The Independent Communications Authority of SA (ICASA) would like to see shorter cellphone contracts, among a series of recommendations aimed at making the cellphone market more competitive. However, it has not called for an end to handset subsidies as was first mooted.
The regulator wants greater transparency in the market and first issued a discussion document in May last year, followed by a series of public hearings and presentations earlier this year. Councillor Nadia Bulbulia headed the working group on the issue.
ICASA released its findings yesterday on its Web site, in a report entitled "Enquiry into Handset Subsidies Findings and Conclusions".
According to ICASA, there is a lack of transparency about the cost of the various handsets offered in various packages, which limits customers` ability to make informed choices.
It recommends that cellphone companies shorten contract periods from the industry average of 24 months for postpaid customers, to a period not exceeding 18 months.
"A 24-month contract as well as automatic renewal for the same period can be regarded as customer capture/retention and not loyalty," the report says.
Accusation
ICASA also accuses the network operators of using the approved tariffs as the minimum of what can be charged, instead of as the maximum charge, which was intended.
However, ICASA says the operators are allowed to effect reasonable discounts in order to compete in the market.
Regulations that ICASA intends developing, the report says, will require network operators and their service providers to offer equally beneficial terms for postpaid customers whether they choose a handset or not.
ICASA also says there is a lack of transparency on the cross-subsidisation of postpaid customers by other services.
"Regulations will be made that require transparency on where the financing of the free handsets comes from and the value of the various offerings, in order to ensure other customers are not unnecessarily burdened with costs of acquiring postpaid customers that account for the major part of the operator`s revenue from calls made," it says.
The other findings include that contracts must be explained to customers verbally and that small print in the contracts be enlarged.
Welcomed
The report cites submissions from all three network operators, the two last independent service providers Nashua Mobile and Autopage, and other parties including Mike Lawrie, former administer of the .co.za domain name.
Cell C said in response: "Cell C welcomes the findings released by ICASA on handset subsidies. During our submissions in the hearings, it was Cell C`s view that customers were not given the opportunity to make informed choices when purchasing contracts as the breakdown in costs - handset, tariffs, free minutes, etc, were not clearly explained. We also welcome the authority`s finding that shorter contract periods should be offered."
MTN and Vodacom say they are investigating the findings and will comment later.
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