IDA’s new rules are meant to safeguard the interests of consumers
By WINSTON CHAI 16 December 2009
(SINGAPORE) The Republic’s telecommunications regulator has imposed a new set of operating guidelines for local operators to weed out the practice of lengthy subscriber contracts and fixed early-termination charges.
Under the Infocomm Development Authority’s (IDA) new ruling, the maximum length for all new fixed line, mobile and broadband contracts must be under 24 months, down from 36 currently.
In addition, agreements with fixed, non-negotiable penalties for early termination will also be a thing of the past. Instead, the IDA wants these charges to be graduated for consumers who have served out more than three months of their contracts.
This means that the closer a customer is to the end of his contract, the lower will be the termination fee he has to pay to his telco. These charges should also exclude items that will no longer apply once the service has been cut, such as the telco’s backend administrative and operational costs, the IDA said in a statement yesterday.
The rules will apply to all new subscription plans put out by the three local telcos - Singapore Telecommunications, StarHub and MobileOne - from today.
Operators currently offering three-year contracts as well as packages with fixed early termination fees however, will have until March 2010 to comply with the new rules.
These amendments were implemented after IDA reviewed a flurry of consumer complaints about the ‘unduly long’ nature of telco contracts and their ‘excessively high’ early termination fees, it said.
A public consultation exercise was conducted before the IDA eventually decided to ring in the changes today.
Telcos tend to lure consumers with freebies such as laptops and LCD televisions in a bid to get them to commit to three-year contracts. Early termination fees on the other hand could run up to as high as $800 for popular handsets such as the Apple iPhone.
With the double-whammy, the telco regulator fears that the consumer could be unfairly locked in and will not be able to enjoy subsequent promotions.
These concerns are further amplified by the impending arrival of Singapore’s new fibre-optic Internet highway. Besides boosting access speeds, the new network, which becomes partly operational at the end of March next year, is widely expected to boost competition in the local broadband market.
The IDA would be keen to remove the hurdle of contractual lock-in ahead of the country’s upcoming technology milestone so consumers can take advantage of the new Internet speeds.
‘In promoting effective competition in the telecoms sector, we have to lower barriers for consumers to terminate services legitimately and switch from one operator to another to enjoy more attractive or competitively-priced services,’ said Leong Keng Thai, IDA’s deputy chief executive.
‘One thing we wish to emphasise is that IDA is not advocating that operators stop offering freebies and discounts. Our concern is that operators will need to obligate consumers to longer and longer contract periods, thus stifling the market of the new and innovative services,’ he added.
1 comment:
No more 3-year telco contracts, fixed penalties
IDA’s new rules are meant to safeguard the interests of consumers
By WINSTON CHAI
16 December 2009
(SINGAPORE) The Republic’s telecommunications regulator has imposed a new set of operating guidelines for local operators to weed out the practice of lengthy subscriber contracts and fixed early-termination charges.
Under the Infocomm Development Authority’s (IDA) new ruling, the maximum length for all new fixed line, mobile and broadband contracts must be under 24 months, down from 36 currently.
In addition, agreements with fixed, non-negotiable penalties for early termination will also be a thing of the past. Instead, the IDA wants these charges to be graduated for consumers who have served out more than three months of their contracts.
This means that the closer a customer is to the end of his contract, the lower will be the termination fee he has to pay to his telco. These charges should also exclude items that will no longer apply once the service has been cut, such as the telco’s backend administrative and operational costs, the IDA said in a statement yesterday.
The rules will apply to all new subscription plans put out by the three local telcos - Singapore Telecommunications, StarHub and MobileOne - from today.
Operators currently offering three-year contracts as well as packages with fixed early termination fees however, will have until March 2010 to comply with the new rules.
These amendments were implemented after IDA reviewed a flurry of consumer complaints about the ‘unduly long’ nature of telco contracts and their ‘excessively high’ early termination fees, it said.
A public consultation exercise was conducted before the IDA eventually decided to ring in the changes today.
Telcos tend to lure consumers with freebies such as laptops and LCD televisions in a bid to get them to commit to three-year contracts. Early termination fees on the other hand could run up to as high as $800 for popular handsets such as the Apple iPhone.
With the double-whammy, the telco regulator fears that the consumer could be unfairly locked in and will not be able to enjoy subsequent promotions.
These concerns are further amplified by the impending arrival of Singapore’s new fibre-optic Internet highway. Besides boosting access speeds, the new network, which becomes partly operational at the end of March next year, is widely expected to boost competition in the local broadband market.
The IDA would be keen to remove the hurdle of contractual lock-in ahead of the country’s upcoming technology milestone so consumers can take advantage of the new Internet speeds.
‘In promoting effective competition in the telecoms sector, we have to lower barriers for consumers to terminate services legitimately and switch from one operator to another to enjoy more attractive or competitively-priced services,’ said Leong Keng Thai, IDA’s deputy chief executive.
‘One thing we wish to emphasise is that IDA is not advocating that operators stop offering freebies and discounts. Our concern is that operators will need to obligate consumers to longer and longer contract periods, thus stifling the market of the new and innovative services,’ he added.
Post a Comment