Contracts by mobile phone company is unfair

11/11/2009 14:31

Vodafone’s “O” rental product which is a Post-pay contract on a fixed minimum period of 2 years is unfair. This contract contains exit penalty fees of $140 (VEP) per connection including an extra penalty for any free handsets (mobile phones) given to consumers as a means to make the product attractive. Therefore, on top of paying $140 per connection, each free phone that Vodafone gives away as part of the product deal is also subject to a pro-rata calculation based on the 24 months usage and price of the handset. So, if the cost of the mobile phone is $200, and a consumer decides to terminate the contract after 12 months, then the consumer will have to pay $100 for the remaining months for not using the phone.

So in truth, the phone is not free but attached with conditions. In total, the consumer will end up paying around $240 plus vat to Vodafone to terminate the contract with in 12month period. This means that you will end up paying Vodafone for the total value of the phone Vodafone supposedly gave away as “free” to the customer as well as an additional penalty for being a disloyal customer because you no longer trust or require Vodafone’s service or simply wish to switch to the competitor who maybe offering a better deal as part of consumer choice. In this deal consumers would like to understand why they have to pay $140 VEP penalty fees?

Consumers are clearly being targeted as victims of daylight robbery but in an unsuspecting manner. While the “black and white” contract maybe clear on the penalty clause, it does not meet the rules and requirement for fair and open competition that deregulation hoped to bring about. It simply restricts consumers a freedom of choice as well as forcing consumers to stay with a service provider through unfair and unreasonable penalty charges.

With Commerce Commission’s latest intervention to seek answers and clarification to alleged unfair trade practices by Vodafone is clearly a start of a new dawn where consumers can now turn to a regulator who seems to be enhancing consumers’ interests while encouraging a competitive and monopolistically free telecommunications environment in Fiji. The Consumer Council of Fiji echoes the Chairman of the Commerce Commission, Mr Reddy’s statement that “prior to the launch of Digicel on 1 October 2008 and during the time that Vodafone was a monopoly mobile network operator in Fiji, it appears that Vodafone locked certain high end users into long term supply contracts, some of which were combined with significant penalties”.

This is indeed encouraging for a nation that needs controlled competition to be part of any deregulation or liberalisation of the marketplace because the reality is that unfair trade practices need to curbed and detected to avoid breach of consumer rights.

We therefore applaud Commerce Commission for investigating such unfair trade practice and if the perpetrator is found to be in breach of the laws of Fiji, a severe penalty will be imposed to instil deterrence.