DELAYS LIKELY ON SUBSIDY REGULATION
ALTHOUGH THE NEW REGULATIONS governing the subsidies applied to cellular handsets were due to come into force on 17 August, it appears South Africa’s service providers were ill prepared to implement them. Of the questions addressed to Nashua Mobile, Vodacom, MTN and Cell C, only Nashua Mobile and Vodacom responded, with both raising concerns that the terminology used in the regulations is “unclear and confusing”.
Dot Field, chief communications officer at Vodacom, says it had contacted telecoms regulator Icasa to raise its concerns with regard to the commercial and technical implications of the regulations for the industry. Field says those engagements had taken place both at individual company and at industry levels.
Vodacom’s concerns were echoed by Mark Taylor, MD of Nashua Mobile, who says most of SA’s cellphone network operators and service providers – including Nashua Mobile – are making representations to Icasa in a bid to obtain more clarity on a wide range of issues.
The regulations stipulate how long contracts may run, how early cancellations may be dealt with and how service providers inform their customers about what subsidies are being given to them and how those subsidies are accounted for.
However, Taylor says some issues in the regulations – such as contract terms and connection fees – were never discussed in a public forum and due to that the industry wasn’t given the chance to articulate its views on those issues with Icasa. “We believe that in a competitive market – where there’s a choice of suppliers – many of the new regulations are unnecessary.
However, he says Nashua Mobile is currently preparing an online and paper billing sheet that will give its subscribers a one-glance overview of all the information required by Icasa. The information will include the subsidy left on the contract, the cost to terminate the contract, free minutes and the value-added services the consumer is paying for, among other information.
The cost of terminating a contract is a sore point for many subscribers, as service providers have traditionally levied massive penalties for ending a contract early. To illustrate that, a call to a service provider resulted in a termination fee more than double the cost of simply allowing the contract to run its course and taking out a new one.
Under the new regulations that kind of rampant profiteering would be prohibited, as termination fees have to be linked to the amount left on the subsidy given to the customer when he took out a new contract.
Taylor says there’s a great deal of uncertainty among network operators and service providers about how they account for the handset subsidy. “Examples include whether to account for the handset at its cost price or its price after a discount or mark-up. Because there’s no standard definition, it will be difficult for subscribers to make meaningful comparisons.”