Subscribe

Mobile rate hikes spur urgent action

Bonnie Tubbs
By Bonnie Tubbs, ITWeb telecoms editor.
Johannesburg, 30 Mar 2015
The cellphone market is unpredictable and consumers could expect to see more price hikes ahead, say industry experts.
The cellphone market is unpredictable and consumers could expect to see more price hikes ahead, say industry experts.

SA's national consumer protector is stepping up in a matter it takes "very seriously", where many consumers feel their hands are tied in the wake of recent mobile rate hikes.

The National Consumer Commission (NCC) has launched an investigation into recent contract price hikes to determine whether these are "fair and legal".

This comes after Vodacom on Thursday notified customers and the media it would increase most of its contract tariffs - for both new and already locked-in customers - as of May; a move that has drawn fierce criticism from consumers.

Cell C pulled a similar move in December, when it announced a "rationalisation" of prices as of February, which saw some of its contract and prepaid tariffs going up. Cell C seemingly avoided much of the consumer backlash by releasing the notification the day before Christmas, while its subscriber base - largely made up of prepaid subscribers - is significantly smaller than leading operator Vodacom.

Bombshell move

In the wake of the about-turn in an era previously characterised by a mobile "price war", the news - in particular Vodacom's announcement ? came as a bombshell to consumers, many of whom feel their hands are tied when it comes to seeking recourse, beyond online venting. This is because the operators' terms and conditions are set up to make provisions for tariff changes, even mid-contract ones.

But consumers were not the only ones that were taken aback. NCC spokesperson Trevor Hattingh says the consumer body was only made aware of Vodacom's plans to increase prices through the media.

"It's a shock to us. If there was a programme in place where they gradually informed people then it would be different. Also, if [Vodacom] had at least informed us they were going to be attempting price increases - and were within their rights to do so - it would have been better.

"We expected that, as the NCC, they would at least inform us [of moves of this nature] so that we would not be the last to know."

Protracted process

Because of the second-hand means by which the NCC received the information, says Hattingh, it has only just started looking into the matter. He says it is "not an overnight thing", but the NCC is pushing to set up a meeting with the Independent Communications Authority of SA (ICASA) this week to get the ball rolling.

Ts & Cs disclaimer

Section 5.8 of Vodacom's contract terms and conditions states: "The charges levied by Vodacom may vary from time to time and Vodacom shall provide you with at least 20 (twenty) business days' notice of such variations before they take effect.
"You shall be bound to pay such varied charges with effect from the date of publication thereof by either Vodacom and/or Vodacom unless you exercise your right of termination as provided for in this agreement."

"We need to see copies of the contracts in question and assess these for compliance first. This is a two-leg issue. Apart from Consumer Protection Act (CPA) compliance, we will also need to check with ICASA as to whether its licencing provisions for the network operators allow this kind of thing."

He says, taken at face value, it seems Vodacom is not complying with the CPA in terms of section 48, but the commission cannot determine this until it has gone through the process of assessing the various factors involved.

Section 48 of the CPA deals with the consumer's right to fair, just and reasonable terms and conditions.

No legs

"If [a customer] signed and bound themselves into a contract with an open clause and the operator increases prices, for all we know in terms of the CPA, the contract itself could be invalid. It could also just be a case of the clause never having bothered anyone until now.

"We don't know and can only establish this once the necessary assessments have been done."

Should it emerge ICASA has stated operators may increase prices and include this clause, the NCC "wouldn't have a leg to stand on", says Hattingh.

ICASA spokesperson Paseka Maleka says both Cell C and Vodacom have notified the authority in terms of the applicable regulations.

"Please note licensees are free to set their retail tariffs within the constraints of the competitive environment. The authority has therefore adopted the approach of regulating wholesale bottleneck services first (ie, termination). These are services that drive higher retail prices.

"There has been a general overall benefit to consumers from this form of regulation in the form of lower retail voice tariffs owing to the regulation of call termination rates since 2010, as well as the administered reduction in the Telkom IP Connect tariff in 2012," says Maleka.

Both Vodacom and Cell C say they have followed the correct procedures when it comes to filing their new tariffs with the regulator, and that the tariff changes are CPA-compliant.

Hattingh says the NCC takes this issue "very seriously" and intends to get to the bottom of it "by all means possible" and as a matter of urgency.

Analysts say, whether the move is sound in terms of terms and conditions legalese, it has left a lasting bitter taste in the mouths of many consumers.

While there is no indication MTN will follow suit and up its prices, Tariffic CEO Antony Seeff points out that changes to the cellular market occur on a regular basis. "We expect the complexity in the market to only increase as operators try to offset declining ARPUs [average revenue per user], shifts in user behaviour, and the impacts of regulatory changes."

Share