Singapore telecom service contracts will be capped at 24 months and penalties for early termination of contracts must be reduced under new rules announced yesterday.
The IDA said the new measures aim to “ensure that industry practices will be more reasonable and fair.”
The new rules, which come into play in March 2010, require operators to reduce early termination penalties each month over the life of all fixed, mobile and broadband service contracts.
The fees must also be lowered to reflect the costs that will no longer be accrued when customers terminate services, such as back-end administrative and operational costs.
IDA Singapore said the new guidelines were “prompted by consumers' concerns” about long contracts and “excessively high” penalties for terminating contracts.
“We encourage the operators to compete with each other on price, quality and innovative services. In promoting effective competition, we have to lower barriers for consumers to terminate services legitimately and switch from one operator to another,” said IDA deputy CEO Leong Keng Thai.
IDA would encourage operators to provide basic service offerings with shorter contract terms, he added.
StarHub spokesperson Michael Sim said the operator’s standard mobile and broadband contract was 24 months. He said StarHub was already cutting early termination charges on its mobile service agreements.
M1 spokesperson Swee Kiat said its own contracts all fall within the 24-month limit, and the company would review the new guidelines on termination charges.