Is subsidy code still needed?

Cell C has called on the regulator to review the need for a handset subsidy code of conduct.

This week, operators met with the Independent Communications Authority of SA (ICASA) to air their thoughts on the draft code of conduct released late last year.

In its current form, the code of conduct stipulates that operators must clearly state how much of the phone or other device is subsidised to the consumer, and how much any given person still needs to pay off.

The new code would have allowed customers to keep minutes that they have paid for, and be credited minutes they have not used by the time the contract term comes to an end. The draft also prevents operators from rolling over contracts to a month-to-month basis, when terms expire.

ICASA's draft would have prevented long term lock-ins, which many operators force contract customers into, by allowing people to choose the length of contracts, starting from six months, ranging through to two years.

However, Cell C is questioning whether there is still a need for the code, which the third mobile operator says was not initially created to protect consumers, but rather to allow Cell C to gain a customer base through mobile number portability (MNP).

Cell C's representative at this week's hearings on the code explained that the draft code and the regulations that preceded it, were initially drafted to prevent incumbent operators, Vodacom and MTN from trapping customers in long-term (two-year) contracts, effectively preventing customers from porting their numbers to Cell C.

MNP was implemented in November 2006, a process which allowed customers to change operators, but take their numbers with them. The entire operation was supposed to have boosted Cell C's subscriber numbers, since it was a late entrant into the mobile market.

However, after several years, the MNP process was considered a flop, and many have noted that, if the long-term contract had been scrapped, Cell C would have fared better.

Cell C now says ICASA is “duty bound to determine whether the code of conduct is still warranted”, especially since the Consumer Protection Act (CPA) is on its way. The CPA is considered as the consumer protection Bill of rights and is expected to change the way many local companies deal with customers.

The mobile market is expecting a serious injection of competition, with Telkom furiously preparing to enter with its own cellular product and alternative operator ECN looking at a mobile option too.

The need for a code of conduct will extend these to businesses as surely as it would have for Cell C in 2006. ICASA has recognised a need for competition in the mobile market, noting yesterday there are indications there is not enough competition in the sector.

There is no clear indication when ICASA plans to have the code completed; however, if operators do subscribe, there will be a vast increase in the control that consumers have over their contracts.