When does consumer protection become regulatory theatre?
I think that’s a question worth asking as the CRTC continues to introduce increasingly prescriptive requirements governing how telecommunications providers communicate with, sell to, and serve their customers.
Each new measure sounds reasonable enough. More disclosures. More notifications. More detailed rules governing customer interactions. More opportunities to complain.
But are consumers actually better off?
Consider the CRTC’s recent decision on broadband speed disclosures. The Commission has effectively defined “typical” Internet speeds as speeds customers should receive “at all times,” while simultaneously recognizing that compensation for slower speeds should depend on the materiality and frequency of the problem.
The result? A regulatory framework that risks encouraging technical disputes over speed-test results, even where customers experience no meaningful degradation in service.
Then there’s the ongoing proceeding examining consumer awareness of the Commission for Complaints for Telecom-television Services (CCTS). The CRTC is considering requirements that would notify customers of their right to complain earlier in the customer-service process.
But where is the evidence that earlier notifications will produce better outcomes?
More referrals to the CCTS won’t necessarily mean more complaints will be resolved, or that consumers are receiving better service. They could simply mean more complaints are being diverted from providers’ own resolution processes.
Meanwhile, the Commission’s proposal to harmonize its four consumer protection codes risks becoming an exercise in regulatory expansion disguised as simplification. Combining existing codes into one document isn’t simplification if the result is more obligations applying to more services. That’s regulatory theatre.
Each of these initiatives carries implementation costs. IT systems to be modified. Employees to be trained. Billing and customer-service processes to be redesigned. Compliance to be monitored and documented.
And for what measurable incremental benefit?
Legal scholars Omri Ben-Shahar and Carl Schneider have examined this phenomenon in their research on the failure of mandated disclosure. Their work explains why such requirements are politically attractive: they create the appearance of consumer protection, while their actual effectiveness often goes unexamined.
It’s easy to mandate another disclosure or notification. It’s much harder to demonstrate that it changes consumer outcomes. That’s regulatory theatre.
The problem is compounded when regulations are considered individually.
The CRTC examines each proposal on its own merits, but who is assessing the cumulative burden of successive consumer protection requirements? Who is measuring whether the combined costs are justified by improvements in consumer welfare?
These aren’t just academic questions.
Telecommunications is a capital-intensive industry. Resources devoted to implementing increasingly elaborate regulatory processes are resources unavailable for other priorities, including improving networks, developing services and enhancing the customer experience.
The timing is striking.
On October 21, the federal government announced a new Cabinet Directive on Regulatory Competitiveness and Red Tape Reduction. Taking effect December 31, it calls for evidence-informed, proportionate and outcome-focused regulation, with greater attention to compliance costs, competitiveness and unnecessary regulatory burden.
The government went so far as to establish a requirement to offset two dollars in regulatory burden costs for every dollar added.
The directive doesn’t automatically apply to CRTC regulatory decisions. But shouldn’t the principles behind it be reflected in the Commission’s approach?
Canada’s 2023 Telecommunications Policy Direction already calls for efficient and proportionate regulation that considers its effects on investment, innovation and competition.
Yet recent proceedings suggest an increasingly prescriptive approach to consumer protection, one in which the existence of a perceived problem too readily becomes justification for another regulatory obligation.
No one is arguing against protecting consumers. Accurate information, fair treatment and effective complaint resolution are legitimate regulatory objectives.
But good intentions don’t establish that a particular intervention is necessary, effective or proportionate.
Consumer protection should be measured by the problems solved, not the obligations imposed.
Otherwise, we risk confusing regulatory activity with regulatory achievement.
And Canadians may end up paying for increasingly elaborate consumer protection rules without receiving much additional protection.
That’s regulatory theatre.
Amen. There appears to be two recurring issues with CRTC: policy whipsaw (based on political whims and consumer sentiment) and eternal rounds of consultations; and implementation rollout, with a wide gap between the CRTC policy direction and implementation directives, where implementation details are vague or not proven to be effective.