JP UK Mobile Phone Dealers Protest Over Govt Impositions 06/19/96
LONDON, ENGLAND, 1996 JUN 19 (NB) -- Some of the UK's mobile phone
service providers have reacted with almost hostility to the proposals
to outlaw "unfair" contract terms in mobile phone contracts. The
concerns voiced by the Federation of Communication Services (FCS) come
as a result of an Office of Fair Trading pronouncement early last week
that it did not like the cellular industry's unfair contract terms.
As reported last week by Newsbytes, the Office of Fair Trading (OFT),
the British government-appointed consumer watchdog, bared its teeth
over what it calls "unfair contract terms" that many cellular networks
and their agents are imposing on cellphone subscribers. In a warning
to the UK's cellular business, John Bridgeman, the OFT's director
general, said that mobile phone companies must drop what his office
terms "unfair terms" in their contracts or face legal action from the
government.
According to the FCS, however, the cellular industry is already in
discussions with consumer groups to address many of the points raised
by the OFT.
David Savage, chairman of the FCS cellular service provider group, the
criticisms from Bridgeman against service provision contracts are both
misinformed and unfairly slanted, "in view of the current discussions
taking place in the industry. Furthermore, work is nearing completion
within the service provision sector on finalizing an industry code of
practice which includes a choice of contract to the consumer."
The FCS argues that some of the "unfair" clauses in mobile phone
contracts in the UK are, in fact, vital if the industry is to continue
to offer mobile phone handsets at "attractive" prices. The FCS claims
that subscribers have benefited from substantial subsidies against the
true cost of the phone. In order to support their subsidies, service
providers have a "minimum contract" term.
Savage said that market research suggests that most new mobile phone
users prefer the cheaper handset option, but he accepts that the
consumer needs to have a choice at the point of sale.
"Most of the criticisms leveled by the OFT are in the process of
being addressed," he said. "I'm disappointed that this damaging and
unnecessary announcement gives a negative viewpoint on the spirit of
cooperation that has been established between service providers, the
OFT, OFTEL, and the consumer's representatives."
Richard Cox, a consultant with telecoms consultancy Mandarin
Technology, told Newsbytes that he felt that the so-called "attractive
prices" have, in fact, been most damaging to the industry, as they
have fooled the consumer into expecting a "cheap phone."
"Until we remove the subsidies for handsets, users will not get the
best deal on their overall mobile phone package," he said, adding
that, while the subsidies are reclaimed in the form of high line
rentals and usage charges in the first year, most subscribers keep
their phones for longer than a year, resulting in high profits for
the cellular networks and airtime providers.
"This clearly isn't in the best interests of the consumer," he said.
(Steve Gold/19960618/Press Contact: Chris Webb, FCS Press Office,
+44-1672-516000; Richard Cox, tel +44-973-311111, fax +44-973-311110,
Internet e-mail richard@mandarin.com; Reader Contact: FCS,
tel +44-181-778-5656, fax +44-181-778-8402; OFT, +44-171-242-2858;
Oftel, tel +44-171-634-8700, fax +44-171-634-8943)