Until the telecommunications regulator signs off on a new code of conduct for cellphone operators, consumers will continue to be nailed
It’s been a hellish few days and the reason for my woes is that I needed to select a new cellphone contract.
Operators respond
You’d think it would be a simple task but, no — since when have South Africa’s cellphone giants cared about simplicity? The more confusing it is to select a cellphone contract, the easier it is to rip you off.
Pre-paid or post-paid, off-peak or peak, per-second billing or per-minute billing, free-minutes versus data bundles — let the confusion begin.
The Independent Communications Authority of South Africa (Icasa), the country’s telecoms regulator, attempted to simplify the cellphone contract process in 2008 when it published handset subsidy regulations. These would have forced the cellphone giants to be more transparent when signing up customers to contracts.
Icasa proposed regulations that would have shortened contract periods, forced operators to declare how much subscribers were paying for the “free phone” they got with their contracts and allow subscribers to purchase a contract from operators at a discounted rate if using their own handset.
But these regulations irked South Africa’s cellphone operators and, when it looked like Icasa was going to push ahead with them, Vodacom served legal papers on the regulator.
Icasa withdrew the regulations in August 2008, pushing back the implementation date indefinitely.
Vodacom won the battle and secured a few more years of obfuscation for the operators.
When I was looking at Vodacom’s website this week, I discovered to my surprise that “Vodacom understands and supports Icasa’s intention to require providers to show clearly what each element costs, as well as the costs of opting out of these contracts”.
It has a funny way of showing it.
Not a lot has changed since 2008. Icasa has a new set of regulations, which are now called a “code of conduct”.
The draft code was published in December last year and Icasa completed public hearings for it in April.
“All the submissions have been considered by the authority and a pronouncement will be made in due course regarding the next process, be it final regulations or further consultation,” says Icasa.
Let’s hope for final regulations.
Icasa emphasises that even though these regulations are referred to as a code of conduct they are still “enforceable by law” and carry penalties of between R50 000 and R250 000 for various violations.
So using the new draft code of conduct as a guide, I set out for Cresta Mall in Johannesburg to become the cellphone operator’s worst nightmare, a consumer who asks difficult questions.
It didn’t start well. I could get printed information about cellphone packages from the Vodacom shop only. The Cell C and MTN shops did not have any. I was directed to MTN’s website, which would have meant that I would have had to go home to my internet connection and then return to the store, never mind the fact that this discriminates against consumers who do not have access to the internet.
The first question I had for MTN, Vodacom and Cell C was what contract lengths they offer.
MTN and Vodacom said they had only 24-month contracts, Cell C said it has a 12-month contract and a 24-month contract, but when I asked for more detail about the 12-month contract I was told that it was being discontinued.
My second question was: If I used my own handset, what were my options?
Very few it seems.
Cell C says my only option is its Value Chat contract, which uses per-minute billing.
Now anyone who knows anything about per-second billing versus per-minute billing knows that the latter is a one-way ticket to being ripped off.
Jeremy Parsons from The Price Consultancy in the United Kingdom says that per-minute billing can lead to subscribers being overcharged by as much as 131,3% and the overcharge is between 50% and 70% on average.
So when I asked the Vodacom sales representative why anyone would want per-minute billing, her simple answer was: because you get more expensive phones with the per-minute billing packages.
So there we have it — of course South Africa’s mobile operators can offer you expensive cellphones when you are being billed excessively using an outdated billing formula because in the long run you are paying for that expensive handset and then some.
Vodacom said I had two options: if I used my own phone I could get a month-to-month contract at the same price as I would have got for a 24-month contract, which means, for the benefit of not being tied into a lengthy contract, I pay the same monthly amount as I would pay for the free phone I would not receive.
Or I could get a discount of R56 off my contract but then I have to be tied into a 24-month contract — R56 multiplied by 24 months is a total of R1 344, which one can assume is what I would pay for the “free” handset over the length of my contract.
MTN told me that I would have to sign a 24-month contract and there was no discount on any of its packages for using my own phone, so immediately it appeared to be out of the running for my signature.
Other questions that consumers need to ask their operators before putting pen to paper include: What happens after my 24-month contract?
Once you have paid off your 24-month contract, you can assume you have paid off the handset.
But if you want to keep the handset and renew your contract with the operator, you are going to get nailed. The operator will charge you the same monthly rate and you will begin to pay off a handset that you have already paid for.
So opting not to take a new handset with your renewed contract can prove very costly.
You should also ask the operators what the penalties are for cancelling your contract before the 24-month period. All three operators couldn’t give me a straight answer, arguing that it was a complicated calculation.
Some staffers offered guestimates of between R1 500 and R3 000.
They also could not tell me what any of the phones that I was receiving “free” were worth if I wanted to buy them without a contract.
What about all those free minutes I get with my different contract packages - do they roll over?
The answer is yes, but not indefinitely. Cell C rolls minutes over for three months, Vodacom for six months and MTN for five months.
So after two hours, I left Cresta Mall none the wiser about which operator offers me the best value for money and wondering why South Africa’s cellphone operators insist on making comparisons between packages so complicated.
Draw your own conclusions, but if you’re not asking the right questions, you’re probably going to be on the receiving end.
Icasa’s code of conduct couldn’t come soon enough.