The big Canadian telecom companies are spending billions of dollars to improve cell phone coverage, but some B.C. residents are forced to pay a cell phone bill for a service they’re not receiving. Even worse, they're not allowed to cancel that non-existent service without paying a big penalty.

Steve Lee is a Telus customer who works from his home office, but his iPhone 5 receives marginal to no coverage when he’s in his house.

"I have to run to the east side of my home to try to get a signal, try to keep the conversation before it drops," said Lee. 

Lee’s neighbourhood used to receive good coverage until last April. Now, on the west side of his house, his wife’s Fido phone receives good service, but Lee’s iPhone 5 on the Telus network receives extremely weak service.  Plus, there’s no service at all on the Bell network.

The further east you walk through the Lee household, the stronger the cell phone signal gets. Telus insisted it was a hardware problem and gave Lee six brand-new smart phones over the past 11 months.

"I said ‘look guys, I think we can conclude it's not a hardware problem. It's your network problem,’" said Lee.

When Telus couldn't fix the problem, Lee asked to cancel his contract. Telus said he'd have to pay a $450 dollar penalty, but Lee argued that he shouldn’t be charged for a service he is not receiving.

Consumer reporter Lynda Steele contacted Telus on Lee’s behalf and the company has now agreed to terminate his contract with no penalty.

"We didn't handle this particular customer interaction as well as we should have. There's no question, we'll apologize for that,” said Shawn Hall, senior communications manager for Telus. 

Telus now admits there is a coverage problem in Lee’s South Surrey neighbourhood, a problem it has known about for some time.

"We've gone out and we've physically tilted antennas to point towards that site, trying to really maximize the amount of coverage we have in that area," said Hall.  

Telus is now trying to find property in Lee’s neighbourhood to put up new infrastructure and hopes to have the problem resolved by 2014.

The company is in the middle of a three-year, $3 billion project to improve cell service in B.C. It's already invested $20 million in new infrastructure in Surrey alone.  

Bell and Rogers are also working to improve cell service. In fact, Bell and Telus share cell phone towers across the country and Bell is also investing billions to improve service.

On Wednesday, consumer reporter Lynda Steele looks at solutions for people who live in an area that receives weak cell service.