Canada's internet code of conduct goes into effect for 10 big service providers

A CRTC logo is shown in Montreal, Monday, Sept. 10, 2012. THE CANADIAN PRESS/Graham Hughes

TORONTO — Canada's 10 largest internet service providers will be required to make their contract terms and pricing easier to understand under a new mandatory code of behaviour that went into effect Friday.

The big ISPs account for more than 85 per cent of Canada's home internet service subscriptions, according to the Canadian Radio-television and Telecommunications Commission.

The rest of the market share is held by hundreds of small to mid-sized ISPs.

The CRTC -- the main regulator for Canada's communications carriers and broadcasters -- says it expects all other ISPs to behave in a manner consistent with principles set out in the code.

"In today's marketplace, Canadian consumers deserve to be provided with clear information and easy-to-understand terms and conditions," CRTC chairman Ian Scott said in a statement.

"The Internet Code will allow Canadians to make better decisions when subscribing to or modifying their existing Internet service, and will make it easier for them to take advantage of competitive offers."

The code is the CRTC's answer to a soaring number of complaints about internet services, such as "bill shock" caused by unexpected extra fees or price increases.

Among other things, the new rules permit customers to cancel a contract within 45 days, without paying early cancellation fees, if the contract differs from the offer.

The code also empowers the Commission for Complaints for Telecom-Television Services -- which is already responsible for wireless and television services -- to require a big ISP to pay up to $5,000 in compensation per complaint.

The code applies only to specific internet providers -- Bell Canada, Cogeco, Eastlink, Northwestel, Rogers Communications, SaskTel, Shaw Telecom, Telus, Videotron and Xplornet.

A 2018 report prepared for a market study by the Competition Bureau estimated there were more than 550 companies offering an alternative to the internet services owned by the traditional telephone and cable companies.

Most of the smaller ISPs are wholesale customers of the big carriers but compete on the retail level for the same residential and small business customers.

The CRTC's internet code comes into effect two days after the release of a government-appointed expert panel recommended a sweeping overhaul of the broadcast and telecommunications system.

Among other things, the 235-page report recommends giving the CRTC new powers and responsibilities.

Some of the recommendations are relatively simple -- such as renaming the Broadcasting and Telecommunications acts, as well as the CRTC -- while others will be contentious and politically difficult.

For example, recommendation 28 is to update the Telecommunications Act to foster a competitive market "through reliance on market forces and, where required, through efficient and effective regulation."

However, it has been historically difficult for the CRTC to determine when it should intervene to regulate prices and when it should rely on market players to establish the right price through competition.

The large ISPs, including Bell and Rogers, have recently launched multiple appeals of the CRTC's decisions about setting wholesale rates for internet services.

A similar battle, pitting Bell, Rogers, Telus and other wireless networks, is at an earlier stage with the CRTC scheduled to hold nine days of public hearings into whether it should set wholesale wireless rates, starting Feb. 18.

Navdeep Bains, the federal minister responsible for telecommunications as well as competition, said on Thursday at a Toronto business conference that the expert panel's findings were "fairly consistent" with his views.

"But we're still reviewing the 97 recommendations and we are going to go through a very comprehensive legislative process as well as we modernize all this," Bains said.

This report by The Canadian Press was first published Jan. 31, 2020.