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Canadians can cancel phone contracts without penalty after two years under new wireless code

Posted on Jun 3, 2013 in Mortgage Market Updates and News

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In a surprise move Monday, Canada’s telecom regulator introduced a set of rules that could spell the end of much maligned three-year cellphone contracts in this country.

The Canadian Radio-television and Telecommunications Commission published the final version of a national code of conduct for wireless carriers that it says will allow consumers to get out of their cellphone contracts after two years without cancellation fees even if they signed on to a longer term.

"As part of a more dynamic marketplace, Canadians will be able to choose a new carrier or re-bargain with their existing one."

The final code differed dramatically from a draft version in that it capped the length of time carriers can lock customers who purchase subsidized devices into a contract for at two-years.

CRTC chair Jean-Pierre Blais said providers can still offer three-year contracts if they choose but the commission focused instead on the maximum length of the amortization period.

“After two years Canadians can choose to walk away from their agreements. For those who have subsidized devices, the amortization period is capped at two years,” he said in an interview Monday morning. “As part of a more dynamic marketplace, Canadians will be able to choose a new carrier or re-bargain with their existing one.”

“This was not part of draft code – we got a lot of comments from Canadians and explored the issue at the hearings and landed with the two year cap,” Mr. Blais said.

Customers who purchase subsidized devices must still pay an early cancellation fee to leave their contracts but that fee cannot exceed the value of the device subsidy.

The amount of the early cancellation fee must be reduced by an equal amount every month for either a period of 24 months or the number of months in the contract, whichever is less.

Cellphone providers cannot charge any fee or penalty for breaking a contract apart from that early cancellation fee.



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