Canadians can learn from U.S. consumer watchdogs

When the Canadian Radio-television and Telecommunications Commission (CRTC) recently approved a $4-per-month increase in local phone rates to subsidize cheaper long-distance rates, the move was criticized as a cash grab by Bell Canada.

Now, following an appeal of the ruling, not by consumers but by Bell, the federal cabinet has ruled that the company does not even have to lower its long-distance rates. Bell can now keep the money from higher local rates that it was supposed to use to lower long-distance rates.

For consumers, the case shines a bright light on the extent to which they are outgunned in the regulatory process. The dwindling handful of groups representing a consumer perspective are no match for the cadres of industry experts and lobbyists at hearings. And deficit-phobic governments have slashed funding for consumer groups and agenices while urging consumers to shop around and organize to protect themselves.

Even if individual consumers had the time and money and expertise to track industry, there are few options to choose from in the local-phone-service market. Moreover, as was the case here, CRTC rulings can be appealed to cabinet. Thus, a well-heeled applicant can use profits earned from consumer dollars to argue its case in front of the CRTC and if the outcome is not to the company's liking, it can appeal to cabinet for a second try.

Monopolies and near-monopolies like Bell know that nickle-and-diming consumers can result in millions in profits, so they are quite happy to funnel consumer dollars to a slew of lobbyists and advertising campaigns aimed at pacifying the public and ensuring that governments protect their interests.

Canadians need and deserve a counterbalancing measure to hold industry and government accountable -- a way for citizens to band together to advocate their interests as easily as industry can. In the U.S., one such mechanism has worked quite well over the past 15 years.

Beginning in the early 1980s, four state governments required utilities (phone, gas, electric and water) to send a one-page flyer periodically to residential customers in the utilities' billing envelopes. The flyer invites customers to join a "Citizen Utility Board" (or CUB) for an annual fee of $5 to 10.

By "piggybacking" on utility bills, CUB flyers are a low-cost, effective means of reaching all utility customers. Governments only provide start-up funds to print the first flyer (through a grant or a loan), and after that CUBs pay for the flyer, which is not heavy enough to cause extra postage costs for the utilities. Between 3 and 5 percent of utility customers have joined each state CUB.

CUBs have been an effective counterbalance to industry lobbyists as their member-elected boards use the pooled resources of customers to hire experts and analysts to represent citizen interests. The Illinois CUB, with 170,000 members and a $1.7 million budget, has saved consumers over $2 billion since 1983 by challenging utility rate-hikes (savings of over $100 for every $1 in membership fees). CUBs also educate ratepayers on how to save money on services and products, and about issues such as conservation.

Broad-based, democratically-structured, well-resourced and effective citizen groups are created through the CUB approach, all funded by voluntary membership fees and at no cost to taxpayers. These are compelling reasons for governments to use the CUB method to strengthen the citizen voice in Canada.

The federal government could require phone companies to enclose a flyer in monthly phone bills inviting customers to join the phone CUB. With a 2 percent response rate and $10 annual membership fee, a group with 250,000 members and a $2.5 million budget would be created to serve and advocate on behalf of phone customers.

The CUB model has even wider applications. Cable TV customers could be invited through their billing envelopes to join a telecommunications consumer association. The government could require banks and insurance companies to enclose a flyer for a financial consumer association in their monthly statements and credit card bill envelopes. And Canada Post could be required to deliver a flyer to every household inviting people to join a postal-service watchdog.

In all these areas, the creation of CUB-like groups would help balance the marketplace and policymaking by giving citizens a stronger voice. Reaction by industry and government to the CUB proposal is also a simple test of whether they are concerned as much about the deficit of democracy in Canada as they are about financial deficits.