But ruling could mean no more cheap iPhones
Subsidised handsets in the UK could soon be a thing of the past following a decision by regulator Ofcom allowing phone users to ditch their “fixed price” contracts if there is a price hike.
Until now customers on contracts involving monthly billing could only cancel if price rises caused “material detriment,” a legally untested term, otherwise they were invariably obliged to continue paying until the deal ends or face an exit penalty.
But, after nearly a year of deliberations, Ofcom has ruled the practice is unfair to consumers and that in future “fixed” should mean exactly that – and, if it doesn’t, customers should be free to take on a contract elsewhere.
But already the phone industry is warning that the changes – due to come into effect in three months’ time – could result in an end to subsidised phones, particularly more expensive brands such as the iPhone, if operators can’t recoup costs through the contracts.
Commented Ovum telecoms analyst Matthew Howett, “The operators have been critical of this during the consultation, saying that this could spell the end of the subsidised handsets.”
Ofcom, which had been deluged with complaints from more than a thousand disgruntled users, is also extending the mid-contract price rise ban to cover fixed line and broadband contracts. More on its ruling can be found here.
* Struggling Taiwanese phone maker HTC is reported to have halted at least one of its four main manufacturing lines, accounting for at least a fifth of total capacity, and is outsourcing production in response to a sales slump. But the report, from a Reuters correspondent who visited one of the company’s plants near Taipei, has been angrily denied by HTC which insists it “is not shutting down nor has plans to sell any of factory assets.”