Telcos' Advance Billing Practices Come Under Fire
Plus: Credit union merger frenzy continues in B.C., and the Paramount-Warner Bros. saga sees more twists and turns
Why do Canadians pay their phone bills a month in advance, rather than after the fact?
That’s what Stephen Lawton is asking in a submission to the federal telecom regulator. Lawton, a former senior customer service advisor in ROGERS’ office of the president, doesn’t believe there’s any good reason for the practice, and he’s asking the Canadian Radio-television and Telecommunications Commission to change it.
“Advance billing is the root cause of a large and recurring class of consumer harm,” he says in his filing. “A customer charged 30 days ahead for service they may cancel mid-cycle is exposed to overpayment, delayed refunds, and late fees on amounts never actually owed.”
That’s the exact situation Lawton found himself in a few months ago when he cancelled his partner’s service with Rogers’ Fido and moved it to Telus’ Koodo, which he details in both his filing and on his Substack, Canadian Snowman Says.
Rather than paying about $4.10 for the four days of service they had accrued, Lawton and his partner ended up being charged the full monthly amount of $42.38. With Fido not having inbound calling and a chatbot that would not provide access to human customer service agents, he was forced to file a complaint with the Commission for Complaints for Telecom-television services.
The CCTS ultimately resolved his specific dispute, but told him that the CRTC handles general billing practices. After he inquired with the CRTC, the regulator told him that advance billing is a common industry practice and that he should file a formal complaint if he didn’t like it. So he did.
As luck would have it, the CRTC is in the midst of reviewing consumer protections. The regulator is taking public comments until Aug. 11, with a public hearing scheduled for Nov. 30.
Lawton, who is now retired, spent 18 years dealing with customer complaints at Rogers. The main point in his submission is that the CRTC has never actually considered whether the practice of advance billing by telcos makes sense – it’s simply accepted because everyone does it.
The practice originated with the original advent of the telephone more than a century ago, when governments allowed providers to bill in advance in order to raise working capital to fund network expansion. But that rationale hasn’t made sense for decades and isn’t found with other utilities.
“What is striking is how little the billing convention has changed and how completely its original justification has dissolved,” Lawton writes in his submission. “The carriers that bill 30 days in advance today are not undercapitalized startups, they are among the largest corporations in Canada.”
Lawton tells Do Not Pass Go that his filing has received considerable attention thanks to a recent Toronto Star article on it. When he submitted it to the CRTC’s review on July 15, it was only the 14th entry – that total quickly grew to more than 100 a few days after the article ran.
Lawton, who writes on Substack as “Stephen Gordon,” says that moving from advance billing to the post-paid system used by other utilities would be a win-win for both consumers and telcos. He says a large portion of CCTS complaints are rooted in consumers disputing advance charges. With carriers having to pay the ombudsman for every complaint received, they would lower their overall costs by stopping issues before they occur.
“It will result in fewer complaints, which is better for the carrier,” he says. “They’re not losing anything, they’re gaining something.”
🎧 ON THE PODCAST THIS WEEK:
Losing Sleep Over the Mattress Duopoly
We’re safe from monopolies when we sleep, right? If only that were so.
✈️ AIRLINES
Flight attendants working for WESTJET won significant new compensation this week following their one-day strike on Sunday. The Canadian Union of Public Employees, the union representing the strike attendants, announced that it had secured an 18-per-cent pay increase over three years and compensation for previously unpaid hours that attendants were working while on the ground, a key sticking point in the labour dispute. Staff will vote on the deal in September. Stories of passengers stranded by the brief strike and resultant disruption, meanwhile, made the rounds this week. An Ottawa resident, for one, told CTV that WestJet refused to book his family onto another carrier to get home from Cancun even though there was space on the flight, thereby violating Canada’s passenger rights laws that require airlines to do in the event of a disruption.
🕺 ENTERTAINMENT
The ongoing story of PARAMOUNT attempting to acquire WARNER BROS. is getting more chapters than the Marvel Cinematic Universe, with a swath of new developments this past week. First, a U.S. federal judge set March 2027 as the trial date to hear the antitrust challenges brought against the deal by a number of U.S. states. The date is seen as a negative for Paramount, which had been seeking to complete the merger this summer. The same judge, Araceli Martínez-Olguín, then also rejected a separate antitrust challenge brought by a group of consumers, ruling that they had not sufficiently established their standing in the case. She said that the consumer case had only established one “particularized injury,” a single price increase on the Paramount+ streaming service, but not the generalized competitive harms needed to be included in the case. The judge did leave the door open for the consumers to file an amended complaint. Lastly, U.K. regulators announced this week that they will not challenge the merger, with Paramount agreeing to concessions including promises to continue operating a local public service broadcaster.
Speaking of streaming, a number of the big services are looking at launching free tiers given slowdowns in paid subscriber growth. DISNEY chief executive Josh D’Amaro said in an earnings call this week that the company is exploring an advertising-supported “free product” as a way to appeal to price-conscious consumers. That follows NETFLIX suggesting the same last month, with the streaming leader confirming it’s also looking at a free tier that doesn’t cannibalize its paid service.
🏦 BANKING
After announcing that they were exploring a merger back in the spring, B.C.-based CASCADIA CREDIT UNION and GREATER VANCOUVER COMMUNITY CREDIT UNION this week announced that they are indeed going ahead with their deal. The two credit unions, respectively based in Summerland and Burnaby, are asking the B.C. Financial Services Authority for the go-ahead. The combined entities would have six branches, serve more than 20,000 members and oversee more than $1.3 billions in assets under management. The tie-up is the latest in a wave of credit union mergers across Canada, many of which are happening because of increased technology and regulatory costs. For more on the merger trend and the resultant risks to credit unions’ identity, check out our coverage in last week’s newsletter.
🥊 COMPETITION
The COMPETITION BUREAU has issued a bulletin reaffirming its position on private right of access to the Competition Tribunal, which is a relatively new option for individuals, companies and organizations to launch legal cases against various abuses of market power by firms. The bulletin lays out the Bureau’s role in such cases, and how or when it may get involved. For instance, if a person or company applies to the Tribunal for leave to argue a case, the Bureau must notify the court within 48 hours whether it is conducting an inquiry into the matter itself or if it has discontinued an inquiry because of a settlement. The bulletin also affirms that the Bureau may participate in or support a private case, or that it can also overrule applications by launching its own investigation into a matter. Private right of access was introduced last year following amendments to the Competition Act as a way of taking pressure off the Bureau as the sole challenger of abuses of dominance. Three applications have been launched so far, which we’ve covered in depth here – against Google’s dominance of the search market, Apple’s app store commissions, and Live Nation’s business practices. The Tribunal dismissed the Google application earlier this year, with the other two still waiting for approval to go ahead.
🚨 COMING UP
We’re in the dog days of summer now, so we’re going to take a breather next week and return on Aug. 18. Novelist, journalist, activist and enshittification master CORY DOCTOROW rejoins the Do Not Pass Go podcast to talk about his latest book, The Reverse Centaur’s Guide to Life After AI: How to Think About Artificial Intelligence Before It’s Too Late.