How the End of 3-Year Cellphone Contracts Will Affect You Starting June 3

Carriers and customers are counting down to June 3, 2015, which will spark the end of three year contracts due to CRTC Wireless Code regulations.

Telecom reporter Christine Dobby for The Globe and Mail has written an excellent overview of what you need to know about the end of three year cellphone contracts. Below is a snippet of how you could be affected by the Wireless Code:

How will this affect me?

If you are on a two-year agreement, your contract will not be affected, but if you still have a three-year cellphone plan, you could be affected in one of two ways.

1. If you signed a three-year agreement before June 3, 2013, you will not have to pay any device subsidy balance remaining on your contract and cannot be charged a fee for cancelling your contract. That is because you will already have been on the contract for at least two years, the maximum length of time the carriers have to recoup the value of the device subsidy.

2. If you signed a three-year contract after June 3, 2013, but before Dec. 2, 2013, you will soon be able to walk away from your contract without a cancellation fee, but you must wait until at least two years have passed since you signed the agreement.

When the CRTC Wireless Code was announced in June 2013, carriers started to phase out three-year terms but not immediately. This means some of you may still have some time to wait until you hit your two year anniversary date before you can walk away without paying the remaining device subsidy.

The most important takeaway here, is for customers that signed a three year agreement before the Code was implemented on December 2, 2013. Rogers, TELUS, Bell and other wireless carriers recently lost a legal challenge arguing the Code should not apply retroactively to three-year contracts signed prior to December 2013 start date.

So once you hit your year two anniversary of your three year contract between June 3, 2015 and December 2, 2015, you will be able to walk away and not pay cancellation fees or remaining hardware subsidies (the Code says carriers only have max two years to recoup hardware subsidies).

If you’re still not sure when the Wireless Code will apply to you, the CRTC has a guide here, while a similar guide explains how to calculate your cancellation fees for your cellphone contracts.

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We keep hearing about the “double cohort” lately, which essentially encompasses two groups of people: those able to walk away from three year contracts as stated above, and those with expiring two year contracts as of June 3, 2015. This large group of coveted ‘free agents’ means carriers may offer better incentives to compete with one another.

We’re already starting to see that with some similar BYOD offers across the board from Fido, Koodo and Virgin Mobile, which will require an unlocked phone. Staying unlocked may be the preferred way to go if you’re looking to reduce your monthly plan cost. Depending on your situation, buying an unlocked device going forward and sticking to BYOD may be the best option.

Are you in one of the above scenarios right now? What are you going to do starting June 3, 2015?