Singapore cracks down on telecom contracts, termination fees

Telecommunication regulators in Singapore issued new guidelines governing contract terms and early termination fees for mobile and broadband services in a bid to make the city-state's telecommunications industry more competitive.

Under new guidelines released by the Infocomm Development Authority of Singapore (IDA) -- which take effect on March 1, 2010 -- mobile, broadband and fixed-line operators will no longer be able to offer service contracts longer than two years.

The guidelines are meant to improve competition between carriers, by making them compete for business based on the quality of their services instead of using contracts and high termination fees to lock in customers..

"In promoting effective competition in the telecoms sector, we have to lower barriers for consumers to terminate services legitimately and switch from one operator to another to enjoy more attractive or competitively-priced services," it said in a statement

Most telecommunication contracts in Singapore are binding for two years or less, but longer contracts have been offered in some cases. The decision to cap the length of contracts at two years was made in response to consumer concerns over the increasing length of service contracts, IDA said.

Under the new guidelines, operators must also drop fixed early termination fees for contracts longer than three months and instead offer pro-rated termination fees that decline over time. This means a subscriber who cancels their contract one or two months before it ends should pay substantially less than someone who cancels their contract after a shorter period of time.

Operators will also not be allowed to charge users an extra administrative when they cancel their contracts..

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