There are loopholes within section 13 of the recently-enacted Consumer Protection Act (CPA) which Telkom can use to argue for bundling its ADSL data service with a compulsory voice service.
This is according to legal experts who say that such bundling, as defined by the legislation, is unlawful unless the telecoms provider relies on specific exceptions.
Section 13 of the CPA prohibits a supplier of goods or services to require that the consumer purchases other goods or services from that supplier or a specific third-party supplier.
There are certain exceptions to the general prohibition on bundling. The CPA prohibits bundling unless the supplier can show that: (1) the convenience to the consumer to bundle the goods or services outweighs the limitation or restriction of the consumer's right to choose; (2) bundling of the goods or services results in economic benefit to the consumer; and (3) the supplier offers bundled goods or services separately and at individual prices as well.
“Section 13 does prohibit bundling, generally speaking, but it also makes allowance for three scenarios where bundling is permissible,” argues Web and digital media lawyer, Paul Jacobson.
He points out that criticisms against Telkom's product and service bundling focus on contentions that it should offer data and voice products separately. “Telkom already offers voice as a standalone service but not data, and the questions remain whether it can demonstrate either of the first two benefits or conveniences.
“It may be able to show that it would be convenient to consumers to bundle voice and data services and in some instances that is true. That said, this argument doesn't take into account people who use a mobile phone for voice or, perhaps, Neotel for voice and simply want to make use of Telkom DSL for data.”
Voice protection
Jacobson adds that there also doesn't appear to be a clear economic benefit to consumers by bundling voice and data services. If anything, he adds, it costs consumers more with the line rental charges.
“Telkom appears to be trying to protect its voice service by bundling it with its data offering as a form of protectionism for a service that isn't required by all consumers who have found more appealing alternatives.
“By way of an example, a consumer who uses a mobile phone for voice may not have a need for a fixed-line phone from Telkom but with the cost of mobile data, Telkom's DSL is still a compelling option. Bundling its fixed-line voice and data offerings means higher costs for those consumers and unnecessarily so.”
“The fact that ADSL services are priced separately from voice services on one's bill does not mean Telkom has met the requirements of the exception, as these services are not offered separately,” he argues.
NCC dilemma
Giles notes that it is difficult to determine how the National Consumer Commissioner (NCC) will interpret exceptions one and two. “So how it will rule Telkom's case is difficult.”
However, he believes given the NCC's strong 'pro-consumer' statements thus far, it is likely Telkom will not meet the requirements for exception two.
“I say this on the basis that even if ADSL prices are subsidised by the voice services, I don't think the subsidisation is so great that it would benefit the consumer to take voice services that they don't intend to use.”
He is of the view that Telkom's greatest chance lies in exception one, as the section is so loosely defined and Telkom could possibly make an argument that, for technical reasons, ADSL services can only be provided on lines that have voice services already enabled on them.
“To my mind, I don't think that this argument will work, and if the matter goes before the commissioner, I think we will see them rule in favour of the consumers.”
Telkom declined to comment on the issue.
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