Cellphone comparison tool axed by government despite internal praise

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Sarah Schmidt – February 24, 2012

Industry Canada privately defended its cellphone plan calculator as an "important consumer-education tool'' even as the minister's office publicly claimed the initiative was killed because it didn't work, internal records show.

After the government spent $1.4 million over three years to develop an online calculator allowing consumers to compare cellphone plans tailored to their usage patterns, then-industry minister Tony Clement killed the initiative just before its launch in 2009. At the time, his spokesman said it would have been "irresponsible'' to launch it with "inaccurate'' information.

Internal departmental records, only now released to Postmedia News under access to information after a long delay, show the department's Office of Consumer Affairs held a different view and defended the calculator against an aggressive lobby campaign by industry giants.

Clement sided with the companies after his office was lobbied directly by Rogers Communications, Telus Communications and the Canadian Wireless Telecommunications Association (CWTA), the records show.

The revelations come just as Industry Minister Christian Paradis, Clement's successor, is set to announce new rules for its latest auction of wireless spectrum.

Consumer groups, such as the Public Interest Advocacy Centre, are worried the Conservative government won't impose set-asides for new entrants to improve competition in the wireless market dominated by a few big telecoms, and instead opt for capping companies' total spectrum.

In a 10-page rebuttal drafted by Industry Canada in response to the industry association's criticisms of the online calculator, written just days before Clement pulled the plug on the project, the department said consumers were looking for a cellphone plan calculator from a trusted and impartial source.

"The Office of Consumer Affairs believes that the market distortion lies in the complexity of the marketplace which inhibits consumers' ability to make educated and informed choices. The Calculator mitigates this by providing consumers with a means to effectively and rationally analyze the marketplace and assess features and options based on their assessment of their own usage patterns. In the absence of such a tool, consumers would have great difficulty in performing this type of complex mathematical analysis,'' according to the rebuttal drafted May 13, 2009.

Two weeks later, Clement informed the department he had "decided not to proceed with the product,'' the records show.

The records show Industry Canada's deputy minister had "instructed'' the Office of Consumer Affairs to prepare the calculator for release "in advance of the Christmas holidays'' in 2008. The launch of the calculator was then scheduled for April 21, 2009, but pushed to June in response to CWTA's "request for further engagement.''

"For us to put a tool out there that didn't accurately measure the marketplace would actually be irresponsible. We would be putting out a product that wasn't doing what we said it does,'' Clement's spokesman told the media after news of the cancellation of the calculator trickled out in the summer of 2009.

"If information in the calculator was inaccurate, we risked putting a Canadian in a bad cellphone plan.''

CWTA made a similar argument in a submission to Industry Canada, dated April 30, 2009.

In addition to not being clear "as to the nature of the 'problem' that the project is designed to rectify,'' the industry group complained the calculator didn't include data plans, handset prices and bundling packages.

It also objected to being "considered an afterthought in the development of a tool that targets our customers and pricing plans.''

In response, Industry Canada's Office of Consumer Affairs said the department made a deliberate choice to compare voice and text plans because the calculator was geared to low-income, slow-adopter consumers. The departmental rebuttal also cited CWTA research showing the top interests of consumers were talking and texting, and pointed out consumers were directed to company websites for details on data plans and any additional information before they chose a plan.

"Simply put, CWTA's research supports the public policy rationale for offering a calculator that helps those who can only afford basic voice and text services increase their ability to make an educated and informed choice.''

The Office of Consumer Affairs also said it would consider "operational enhancements to this important consumer-education tool once it is launched and we have had the sufficient opportunity to gauge consumer reaction to the calculator.''

John Lawford, a lawyer with the Public Interest Advocacy Centre, tested the online calculator as part of Industry's Canada's pre-launch consultation.

In an interview Friday, he said "it worked fantastically. It was just like doing comparison shopping on the Internet where you can plug in what you're looking for and it compares everything and brings it up in a list.''

The discount brands "were always at the top, and the main plans, unless you said you sent a bazillion texts and wanted a North American calling plan, then the Bell, Telus, Rogers plans were way at the bottom because they were more expensive,'' added Lawford, who characterized the government's decision to the kill the online calculator as "purely political.''

Original article on Canada.com website