General

Note: All the info found on this page should be accurate as of October 11th 2011. However, you should ALWAYS confirm with your service provider for any fees or processes involved in getting out of a contract / early upgrade. Also, this guide only apply to contracts made AFTER June 30th 2010 in Quebec ONLY. If you are in another province or your contract was signed BEFORE July 1st 2010, the rules are different and you should have a look the their terms & conditions found on your service provider’s website.

So you got in a 2/3 years contract with a cellphone service provider (Fido/Rogers/Bell/Telus/Virgin) and you’re now looking to cancel your contract or upgrade to a new phone early in your contract. In the past, you usually had to pay astronomical fees in order to cancel your contract. Fortunately, since July 1st 2010, in Quebec ONLY, a new bill (Bill 60) changes the rules of early cancellation fees (known as ECF or DECF). For some reasons, it seems to be a complete mystery as to how these new rules work. It’s not explained anywhere on any service providers. So I did some research and talked to a few representives to get the details right. So here’s how it works:

The formula is: [rebate] – ( [rebate] * [complete months elapsed] / [contract length] )

Example

So let’s say you bought an iPhone 4 16GB on July 30th 2010 on Fido.

The unsubsidized price of the iPhone 4 16GB is 649$. But you only paid 159$ for it because of the 3 year contract.
So 649$ – 159$ = 490$. This is the rebate Fido gave you (490 $). In the event you would cancel your contract right away, the maximum fee you could pay is 490$. Service providers cannot charge you more than the rebate they gave you in the event you cancel your contract at any time.

The whole formula is based on this number. Now divide the rebate by the length of your contract (in months).
For a 3 year contract (36 months), you should do 490$ / 36 = 13.61$. This is the amount that is withdrawn from the rebate for every month you complete.
So if you cancel after 2 complete months in your contract, the maximum fee you will have to pay is 462.78$ (= 490$ – ( 2 x 13.61$ ) ).
The longer you stay in the contract, the lower the maximum fee will be. Obviously, after 36 months, the amount reaches 0$.

So to get back to the formula I wrote earlier, if you cancel after 12 completed months in your 3 years contract, the ECF you will need to pay is:

490 – (490 * 12 / 36) = 326.67$

What is ECF and DECF?

ECF (Early Cancellation Fee) and DECF (Data Early Cancellation Fee) are usually both present if you have Voice + Data plan. The rebate explained earlier is usually split in 2. For the iPhone 4 16GB on Fido, the ECF is 200$ while the DECF is 290$ (for a total of 490$, the maximum fee a service provider can charge you!). If you cancel your contract completely or ugprade to a new phone early, simply follow the formula outlined above as the ECF and DECF is combined.

However, should you want to cancel only the Data plan while keeping your Voice plan, you will need to pay the DECF only. You will need to confirm with your service provider for the exact amount as the ratio is different for every phone and provider. For example, if you want to cancel your Data plan after 12 completed months (of your 3 years contract) and the DECF is 290$, the maximum fee you can pay is:

290 – (290 * 12 / 36) = 193.33$

The same formula applies to Voice plans (ECF).

What if I didn’t get a rebate on the phone/equipment?

In the event you want to cancel a contract but you didn’t get any rebate for the cell phone equipment, the maximum fee you can pay is the lesser of 50$ or 10% of the total amount yet to be paid for the services. For example, let’s say you have a monthly plan of 30$ and you want to cancel after 12 months:

10% of (24 months remaining * 30$ plan) = 72$

But wait! 72$ is exceeding the maximum fee of 50$. Therefor, 50$ is the maximum to paid during a cancellation.

Conclusion

Hopefully, this makes it easier for Quebec residents to understand the new bill concerning early cancellation fees.
Like I said earlier, make sure you contact your service provider to confirm the fees to be paid if you cancel / early upgrade.
As we all know, these companies are experts at hiding fees in every corner…