The Infocomm Development Authority (IDA) has issued a consultation paper proposing two main areas relating to current practices, namely a) maximum length of contract and b) early termination charges (ETC). These guidelines would exclude mobile, fixed line or broadband services to business or corporate customers as these are negotiated deals and each contract are typically customised and have unique requirements.

• Maximum length of contract – The IDA has proposed that the contract term for mobile, fixed line and broadband services offered to consumers should not exceed 24 months, down from the current 36 months maximum allowable. It believes that this is a reasonable time period as most service plans do not exceed 24 months. Operators are also strongly encouraged to offer contract term options of less than 24 months which are not bundled with free gifts.

• ETC – The IDA seeks opinions on the proposal that the ETC for mobile, fixed line and broadband offered to consumers (for contracts longer than 3 months) should be on a graduated basis, ie ETC must decrease in tandem with the number of months left on the contract.

• ETC quantum – Besides the graduated ETCs, the IDA has also proposed a fairer quantum of computing the ETC. The IDA has proposed that ETCs for services provided to consumers exclude any costs avoided when they cease provision to the consumers and should be done on a cost-recovery basis. It should also be reasonably below that of the sum of the monthly fee for the remaining months of a terminating customer’s contract.

• Freebies and recovery of charges – The IDA is cognisant that in view of increasing competition, telcos are resorting to competing based on the offer of freebies. In return, operators have tied them down to even longer contract terms. Customers, although knowingly agreeing to these terms, may find themselves disgruntled at being locked in to such long term contracts and face punitive charges if they decide to switch. A balance needs to be struck between long contract periods and high ETCs. In order to make sure that operators are not worse off, they may recover the value of the discount it had provided up to the point of termination, may recover the cost of any gift provided minus the portion of the cost of gift the operator had been able to recover from the consumer’s monthly subscription fee and must inform the customer upfront and in a transparent manner the costs of gifts/discounts it would recover from the customers along with the method of computation should the customer terminate prematurely.

The IDA is seeking public opinion on these proposals and all submissions to the IDA are due by Jan 13.