Say goodbye to long-term lock-ins

Consumers will no longer be locked into long-term contracts with mobile operators, according to the Independent Communications Authority of SA's (ICASA) new regulations.

ICASA's regulations are good news for consumers, as they are being given the option to choose the period of their cellphone contracts. The authority is allowing providers to offer contracts from six, 12, 18, or 24 months, and consumers can pick which suits them best.

“The subscriber must confirm in writing the acceptance of the contract period,” say ICASA's regulations in the Government Gazette.

The gazetted regulations will become effective as of 17 August.

ICASA's gazetted regulations also stipulate: “Post- and pre-paid offerings or packages that include handset subsidies must clearly indicate the subsidy and the monetary value of the services offered.”

Providers are now expected to show clearly how much of the subsidy remains on any given contract, as well as the cost consumers will need to pay if they decide to opt out of an existing contract. Both stipulations must be shown on the bill at the end of every month.

Last month, ITWeb conducted an investigation into contract terms and conditions, and discovered that many cellphone providers forced customers to ride out contracts, because of exorbitant cancellation penalties and full contract payouts. Some customers paid close to R10 000 to cancel a contract half way through the stipulated period.

Some providers insisted the cancellation costs were intended to pay off cellphones subsidised as part of the contracts.

At the time, telecommunications attorney and consultant Kerron Edmunson said: “The fact that a customer signs a contract and agrees to be bound by an unfair term should not be supported in law when the operator, in this case, can be adequately compensated for the termination of the contract by payment of actual outstanding costs including the actual (but not inflated) cost of a phone.”

Must be transparent

“Such a penalty must be proportional to the remaining contract term and the remaining level of the handset subsidy. Other penalties that accrue through the agency agreement between a licensee, its agents or reseller and another party should not be imposed upon, transmitted to or incurred by the subscriber.”

Consumers are also being given the option to buy a handset, independently of contract charges or package offerings.

Vodacom MD Shameel Joosub says: “It is encouraging to note that the handset subsidy regulations include regulations which appear not to restrict subsidies in terms of handsets. However, there are certain aspects of the regulations which are unclear and confusing, as well as new regulations on which Vodacom has not been consulted. Vodacom will engage ICASA to clarify these regulations.”

“MTN is currently assessing the handset regulations proposed by ICASA,” says Graham de Vries, GM of regulatory affairs at MTN. “There are a number of provisions in the regulations that MTN has difficulty in interpreting and MTN will subsequently take this up with ICASA.”

Nashua Mobile declined to comment on the matter, saying details on the regulations were being processed internally.

Altech Autopage Cellular was not available for comment at the time of publication.

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