The three-year test period for 3G bundling will end in one year, and a decision will soon be made on pending legislation that would permit bundling in the future. The Finnish Consumer Agency does not support continued bundling. Expensive phones can be promoted also by developing phone financing alternatives.
Since April 2006, the sale of new 3G phones as a package together with a service contract has been permitted. The goal has been to promote adoption of the new technology. In practice, we have seen that the bundling has caused many problems for consumers. It is now being debated whether bundling should continue after the test period ends. Opinions on the draft legislation amendment are currently being submitted. The draft proposes continuation of bundling and revisions to several provisions.
For the consumer's position to be secured, the legislation on bundling would need a major overhaul. Instead, it would make more sense to develop financing alternatives to make it easier to obtain the new phones. For example, instalment plan and consumer credit regulations already offer rules to safeguard the consumer's position.
Since the beginning of the test period, the Consumer Agency has provided guidance to the telecommunications industry regarding obligations that bundling involves, such as informing the customer clearly of a fixed term for a bundled contract and any restrictions imposed. Nevertheless, the Agency and municipal consumer advisers have had to help baffled consumers with the interpretation of contract terms. The newest reports from consumers do not mince words to describe how even unlocking a SIM card at the end of a contract period or after paying the full price of the phone can turn out to be an infuriatingly cumbersome operation.
A contract that is binding even after death?
Difficult situations have included cases where a subscriber runs into financial difficulties or dies. What happens to the device and the service contract in these situations has sometimes been unclear. In the most shocking examples, next of kin have been informed that a service agreement made with the deceased shortly before his or her death cannot be cancelled until the contract term runs out.
The current Communications Market Act sets certain requirements to protect the consumer's position. To a large extent, however, the consumer's position has been dependent on operators' contract terms, especially with regard to the sale of a phone. The special terms for 3G sales have left many issues open. Therefore, at a minimum, the legislation should set constraints as a basis for companies that conduct themselves professionally to adequately consider the consumer.
Salespeople tangled up in the contract web
Consumers have found that in problem situations, responsibility gets shifted from the salesperson to the operator or vice versa. Complex contractual problems often seem troublesome for phone stores to resolve as well, as they have ties to the operator as well as to the phone manufacturer when it comes to warranty repairs.
The amounts charged for data transfer, for example, have often come as a surprise to consumers. The reports show not only that advertisements have not included sufficient information about pricing, but also that salespeople have not been able to recommend the most suitable service for one's needs at the time of sale despite being requested to do so. Also, letting a customer know when there is no way to set a limit on account usage is something that is often overlooked.
Bundling makes price comparisons more difficult and can stifle competition
Because bundled contracts are so complicated, it is hard to compare them. Consumers need to take into account not only phone fees, but also the features and prices of different phone models. Indeed, in practice, it is very difficult to estimate the overall cost of a contract and rank offers from different operators. Comparison is further complicated by the fact that information on packaging can be unclear and inaccurate.
Bundling can also make markets sluggish. Bundled contracts are fixed-term contracts, meaning that a customer cannot switch to a different operator or a preferred phone model during the contract period without incurring additional expenses. A calling plan change, for example, can also cost extra. When there are fewer and fewer customers available who can quickly switch operators, new operators may be discouraged from entering the market. Another concern is that phones become outdated when getting new models is troublesome and consumers are tied to aging phones for two years at a time.
A complicated package looks simple in advertisements
Fixed-term subscription contracts, usually two years in duration, have been introduced to the market. The marketing for bundling has mainly emphasized low one-time payment for a phone at the time the contract is signed, or a fixed monthly payment for a calling time and text messaging package.
Individual ads can create a misleading picture of contract terms or overall costs, since information required by law may have been left out or presented unclearly. In particular, the presentation of important information in a minuscule font or flashed quickly on a television screen has even been condemned by the Supreme Court. Surveillance campaigns of 3G advertising carried out by the Consumer Agency have uncovered much that is objectionable, both in the early stage and later on.
More information:
• Inadequate price information in ads for 3G packages (Current Issues on Consumer Law 9/2006)
• Clarity Doubly Important in Packages (Current Issues on Consumer Law 2/2006)
• Incorrect information on 3G coverage can be grounds for cancelling a contract (Current Issues on Consumer Law 3/2007)