When you pay your utility bill, chances are you’re paying after you’ve consumed the utility. For example, the hydro company will track your power use over the month, and then bill you based on that usage.
Not so for your smartphone, which is billed in advance. In other words, you pay for the service before you actually use it, and sometimes even pay for services you never use at all.
The practice of advance billing has been around for over a century, and now some Canadians are trying to change it.
Billing system that’s ‘broken by design’
Stephen Lawton, a former Rogers employee, told the Toronto Star that advance billing is the root cause of tons of billing issues customers deal with, calling the system “broken by design.” According to Lawton, it forces customers to overpay and hope they can get a refund, or wait and risk late fees.
Advance billing means telecom companies charge customers roughly 30 days in advance — you pay now for services you haven’t received yet. And while this works fine most of the time, things can go wrong quickly when the billing cycle changes, such as when customers cancel, switch providers, or move. In these cases, customers end up paying for a service they won’t receive, and carriers owe them a refund. But Lawton says telcos’ systems are slow to show this to customers, and that customers often need to chase down their money (or even pay late fees on services they never used).
Lawton worked for 18 years as a senior adviser in Rogers’ office of the president, which meant dealing with the company’s angriest customers at the top of the complaint chain. Now, he runs a Substack newsletter where he writes about politics, Canadian affairs, and more — including, more recently, telecom billing. Between his Substack and his interview with the Star, Lawton laid out the case for scrapping advanced billing ahead of the Canadian Radio-television and Telecommunications Commission’s (CRTC) public hearing on it slated for later this year.
To understand where Lawton is coming from, it helps to understand the history of advanced billing. Lawton told the Star that it tracks back to 1877 when Canada’s first telephone line, which connected Prime Minister Alexander Mackenzie’s office to Rideau Hall, was leased for $42.50 per year and was “payable in advance.” As phone companies grew, regulators allowed the advanced billing practice so cash-strapped companies could access so-called working capital.
However, Lawton says that rationale no longer applies to the multibillion-dollar telecom giants that dominate the industry today.
Pay more, or fight through a system designed to block you
Lawton detailed his own experience with advance billing issues when his partner tried to switch providers last year.
“We cancelled four days into a billing cycle. The old provider’s system still showed the full month’s charge — about $42 — instead of the roughly $4 we actually owed for four days,” Lawton wrote on Substack.
When he tried to contact the carrier to pay the correct amount, Lawton found that the company had removed almost every way of talking to a real person: “no inbound calls, a chatbot that wouldn’t connect me to anyone, and callback requests that were refused because the account was now cancelled.”
The issue of getting in touch with a carrier has only gotten worse in recent months as companies like Rogers continue laying off workers and outsourcing jobs, leading to spikes in customer service issues across the country.
When Lawton refused to pay the incorrect amount, his carrier tacked on a late payment fee for the service Lawton never received.
Lawton took the complaint to the Commission for Complaints for Telecom-television Services (CCTS), which resolved the issue but noted billing policies fall under the CRTC. When Lawton wrote to the telecom regulator, he was told advanced billing “is a common industry practice.”
Current rules leave carriers free to delay refunds
The CRTC doesn’t direct telecom companies to bill customers in advance or in arrears (the term for billing after consumption, like most other utilities), but it does offer some other protections for customers. That includes rules requiring telcos to provide a pro-rated refund for amounts paid in advance.
Unfortunately, the rules don’t dictate how quickly carriers must update balances or return overpayments, allowing companies to drag their feet. Some telcos will apply the credit to customers’ final bills, others refund it directly to the credit card used for payment, and some will mail a cheque for the amount.
But there’s another big issue with the system that Lawton highlights: the cost of billing errors. Billing issues are routinely among the top complaints received by the CCTS, and telcos must pay rising regulatory fees to the CCTS for every complaint accepted against them. That means each bill problem carries a hidden cost — a cost Lawton says could be reduced by switching to arrears billing.
Lawton called on the CRTC to ban advance billing entirely, forcing telcos to bill in arrears. Alternatively, Lawton says the CRTC could implement rules forcing carriers to update balances in real-time and calculate late fees using only the amounts customers actually owe. That latter change is something telcos already do to process online payments and other customer data, but Lawton says they choose not to apply the same tech to customer cancellations.
Lawton says Canadians interested in putting an end to advance billing can send comments to the CRTC as part of the regulator’s consultation on improving consumer protections. The consultation is open for public comments until August 11, and the next step will be a public hearing on November 30, 2026.
Source: CanadianSnowmanSays (Substack) Via: Toronto Star
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