Pat Pilcher: Canada proposes smartphone unlock laws

1:45 PM Wednesday Jan 30, 2013

What a difference geography can make.

In the same week that the US government imposed a bizarre and draconian law that effectively made it illegal to unlock cellphones without the telcos consent, the Canadians have thought differently and proposed sweeping legislation that'll make it tricky for carriers to lock mobile phones and will also act to limit early what termination fees are charged.

Released by Canada's telecommunications regulator, The Canadian Radio-television and Telecommunications Commission, the difference between the proposed Canadian laws and those bought into force in the US reads like night and day.

Where there appears to have been little to zero public consultation for US laws which appear designed to ensure that telcos get fat at the consumers expense whilst stifling competition, the Canadians are seeking public feedback on legislation designed to protect consumers and stimulate competition. Feedback is being sought via an online discussion forum and there will also be a public hearing in Quebec on the proposed laws in early February.

Telcos will be required to unlock customers' wireless devices under "reasonable terms." Which should in theory cover fees charged by telcos and the time frames under which unlocking is being applied. This is an eminently sensible solution, especially when compared to the loopiness that is happening just over the border. Telcos will still be able to recover the cost of a subsidised handset until the consumers plan expires and then the consumer will be freed up to seek a better plan, be it from the same telco or a more attractively priced competitors offering.

The proposed law will also require that customers are able to cancel parts of their calling plans that would otherwise incur additional costs. Customers will also be able to set a cap on their bill. Once they hit this cap, any services that would cost would be suspended.

With confusing double-speak often masking hidden additional costs not readily apparent to the customer, this requirement could have the added benefit of making mobile calling plans more comprehensible as well as forcing telcos to offer truly competitive tariffs.

Sensibly, the proposed law will also see early termination fees only being able to include subsidies of the handset/other mobile hardware and discounts the customer received for signing on to a contract of a specific length.

In essence mandating what should constitute an early termination fee should limit the ability of the telco to hit customers hard for exiting their calling plan early as customers will only be required to pay a reasonable (and easily understood) representation of what is owed so the telco doesn't lose out and the customer isn't locked into an uncompetitive mobile plan for fear of being whacked with massive early contract termination charges.

Telco advertising has also been given the once over and under the draft law, and explanations will be required when advertising "unlimited," plans. More specifically, Canadian telcos will need to be up front about what the specific limitations are to supposedly 'unlimited' plans.

Telcos will also be required to send customers a personalised summary of terms and conditions in their mobile pan that'll highlight cancellation charges at different stages of their contract and advise on how to best monitor mobile usage. Should the law go ahead, telco marketing double-talk could become a thing of the past.

The proposed law is still very much in its infancy but the draft version has already received a tentative thumbs-up from both telcos and customer advocacy groups. Even though the specifics underpinning much of the law could still change after industry and customer consultation is factored in, the proposed legislation provides a potent example of how consumer law around telecommunications should work.

With concerns already being aired locally around New Zealand being forced to adopt similarly draconian laws prohibiting phone unlocking without the consent of the telco under the trans pacific partnership, one can only hope that kiwi regulators are watching the Canadian situation closely.