New rules for telecoms: roaming caps and two-year contracts

New rules for mobile phone carriers might not have much of an impact on Telus (TSX:T), which has already implemented some of the new guidelines, ...

New rules for mobile phone carriers might not have much of an impact on Telus (TSX:T), which has already implemented some of the new guidelines, but it could have a positive impact on a local company that was born out of high roaming charges.

The Canadian Radio-television Telecommunications Commission (CRTC) has put Canada's wireless carriers on notice. They must eliminate three-year contracts and cap roaming charges.

The new code will apply only to new contracts starting on December 2. It means Canadians will be able to cancel their wireless contracts after two years.

Telus already has two-year contracts, and there is no cancellation charge for customers who end their contracts early. The only thing Telus customers must pay if they cancel a contract before the end of its term is the balance they might owe on any new phones that came with the plan.

As for roaming, data charges will be capped at $50 per month and international data roaming charges at $100 month – a move aimed at reducing some of the world's highest roaming rates.

Those high rates gave birth to Vancouver's Roam Mobility, which struck a deal with T-Mobile in the U.S. to provide Canadians travelling to the U.S. with reasonably priced phone and data services.

The caps simply mean that, once customers reach their roaming cap, their service gets disconnected. If they want to keep roaming, they have to pay for it, and Roam will still offer rates that are far below what Canadian telecoms offer, said Emir Aboulhosn, Roam's senior vice-president of business development.

Under the new rules, telecoms will be obliged to unlock smartphones after 90 days, which would allow customers to move to another carrier. Again, Telus already allows customers to unlock their phones, for a fee.

Allowing people to unlock their phones will make it easier for Canadians travelling to the U.S. to buy $20 SIM cards from Roam mobility.

"It all works in our favour," Aboulhosn told Business in Vancouver. "The CRTC is helping them liberate their device to move to any provider they want. It allows people to get access to Roam Mobility service much easier than they did before."

OpenMedia, the Vancouver-based telecom watchdog that has lobbied aggressively for the changes, welcomed the CRTC ruling.

"This new code of conduct is further evidence that the CRTC has started to listen to the concerns of Canadians," said OpenMedia spokeswoman Lindsey Pinto. "Under the new code, Big Telecom will find it more difficult to abuse cellphone users through restrictive contracts, price-gouging and disrespectful customer service."


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