MELBOURNE, Australia—Australia’s telecommunications industry ombudsman (TIO) has placed the country’s mobile-phone operators on notice following a spate of “unreasonable early termination fees on mobile-phone contracts” this year. Already this year, the TIO has investigated more than 40 complaints of unconscionable termination fees in which customers’ contracts had either almost expired but were charged full termination fees or were charged a flat fee regardless of the time their contracts had to run.
The ombudsman, John Pinnock, recently wrote to all mobile service carriers and resellers outlining the TIO’s position that early termination fees are “lawful, fair and reasonable.” Early termination fees, he said, must be determined by the true loss to the company of a terminated contract.
“Large, fixed termination fees will, in general, not be accepted by the TIO as valid,” Pinnock said. He said the TIO expects companies to improve their disclosure of fees and their method of calculating them.
Pinnock said he is pleased that some companies have recently removed flat fees from their mobile deals. “This is a step in the right direction, but the TIO has a number of outstanding cases with other companies who are arguing that a fee of, say, A$250 (US$141.50), is reasonable on a contract with only two months to run. And no company is yet supplying as a matter of course the information a customer needs to be able to make an informed decision about when to terminate a mobile contract.”
Complaints about early termination fees have risen since September last year when mobile number portability was introduced. Meanwhile, TIO’s complaint statistics for the first quarter of 2002 found that 19,625 complaints were made to the office, a modest 3.7-percent drop on the previous quarter. Mobile contracts remained a major cause of complaint, making up 26 percent of all complaints about mobile-phone services.
