Consumers should be wary of how the final payment of their telecommunication plan is calculated when they choose a plan, especially if the cut-off date for payment does not fall on the contract end date, they may have to pay extra charges for the final payment.
At present, some service providers will extend the service to align with the billing cycle if the last cut-off date does not fall on the contract end date. In that case, consumers are required to pay for the service beyond the contract period, which incurred additional and unnecessary expenses, in particular to those who had already subscribed to a new plan with another company.
Such unfair practices have become a source of complaint. The Office of the Communications Authority received 34 complaints related to the paying of a monthly bill when the cut-off date does not coincide with the contract end date in 2011, the figure more than doubled the 16 cases received in 2010.
Price disputes also constitute a significant portion of complaints lodged with the Council, out of the 6,296 cases on mobile phone service, data plans, fixed line phone service, residential broadband as well as pay television received till November in 2012, about 40% (2,731) belong to category of price dispute.
To study the practices of the industry, the Consumer Council has surveyed 10 local telecommunication and pay TV service providers with regard to how they fixed the cut-off date for payment, and how the final bill payment was calculated for 4 types of fixed period service plans: mobile voice and data, residential fixed line, residential broadband and pay television.
The study revealed that the cut-off date for payment does not necessarily correlate with the date consumer signed up the contract or the date of service commencement.
Of the 10 companies surveyed, 6 service providers would preset a cut-off date or dates for the billing cycle, while the remaining 4 would either fix the first day of the service commitment period, one day prior to or same day as the service commencement date, as cut-off date for the next billing cycle.
However, not every customer was well informed about the cut-off date when they signed up for the plan.
Only 4 out of the 10 service providers surveyed would list the cut-off date in the service contract. For the remaining service providers, the cut-off date was listed either in the service confirmation letter, billing statement, or in renewal contract for specific mobile voice and data service.
Besides, the study found that most of the service plans on residential telephone, pay television and residential broadband have the contract end date in line with the last payment's cut-off date, if not, the last payment will be calculated on a pro rata basis.
However, the study also revealed that 1 residential broadband and 6 mobile voice and data service providers would extend the service for subscribers until the next cut-off date for the final payment, so that the final payment covers the extended service beyond the contract period.
Of the 6 companies which charged for service extension, only 1 service provider allowed their users to apply for no extension, subscribers of the remaining 5 service providers would have no choice but to pay for the extended period.
These 6 service operators said customers were informed of the calculation method for the last bill payment either in the contract or by way of verbal explanation, or both when they signed the contract.
Given that some service providers may delineate different arrangement and calculation method for the final bill payment due to operational reasons, the Consumer Council is of the view that such practices cannot be fully justified even when the consumers were duly informed in advance. The Consumer Council suggests that service operators should adopt fair and reasonable arrangements for the final payment.
Service providers are advised to align the cut-off date with the contract end date, so that consumers are only required to pay for the service within the contract period. And if there is a discrepancy between the billing cycle and the contract period, the last bill payment should be charged on a pro rata basis.
To avoid confusion and disputes, service providers should provide consumers with adequate and clear information, including payment calculation method. They have the responsibility to clarify the main points to the consumers, enabling them to make informed choices before signing the contract.
Consumers should read and ask for the details in contract terms like service payment, end date of the contract, billing cycle as well as the length of the required period for advance notice of termination before renew or subscribe to a plan. The best way to avoid paying extra charges is to request aligning the contract end date with the billing cycle.
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