Commission to probe contract price hikes

(Duncan Alfreds, News24)
(Duncan Alfreds, News24)

Johannesburg - The National Consumer Commission (NCC) has launched a full-scale investigation into mobile networks’ price increases for contract subscribers.

Major networks Vodacom [JSE:VOD] and MTN [JSE:MTN] announced increases to cellular contract tariffs earlier this year, while Cell C also announced contract price hikes in December 2014.

Subsequently, the NCC said it has received 32 complaints from consumers who felt that networks were acting unfairly when increasing prices in the middle of contract periods.

The NCC then launched an inquiry to study each complaint and requested information about general mobile network practices from the Independent Communications Authority of South Africa.

“The NCC has, after receiving all requested information and after assessing all complaints in respect of the provisions of the Consumer Protection Act and its regulations, concluded that a reasonable basis exists to institute a full-scale investigation,” NCC spokesperson Trevor Hattingh told Fin24.

The probe is expected to be completed in 12 months and will specifically study the “compliance of contract terms and conditions of cellphone service providers”, Hattingh said.

“As such we will audit the terms and conditions of mobile network service providers in relation to the provisions of the Consumer Protection Act and its regulations,” Hattingh told Fin24.

He said that in 2012 the NCC conducted an audit on all cellphone networks, which resulted in them bringing their terms and conditions to a 99% compliance rate.

Rising costs

South Africa’s two biggest network providers have alluded to rising costs as grounds for contract price hikes.

MTN pinned its price increases on rising mobile termination rates, increased network investments, transport costs, handset price increases, falling exchange rates and higher taxes.

In March, Vodacom told Fin24 that its increased network upgrade spend meant that its investment per subscriber has grown from R218 per customer in 2013-2014 to R269 per customer in 2014-2015.

Falling mobile termination rates also resulted in Vodacom being hurt by a R2bn service revenue knock for the financial year ended March 2015.

What are your views on this investigation? Do you think it could help bring mobile networks into line? Tell us by clicking here.

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