The non-debate over your wireless bills

Canada's campaigning politicians are starting to address consumer outrage over gas prices with promises to do something about the rising costs, but they have so far ignored the mounting anger over ever-increasing phone, internet and television bills.

Canada's campaigning politicians are starting to address consumer outrage over gas prices with promises to do something about the rising costs, but they have so far ignored the mounting anger over ever-increasing phone, internet and television bills.

As documented in's recent Disconnected series, consumers have never been angrier with their telecommunications service providers. A spate of class-action lawsuits and protests — both online and on Parliament Hill — over the past year addressing cellphone rates, text messaging fees, hidden charges, one-way contracts and internet throttling are evidence that there is something rotten in the state of Canadian telecommunications.

And with the average household spending nearly as much per month on telecommunications as on gasoline, consumer advocates are wondering why the situation is being met with silence from politicians on the campaign trail.

The Consumer Association of Canada (CAC) says the problem starts with Industry Canada, the
Bruce Cran ((CBC))
government ministry that is ostensibly responsible for promoting the competitiveness of Canadian companies and for protecting the customers of those companies. The minister of industry, currently Jim Prentice, must therefore balance the encouragement of companies with the rights of consumers — an untenable situation.

"That's bloody ridiculous," says Bruce Cran, president of the CAC. "It's a total conflict."

The problem, Cran says, is that the government did away with proper consumer protection more than a decade ago when the Liberals abolished the consumer affairs cabinet position in 1995. The consumer advocate role was wrapped into the industry minister's portfolio, and since then, Canadian companies — not just telecommunications providers — have had increasingly free rein to trample on consumers, he says.

The apparent result has been a rash of consumer abuse through unsafe products, such as the recent listeriosis outbreak, and rising prices. Consumer protection agencies have been "totally ineffectual" according to Cran. The Competition Bureau, which is under Industry Canada's umbrella, has examined rising gas prices six times yet found nothing wrong; the Canadian Radio-television and Telecommunications Commission has been told by the government to lay off and let market forces solve problems; and the Commissioner for Complaints for Telecommunications Services (CCTS) — set up last year — has yet to promote itself and is unknown to the average Canadian.

"What's the CCTS?" Cran jokes.

The situation hasn't been helped by the fact that Prentice and his predecessors have evidently put far more emphasis on industry than on consumers. The CAC, for example, has not been able to get a meeting with the minister of industry for more than 10 years, and it's not for lack of trying.

"Every time we get into an argument, we're overwhelmed by the lobbying power of industry," Cran says. "Industry lobbyists are in there by the dozen and we can't even get a word in edgewise."

The main parties are divided on whether or not the consumer affairs position should be brought back. Prentice told earlier this month that he was opposed to the idea.

"I think it's possible for the minister of industry to be vigilant on the consumer affairs side as well," he said.

Prentice's Liberal counterpart, Scott Brison, was in favour of reinstating the position while the NDP's Charlie Angus said the two roles could be kept together, but the person holding the job had to show "a little bit of backbone."

Lots of bluster, but fees came in

Political indifference to the plight of phone, internet and television customers goes beyond the simple lack of a cabinet minister, however. Canadians also don't believe the government can actually do anything to rein in telecommunications providers, as evidenced by the recent short-lived bout over text messages, with the Conservatives and the NDP on one side and Bell Canada Inc. and Telus Corp. on the other.

NDP Leader Jack Layton launched an online letter writing campaign in July to protest the new charges on incoming text messages while Prentice called the chief executives of both companies onto the carpet to explain themselves. Layton's campaign quietly fizzled while Prentice suggested that if consumers didn't like the new charges, they could change providers. The new fees took effect in August.

"Every politician, irrespective of partisan stripes, is alert to the returns he can make by tapping into a vein of public discontent," says Akaash Maharaj, senior resident professor of public affairs and international relations at the University of Toronto. "As the Conservatives found, it's a dangerous game to toy with the irate Canadian if they don't have an actual policy prescription to resolve the problem."

Governments have a long history of regulation and intervention in petroleum markets: the National Energy Program was introduced in 1980 ostensibly to help Canada deal with rising world oil prices and P.E.I. and Newfoundland and Labrador have set up agencies to review price changes at the pumps. But for the government, it's been largely hands-off the telecommunications sector, especially the relatively new areas of cellphones and internet access.

"Canadians are less accustomed to the idea of government playing a role, let alone a constructive role," Maharaj says. The type of grandstanding recently done by Prentice and Layton only served to "reinforce that as far as telecommunications goes, government is at best impotent and at worst misguided."

Throttling making people see red

The telecommunications issue drawing the most consumer anger, however, is that of throttling, or the slowing of internet speeds by providers, including Bell, Rogers Communications Inc. and Shaw Communications Inc.

The companies say they need to slow down certain uses of the internet in order to prevent congestion on their networks, a position many users feel violates the neutrality of the medium and saps Canada's ability to compete internationally. The CRTC is currently probing Bell's throttling and is expected to rule on whether the company has broken the law by the end of October. Still, even if Bell is found guilty, the CRTC is unable to issue any fines or penalties and will do little other than slap the company on the wrist.

Andrew Fernandez, a biochemistry scientist at the University of Western Ontario, told the CRTC in July that Bell's throttling was harming medical research in Canada. Fernandez said that his work in bioinformatics and human health genetics regularly requires him to transfer large files across the internet, with peer-to-peer applications such as BitTorrent — the type of software Bell throttles — proving to be most efficient way to do so.

"Thanks to Bell's decision to throttle my internet bandwidth … I can no longer utilize my home office when doing research," he wrote. "Bell assumes that any large encrypted file transfers must be illegal music or video sharing, and therefore confuses my cancer-related human genome database with pictures of Paris Hilton or Britney Spears."

Fernandez now says throttling is only the tip of the iceberg in Canada's continued slide from its previous position as a global internet leader. Earlier this decade, Canada ranked second only to South Korea in terms of broadband deployment, but is now only hanging on to the 10th spot in rankings from the Organization for Economic Co-operation and Development.

Fernandez, who is also a former associate director of public infrastructure for Bell, recently moved back to a brand new subdivision outside of London, Ont., after living in North Carolina for a few years. He noticed the internet equipment being installed in his subdivision was the same gear that was being used before he left for the United States earlier this decade.

"I'm looking at that thinking, 'what's going on here?' I can understand if they dug up the ground 40 years ago and were trying to retrofit, but this is brand new," he says.

Where's the competition?

The anecdote illustrates the real problem with the internet in Canada, he says — there's no real competition and the providers are therefore investing very little in new, top-grade infrastructure.

A recent study by Oxford University and sponsored by network gear maker Cisco Systems Inc. confirmed Fernandez's theory, finding Canada ill-prepared for future internet bandwidth demand and barely capable of coping with existing usage.

Governments in other countries are investing in building the internet, which they view as essential economic infrastructure akin to roads and railways. Finland, for example, last week announced it would fund one-third of a €200-million network that would give every household in the country super-fast connectivity by 2016.

The Canadian government has been urged from all quarters to institute a similar broadband strategy, and to spend part of the $4.2 billion earned from the recent auction of cellphone airwaves on such a plan. The Liberals and NDP both back the strategy, but the Conservatives have been silent.

Still, some believe the reason for the inaction on telecommunications issues is not because politicians aren't listening — it's because they agree. The Conservatives have for the past two years been implementing recommendations made by the Telecommunications Policy Review, an expert panel appointed by the Liberals before they lost the 2006 election.

It would be hard for the Liberals to criticize the Conservatives for following recommendations — such as the deregulation of local phone markets or the creation of the CCTS — when it was their own panel that came up with those suggestions, says James Milway, executive director of the Institute for Competitiveness and Prosperity.

"I'm wondering if this is something where the two major parties agree and the Liberals aren't seizing this to show how they differ from the Tories because they actually agree with the Tories," he says.

One key issue the parties likely agree on, Milway says, is the need to lift foreign ownership restrictions on telecommunications companies — another of the recommendations made by the 2006 panel, and reiterated this summer by another Conservative-appointed review.

Both panels suggested lifting the ownership restrictions from the current 47 per cent in order to allow foreign companies in to Canada to compete with the likes of Bell, Rogers and Telus.

Indeed — in varying degrees, Prentice, Brison and Angus all told this month that they were in favour of lifting those restrictions. Brison and Angus, however, insisted that Canadian culture protections would first need to be put in place.

Conservative Leader Stephen Harper earlier this month addressed the issue of foreign ownership and said he would lift the restrictions on airlines and uranium mines — both of which were also recommended by the government's panel this summer. However, Harper was silent on the issue of telecommunications.