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On January 31, 2020, an Internet Code will come into effect in Canada. The Internet Code, published by the Canadian Radio-television and Telecommunications Commission (the "CRTC"),1 follows in the footsteps of the CRTC's infamous Wireless Code of 2013.2 In so doing, the CRTC has now set its sights on large facilities-based Internet Service Providers ("ISPs"). The mandatory code imposes new consumer-oriented obligations on specifically identified ISPs.3 These particular ISPs include large service providers from the "incumbent telecommunications service provider," "cable-based carrier," and "other carrier" categories referenced in the CRTC's Communications Monitoring Report.4 The Internet Code will apply only to fixed retail Internet services. The mobile wireless Internet services provided by some of these ISPs, already covered by the Wireless Code, will not be subject to the Internet Code. Further, unlike the Wireless Code, the Internet Code will only apply to consumer contracts and not to small business contracts.

The Internet Code is a unique regulation, in that it is very limited in terms of its scope of application to certain ISPs and services. By contrast, the significantly broader European Electronic Communications Code ("EEC") covers a much more ambitious scope that includes telecommunications, media and information technology.5 EU member states must adopt national legal frameworks that comply with the EEC by December 21, 2020.6 It will be interesting to follow the CRTC's review process for the Internet Code, likely to occur in the next three to five years, to see if the CRTC takes inspiration from the national implementations of the EEC.

The following summarizes some of the key provisions of the Internet Code that apply to all consumer Internet service relationships (i.e., both existing and new):

Documentation requirements

ISPs will be required to retain any information needed to defend allegations of breaches of the Internet Code. Since any ambiguities found in the Internet Code or consumer contracts will be interpreted in favour of the customer, strong information retention practices will be critical in the event of a dispute before the Commission for Complaints for Telecom-television Services (the "CCTS"). The CCTS has the power to require an ISP to perform or cease doing specific activities, or to pay the complainant monetary compensation of up to $5,000.7 ISPs will need to ensure their privacy practices and policies properly align with their retention requirements.

Clarity

The CRTC has imposed a series of obligations on ISPs to engage in clear communication regarding contractual terms, communications with customers, pricing and unlimited services. Notably, unlimited services cannot be charged overage fees and all limits on their use must be documented in a fair use policy. An ISP is also required to communicate all key contract terms when making an offer to a customer before they consent. Further, an ISP must retain evidence to this effect and provide it upon request to the customer or the CCTS, free of charge. These requirements will undoubtedly require ISPs to revisit any dense terms and conditions.

Provision of contracts during term

A customer may request a copy of their contract at any time during the term of a contract. Their ISP must provide a copy of the contract and related documents, free of charge, within one business day for an electronic copy or 15 calendar days for a paper copy. An ISP is also required to provide the contract in accessible formats for persons with disabilities including, but not limited to, braille, large font or plain text formats.

Changes to contracts and related documents

The Internet Code prohibits an ISP from changing the key terms and conditions of the Internet service contract during the commitment period without the customer's consent, unless such changes reduce the rate for a single service, or increase the customer's usage allowance or speed for the same price. If an ISP wishes to make a change to the contract or related documents, it must give the customer 30 days' notice, explaining the change, including whether or not the customer is allowed to return to the existing contract terms if they are unsatisfied. The customer may also refuse the change. A similar notice must be provided with 60 days' notice if the ISP wishes to make changes to a service after the commitment period (e.g., for consumers on a month-to-month contract).

Bill management and data usage notifications

The Internet Code imposes obligations on an ISP to notify its customers when they have reached 75%, 90% and 100% of their monthly usage limits. An ISP that charges overage fees must also offer free tools that allow its customers to monitor and manage data usage and the additional fees they incur. Such tools must be made accessible to customers with disabilities. Further, the ISP must provide a customer who has incurred overage fees during a monthly billing cycle with information on the availability of these tools, data usage associated with common online activities and alternative service plans that may better suit the customer's needs.

Contract cancellation or extension

A customer may unilaterally cancel their Internet service contract by notifying their ISP. If services were billed on a pre-paid basis, the ISP must then refund the amount paid, pro-rated to the number of days remaining in the last monthly billing cycle. At the end of the commitment period, an ISP may extend its service contract, on the same terms and conditions, on a month-to-month basis. The ISP must notify any customer on a fixed-term contract at least 90 calendar days before the end of the commitment period and provide certain prescribed information.

Security deposits

The CRTC allows an ISP to require a security deposit from a customer; however, the ISP must give reasons for doing so and retain records of those reasons. Security deposits must be reviewed annually for whether their retention continues to be appropriate. The ISP must return the deposit with interest, retaining any amounts owed by the customer, within 30 calendar days of the termination of the contract or of the satisfaction of all conditions pertaining to the return of the deposit. The interest rate must be at least 1% greater than the Bank of Canada's overnight rate.

Disconnection

The Internet Code establishes strict limits on when an ISP may disconnect a customer, and imposes an obligation to notify the customer at least 14 calendar days prior to disconnection, except in cases where it is necessary to protect the network from harm, prevent fraud or prevent a customer on credit-limited spending programs from exceeding their pre-set limits. An ISP is further prohibited from disconnecting a customer who disputes the ISP's notice of disconnection and pays any undisputed amounts due.

The following provisions of the Internet Code will only apply to new, renewed and amended contracts, not to existing contracts:

Provision of contracts upon agreement

The CRTC will require an ISP to provide a copy of the service contract to the customer. The contract must include certain key terms and conditions prescribed by the Internet Code. Terms of service documents will only be considered sufficient to meet this requirement if they contain all of this information. The contract must be provided free of charge and delivered immediately upon signing, if agreed to in person. If agreed to at a distance (e.g., online or over the telephone), the contract must be delivered to the customer within one business day for an electronic copy or 15 calendar days for a paper copy.

Right to cancel a contract

A customer may unilaterally cancel any contract, without any fee or other penalty, within 45 calendar days of the start of the contract, if the terms and conditions of the contract conflict with those the customer agreed to or if the ISP fails to provide a copy of the contract within the aforementioned time limits.

Critical Information Summary

Similar to the Wireless Code, the Internet Code requires an ISP to provide a "Critical Information Summary", within or alongside the contract. The Critical Information Summary must contain the key terms and conditions required by the Internet Code and may not exceed two pages.

Service outages

An ISP must explain its policies for service outages and associated rebates in its contracts or related documents.

Early Cancellation Fees

The following table summarizes the rules for permitted Early Cancellation Fees ("ECFs"):

Trial periods

A new customer that signs up for services that are subject to ECFs must be given a trial period of at least 15 calendar days, during which time the customer may unilaterally cancel their contract without fees or other penalties if they use less than half of their permitted monthly usage and return any equipment provided by the ISP. Persons with disabilities must be given a trial period of at least 30 calendar days and double the usage of the standard trial period offered.

Conclusion

Although the Internet Code will only apply to certain listed ISPs at the outset, it is possible that the CRTC will expand the scope to additional ISPs upon its review of the Internet Code that is likely to occur within the next three to five years. The Wireless Code saw a similar review in 2017, the result of which was several amendments broadening its scope. Note that our summary above only covers some of the new obligations being imposed on ISPs. Please contact a member of our telecommunications team with any questions you may have about the Internet Code or for any assistance in drafting or reviewing your Internet service contracts or policies.

Footnotes

1 Appendix to Telecom Regulatory Policy CRTC 2019-269. For more information on the Internet Code, visit.

2 Appendix to Telecom Regulatory Policy CRTC 2017-200.

3 The exhaustive list of ISPs to which the Internet Code will apply are Bell Canada, Rogers Communications, TELUS, Cogeco, SaskTel, Videotron, Eastlink, Shaw Telecom, Xplornet, and Northwestel, current as of the time of writing.

4 Communications Monitoring Report 2019, online.

5 Directive (EU) 2018/1972 of the European Parliament and of the Council of 11 December 2018 establishing the European Electronic Communications Code.

6 EEC, article 124.

7 Procedural Code, Commission for Complaints for Telecom-television Services Inc., Amended and Restated effective September 1, 2017, online, para 14.

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

© McMillan LLP 2020