Canada Budget 2017: Low-Income Internet Support a "Cruel Joke"
OTTAWA – The Public Interest Advocacy Centre (PIAC) today decried the federal government’s Budget 2017, Building a Strong Middle Class, as providing only $13.2 million over 5 years to support low-income Canadians’ access to broadband – an amount over 100 times lower than suggested by PIAC and other public interest groups in evidence presented last year to the Canadian Radio-television and Telecommunications Commission (CRTC).
“This Budget is a cruel joke for low-income Canadians struggling to afford broadband internet for education, health, employment and other key services,” said John Lawford, Executive Director and General Counsel of PIAC. “Acknowledging such a fundamental problem with a token amount and having the gall to call it an ‘Affordable Access program’ is insulting,” he added.
PIAC intends to continue its work advocating for affordable broadband access for all Canadians – a message it recently took, with the help of Consumers International, to preparatory meetings of the G20 digitalization ministers in Germany.
The CRTC recently rejected taking a role in solving this problem and instead called upon the federal, provincial, municipal, and first nations governments of Canada, along with internet service providers and community support groups, to address affordability of broadband for low-income Canadians.
For more information:
John Lawford
Executive Director and General Counsel, PIAC
Tel: 1-613-562-4002 ext. 25
Cell: 1-613-447-8125
jlawford@piac.ca
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The Need Remains for a Financial Consumer Code
In 2014, PIAC submitted an analysis to Finance Canada calling for a comprehensive financial consumer code, as well as the establishment of an ombudsman to address consumer complaints arising under a financial consumer code. We suggested the present Ombudsman for Banking Services and Investments (OBSI) could perform the day-to-day intake of complaints based on the Code, mediate and suggest resolutions to the financial institutions, leaving Financial Consumer Agency of Canada’s (FCAC) role as supervisory, exercising an oversight, systemic enforcement and policy role.
Canadians need a comprehensive financial consumer code and an ombudsman to address consumer complaints arising under such a code.
The financial consumer code, as PIAC envisioned, would be binding upon financial institutions subject to federal Government authority and have the force of law. At the time, we reasoned that “in the absence of a clear, simple to understand standard, consumers – and notably vulnerable consumers – stand at a significant disadvantage when dealing with financial institutions and their employees or representatives.”
As allegations about aggressive sales tactics by TD Bank employees comes to light,[1] PIAC reviewed its 2014 submission. We found the need remains for the creation of a document consumers can point to that outlines clear rules of road for federally regulated financial institutions and consumers.
However, having clear rules is only one piece of the puzzle. Once a document is created, Canadians will expect to have a champion to defend the contents of a financial consumer code. An effective body to adjudicate their concerns, and make public those instances where banks behave badly. On this score, the available evidence suggests the current enforcement approach towards banks in Canada is akin to having referees without whistles.
“the current enforcement approach towards banks in Canada is akin to having referees without whistles.”
In 2014, PIAC expressed concern with the communications approach of the FCAC towards enforcement and compliance issues involving federally regulated financial institutions. We noted the FCAC “is not sufficiently focused upon informing the public” and that “generally, an announcement involving the violation of an act under the authority of the FCAC is posted on the FCAC website. FCAC rarely holds a press conference or communicates directly to the public explaining what occurred that was in violation of an existing statute or regulation.”
Since 2014, PIAC contends the FCAC’s approach to making public any enforcement activity has not changed. It is difficult to recall the last occasion when a federally regulated financial institution was publicly named by the FCAC to be in violation of a statute under its purview. Even in the face of a series of alleged wrong-doings by a leading Canadian financial institution, there have only been e-mail statements by spokespersons. No public statement by the FCAC Commissioner to our knowledge thus far.
Meanwhile, the head of OBSI urged consumers who have encountered such banking issues to file a complaint with their financial institution.
“Financial institutions have 90 days to deal with it, but if they’re still unsatisfied then that’s where OBSI comes in,” Sarah Bradley said. “We’re here to help them resolve those disputes.”[2]
OBSI is an impartial arbitrator to resolve disputes between banks or investment firms and their clients. However, the OBSI is not used as a dispute arbitrator by TD. TD was allowed to move these services to another arbitrator called ADR Chambers Banking Ombuds Office in 2011.
This confusing morass of who is responsible for what complaints is not what Canadians will expect if a financial consumer code is introduced. Canadians will expect a “consumer protection czar” who not only accepts the mantle, but uses it to publicly defend the interests of Canadians when banks behave badly.
Enter the federal Minister of Finance. PIAC believes Finance Minister Morneau has an opportunity to enhance consumer confidence in the banking sector by introducing the establishment of comprehensive financial consumer code, and a single ombudsman to address consumer complaints arising under such a code. PIAC encourages the Minister to conduct the actions required to make the Financial Consumer Code and the applicable consumer redress regime a reality.
Jonathan Bishop has been a Research Analyst with the Public Interest Advocacy Centre (PIAC) since 2012. He was part of a team that authored PIAC’s 2014 submission to Finance Canada’s Consultation on Canada’s Financial Consumer Protection Framework: Consultation Paper. That submission can be viewed here.
[1]Posadzki, A. “Banking ombudsman says TD Bank allegations raises ‘serious concerns’”, Toronto Star, March 13, 2017. See also, Erica Johnson, “’We do it because our jobs are at stake’: TD bank employees admit to breaking the law for fear of being fired,” CBC News, March 10, 2017. Online: <http://www.cbc.ca/news/business/td-bank-employees-admit-to-breaking-law-1.4016569>, and Erica Johnson, “’I will do anything I can to make my goal’: TD teller says customers pay price for ‘unrealistic’ sales targets,” CBC News, March 6, 2017. Online: <http://www.cbc.ca/news/canada/british-columbia/td-tellers-desperate-to-meet-increasing-sales-goals-1.4006743>.
[2] [2]Posadzki, A. “Banking ombudsman says TD Bank allegations raises ‘serious concerns’”, Toronto Star, March 13, 2017.
#WCRD2017: Building an Affordable Digital World For Everyone
March 14, 2017
Tomorrow is World Consumer Rights Day 2017, Building a Digital World Consumers Can Trust. Organized by Consumers International, of which PIAC is a member, this year’s WCRD theme is consumer digital rights, including one of four key digital issues—“access and choice” to high-speed internet. Broadband access, however, is almost impossible to discuss without addressing the affordability of broadband internet. At PIAC, we ask, “How do we build a digital world that is affordable for everyone?”
The digital world has become an integral and ever-growing part of our everyday lives. Many of us now find jobs on the internet, housing, school, make medical appointments, and – since it is that time of year in Canada – even file our taxes online. Innovation, Science and Economic Development Minister Navdeep Bains has said:
Today, the digital economy is the economy. There is not a single industry that digital technologies don’t touch anymore. […] Canada must do more to give people the skills and experience they need to compete in a global and digital world. In particular, we need to give every Canadian the opportunity to get online. No one should be left behind.¹
Are governments and policy makers in Canada and the rest of the world ensuring everyone can get online? PIAC believes much more can and must be done, especially to ensure low-income families – those who could benefit most from being online – can affordably access broadband.
Broadband adoption can be affected by a number of factors, including geographic access to broadband infrastructure, digital literacy, privacy and security concerns, and personal choice. However, cost has consistently been a key barrier to adoption and one for which Canada has largely fallen short of finding a solution yet.
According to a national telephone survey commissioned by PIAC in 2015, only 74% of Canadians with annual household incomes under $20,000, and 78% of Canadians with annual incomes between $20,000 and $30,000, had internet service at home. Meanwhile, 99% of Canadians with annual household incomes of $100,000 or more had home internet service. When asked why survey respondents did not have home internet, cost was the second most cited reason after a professed lack of interest—almost one third (30%) of respondents said cost was a reason why they did not have home internet service. Only about 5% of respondents said there was no high-speed internet service available where they lived. This means low-income Canadians in both urban and rural areas are not going online.
However, there is evidence that those low-income Canadians who can access internet service value it greatly. A separate survey commissioned by PIAC with low-income individuals indicates that respondents perceive home internet access (77%) to be equally important as health care, and more important than all other items listed except food (91%) and housing (88%). Television was viewed as an important service to over half the respondents (54%), just behind clothing. Meanwhile landline phones and mobile phones were cited as almost equally important to each other, with 46% of respondents indicating traditional telephone service is important, compared to 44% who indicated mobile phone service was important.
Figure 1. PIAC Survey of Low-Income Canadians Who Use the Internet (2015)
PIAC’s 2016 report, No Consumer Left Behind Part II², found low-income Canadians struggle to afford their communications services (including phone, internet and TV).
- About one-half of low-income Canadians had to trade off other household goods or services in order to pay their communications bills—almost 1 in 5 (17%) indicated they went without other essential goods, such as food, medicine or clothing, in order to pay a communications bill.
- About 20% of low-income subscribers struggled to pay off their communications bills in the past year, having to make partial payments; suspend or disconnect their service; commit to a payment plan; or be referred to debt collectors.
- More than 1 in 10 respondents (11%) ultimately cancelled a communications service because of the high cost.
What does this mean? This means many low-income families need to sacrifice other household goods, including at times food and medicine, or struggle in order to pay for communications services. Based on PIAC’s report, this means those communications services are not affordable for low-income individuals. This existing problem no longer requires talk, but action; there needs to be a policy solution to ensure low-income households can have more control over their communications expenditures. The Government of Canada, the Canadian Radio-television and Telecommunications Commission (CRTC), and other telecommunications policy makers must act in order to ensure there is affordable broadband today.
In the CRTC’s hearing on basic telecommunications services one year ago, the Affordable Access Coalition, including PIAC, advocated for an Affordability Funding Mechanism which would provide a subsidy discount for low-income users of telecom services. In its final policy³, the CRTC decided not to address affordability for low-income households at all, and instead asked the Canadian federal government to add this issue to its forthcoming Innovation Agenda. At the moment, therefore, there is no national solution to ensure low-income families can get online at home and no guarantee one is forthcoming. While some telecom providers are offering limited home internet packages to small groups of low-income consumers, Canada needs a national affordability plan to ensure all Canadian consumers can participate in the digital world. We must demand that policy makers stop passing the buck.
Affordable broadband will not only be a challenge in Canada but for all low-income consumers wishing to go online around the world. It is a challenge all governments and policy makers must recognize and urgently address.
Universal digital participation is key to innovation and to building a digital world consumers can trust. For World Consumer Rights Day 2017, we believe Canada needs to ensure there is affordable broadband internet for all.
¹ Government of Canada, “Innovation Minister says the digital economy is the economy” (17 November 2016), online: Government of Canada.
² Jonathan Bishop & Alysia Lau, No Consumer Left Behind Part II: Is There A Communications Affordability Problem in Canada? (Ottawa: Public Interest Advocacy Centre, 2016), online: PIAC
³ See: Telecom Regulatory Policy CRTC 2016-496.
“The Economist” concludes Canada has “most affordable” Internet– what is wrong with this picture?
The Economist’s Intelligence Unit released a study yesterday concluding that Canada, amongst the countries studied, has the world’s most “affordable internet”. This greatly surprised us at PIAC and we beg to differ.
The Economist study defined affordability as: “the cost of access relative to income and the level of competition in the Internet marketplace.”
However, a closer look at the data shows that the only aspect of internet service where Canada truly leads the pack is “average revenue per user”– a measure of how much Canadians spend on internet service. In other words, the study counterintuitively concluded that Canada’s internet is the world’s most affordable even though Canadian internet companies make more money from Canadian consumers than any other internet providers in any other country. The strange conclusion that our internet is the most affordable appears to stem in part from the study’s measure of income, which is then compared to the access cost. Income is based on average income – meaning that, relatively speaking, access costs may appear affordable relative to Canadians’ average income but it may well not be affordable to Canadians living below the average income threshold.
More importantly, the Public Interest Advocacy Centre defines affordability quite differently than the Economist’s Intelligence Unit. In our first report on communications affordability in Canada in 2015 we stated that:
a [communications] service can be described to be affordable where its cost does not require a household to cut back its expenditures on other basic necessities such as food, shelter, clothing, transportation and health care. This relative threshold can be quantified as a percentage of household income. We suggest that communications services are “affordable” where, as a guideline, they make up about 4% to 6% of a household’s income.
PIAC also noted:
However, affordability in our view must also incorporate a subjective quality because it is related to control – the ability of an individual or a household to control their expenditures in order to fulfill their needs. Therefore, because affordability concerns a household’s control over their budget, affordability is also about choice which allows a household to access a service offering which meets their needs. An assessment of affordability, therefore, should take into account the choice and preferences of low- income consumers in meeting their needs.
The Economist’s index measure of affordability is an economist’s blunt one that only judges by relative, average, objective measures. PIAC, however, considers the essentiality of these services and understands subjectively how low-income Canadians struggle to afford communications. We surveyed low-income Canadians. They told us that communications is essential to them and what’s more, 17% told us they have gone without essential goods like food, medicine or clothing to pay their communications bills. We published our findings and took those findings to Canada’s telecommunications regulator, the CRTC. The CRTC heard our submissions and called on Canada to take action to address challenges with affordability:
Over the course of the BTS [Basic Telecommunications Services] proceeding, however, the CRTC heard from Canadians forced to make difficult spending decisions due to the cost of broadband Internet access services. Given the economic, socio-cultural and civic importance of broadband, the CRTC concluded that any Canadian left behind in terms of broadband access is profoundly disadvantaged, and that coordinated national action is necessary to address this problem. The risks of non-action are too great: missed opportunities for innovation, creativity and engagement; reduced competitiveness; weakened domestic prosperity; and diminished prospects for Canadians.
PIAC hopes to see such action in the 2017 Federal Budget, as well as in federal and provincial government initiatives going forward. After examining the affordability of communications services in our two reports in 2015 and 2016, PIAC advocated for, in the CRTC hearing noted above, the establishment of a National Affordability Plan to ensure broadband Internet service is both available and affordable for low-income households in Canada. PIAC also suggested the CRTC spearhead affordability initiatives, with federal and provincial political support and coordination. Sadly, the CRTC refused to take responsibility for communications affordability in Canada and instead asked the federal and provincial governments to take the lead. Nonetheless, PIAC continues to advocate for a flexible end-user subsidy, which we believe would most effectively address the affordability of communications services by allowing low-income Canadians to make telecommunications choices that best suit their needs.