IDA issues new guidelines for telecoms contracts

New guidelines will ensure telecommunications companies offer consumers better deals.

The new guidelines will take effect on 1 March 2010.

With the new guidelines for new or renewed contracts for all fixed-line, mobile and broadband services, the maximum contract period for all such services will not exceed 24 months. Consumers who sign on to contracts longer than three months and who terminate their contracts before the end of their contract period will no longer have to pay fixed early termination charges, but will see these charges decrease over time on a month-by-month basis as they serve out their contract. In addition, operators offering these services must also ensure that these early termination charges do not include costs which they can avoid when the consumer terminates his service. Such costs could include back-end administrative and operational costs that the operator would not have to incur once the customer terminates the service.

The new guidelines were prompted by consumers’ concerns that contract periods might be becoming unduly long, and early termination charges excessively high, which together hinder them from terminating the service and switching between operators. These guidelines were subsequently developed after a public consultation and a review by the Infocomm Development Authority of Singapore (IDA).

IDA Deputy Chief Executive and Director-General (Telecoms and Post) Leong Keng Thai said, “We encourage the operators to compete with each other on price, quality and innovative services. In promoting effective competition in the telecoms sector, we have to lower barriers for consumers to terminate services legitimately and switch from one operator to another to enjoy more attractive or competitively-priced services. The new guidelines will give consumers greater flexibility and freedom to pick from the wide variety of plans in the fast-changing and dynamic telecoms market, unhindered by long contracts or excessive early termination fees.”

“On the other hand, the guidelines will continue to allow the operators freedom to innovate in designing new service plans to attract customers, including offering discounts and gifts. IDA would also like to encourage operators to provide no-frills service offerings that come with shorter contract terms, to cater to a segment of consumers who prefer such services. The consumer can look forward to more competition in telecommunication services.”

The guidelines seek to create more “reasonable and fair” industry practices, and strike a balance between protecting the interest of both consumers and providing operators with the freedom to innovate in designing service plans, while enabling them to seek early termination charges on a cost-recovery basis.