Liberating consumers from phone, Internet and TV shackles

Communications providers will have to earn their profits – not by holding us captive, but by successfully courting us.

By JPOST EDITORIAL
Likud Minister Moshe Kahlon 311 (photo credit: Avi Hayun)
Likud Minister Moshe Kahlon 311
(photo credit: Avi Hayun)
The process of breaking the bonds that tie us to a variety of communications service providers begins this morning. The cabinet is scheduled to consider legislation that would drastically limit fines for backing out of contracts with telephone, Internet and TV providers (both cable and satellite).
This follows hot on the heels of liberating Israel’s cellphone subscribers from similar shackles.
Government sponsorship of the new bill submitted by the Communications Ministry is sure to trigger massive lobbying and publicity onslaughts by the conglomerates, whose revenue-generating potential will now have to be directed to means other than holding their clientele hostage.
But as was the case with the cellphone providers, the great hue and cry sure to be raised by the big corporations will be countered both by overwhelming popular sentiment and by the logic of fair business practices.
Put plainly, these companies will at long last get their comeuppance, while the general public gets a modicum of justice.
ACCESS TO communications services is an inseparable part of modern life, yet when we subscribe to the services of any given firm, we enter the latter-day equivalent of medieval serfdom. The penalties levied on any attempt to terminate a contract are so prohibitive as to keep us fettered to the providers against our better interests.
Exorbitant exit fees generally bear very little relation to the harm that contract cancellations inflict on the service provider. Cable and satellite subscribers, for instance, are on average required to pay retroactive fees for benefits they supposedly enjoyed during their subscription period. Said fees can run into many thousands of shekels – yet nobody can quite explain the logic of how they are calculated.
Internet providers – often the very same firms that also provide TV and telephone connections – have honed the punitive measures further, requiring customers to keep on paying their fees all the way through to the end of their scheduled subscription even if they terminate.
The variety of means used to prevent customers from exercising their rights to avail themselves of better deals is awesome and imaginative. The bottom line is that the providers keep their clientele constrained by an array of essentially dirty tricks.
This impairs fair and free competition and allows the providers to lord it over subscribers, treat them disdainfully and offer substandard service. The ramifications are numerous and all negative.
Following government approval, the new bill will face three Knesset plenum votes and Knesset Economics Committee consideration – all one hopes by the end of July. It will allow communications firms to retain only a thin sliver of the punitive powers they imperiously wield now.
They will be able to collect no more than 8 percent of the customer’s average monthly bill for each of the months remaining until the canceled contract would have expired. This is likely to amount to no more than a few hundred shekels overall.
This is exactly the restriction that came into effect on February 1 for all cellphone providers. The revenue they accrue from the much-curtailed damages they can require is so puny that some of the cellphone providers prefer to forgo it altogether.
Communications providers would also be allowed to demand continued payment for equipment already purchased but not fully paid for. Nonetheless, this wouldn’t be in a lump sum, as most firms now charge on subscription- termination, but in monthly increments.
IN ALL, we are promised a fair shake. Communications Minister Moshe Kahlon (Likud) put it thus: “There’s no reason why customers who wish to switch to another company and take advantage of improved offers should have to pay penalties. Our proposed legislation is part and parcel of an ongoing broader effort to increase the power of the consumer.”
We agree. This is not only advantageous for consumers, but ultimately is best for business as well. When the consumer is made king, the engines of competition are stoked. Unimpeded competition is the basic prerequisite of the free enterprise system.
Communications providers will have to earn their profits – not by holding us captive, but by successfully courting us. This means offering genuinely lucrative bargains, and treating us with respect.