined to comment.

The biggest problem with deregulation, industry observers say, is that there is still one huge regulation left: restrictions on foreign ownership of Canadian telecommunications companies. The issue, looked at more closely on Wednesday in this series, is that with foreign entities blocked from entering Canada in a meaningful way, domestic players have a cozy playing field and thus little impetus to truly compete against each other. The result is a distorted market — deregulated in most ways but not in the most important way, which inevitably produces high prices and poor services.

Canadian politeness a problem

Tony Merchant, the class-action lawyer, says the problem extends beyond government and regulatory action and lies with consumers themselves. Canadians' politeness and non-confrontational manner serves them well in international reputation, but it also makes them willing suckers to be taken advantage of by the likes of banks, airlines and telecommunications providers.

"Canadians have a silly smugness that says our large institutions are honest and fair. We don't think that they would cheat us. We just think they are fair and that's what it costs," says Merchant, whose mother worked for the CRTC. "It doesn't make us good consumers, it makes us dupes."

The companies themselves are vowing change, however. In July, Rogers said it had learned a lot from the customer revolt over iPhone prices while Bell, which is under new management, says it is focusing heavily on improving its customer relations to avoid future lawsuits and protests.

"You're only going to win in this game if you offer the best service," Bibic says. "Certainly we're well aware of that and one of our key priorities that we're continuing to push forward under the new Bell structure is an extreme focus on improving service."

The service providers may have to put action to their words sooner rather than later. The younger generation, according to Graham Fair of Ruinediphone.com, is very vocal about its dissatisfaction and — unlike the Canadians described by Merchant — they are not going to take it anymore.

"When we see a need for something, we do step up," says the 31-year-old, who works for a technology company in Vancouver. "When we do see an injustice on the part of a company, we're seeing a very healthy market for Canadians standing up to get action."