2degrees going to Commerce Commission over Vodafone phone locking

2degrees will lodge a complaint with the Commerce Commission over Vodafone's new policy of locking some pre-pay  handsets to its network, director of corporate affairs and wholesale Mat Bolland tells NBR ONLINE.

Although the break-free Vodafone is now charging is modest ($30), Mr Bolland agrees with the Telecommunications Users Association (Tuanz) that there is a risk of mission creep.

"You start off with a couple of handsets with a $30 break fee, then see what increases you can get away with," the 2degrees manager says.

Commerce Commission comunications manager Allanah Kalafatelis tells NBR, "The Commission is aware of Vodafone’s new limited phone locking policy. From our perspective the main issue arises under the Fair Trading Act. Simply, consumers must be aware of the terms and conditions of the handset they are purchasing."

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Vodafone follows Telecom with phone locking

EARLIER: Vodafone has begun locking some cellphones to its network again - a practice it previously abandoned in 2008 after a Commerce Commission warning.

Since June 1 (as spied by Geekzone members last night), the carrier has been selling three low-end, pre-pay handsets that are locked to Vodafone's network. 

If they want to change phone networks within nine months, the pre-pay customers will have to pay a $30 break fee.

Early last year, Telecom introduced phone locking and a $30 release fee for handsets on its Skinny Mobile plans.

2degrees complained to the Commerce Commission. Its then CEO, the late Eric Hertiz, said "This is a cynical move to lock in the most cost-sensitive consumers so they can’t make a choice."

Telecom said the $30 break fee was small potatoes.

Tough on travellers
Historically, NZ has been one of the few countries without SIM card looking. Vodafone abandoned the practice in 2008 after being leaned on by the Commerce Commission* 

In March last year, as the Commerce Commission rejected 2degrees' complaint, Telecommunications Users' Association head Paul Brislen raised a practical problem.

"Locked handsets mean customers travelling overseas are stuck with the SIM they were issued. No more dodging those atrocious roaming charges by swapping to a local provider without a lot more hassle - hassle the customer doesn't need," the Tuanz boss told NBR ONLINE.

Mission creep
And although $30 is not a big sum, Mr Brislen worried about "mission creep" once the principal of of break fees was estabalished.

Today, he added, "Anything that makes it more difficult for a customer to switch providers should be avoided at all costs, by both providers and by customers. Having said that, if a customer has done his or her homework and is happy to have a device that's locked to a single provider, then they should be informed of this up front when buying the device. Any unlock process should be clearly labelled by the provider."

Network operators, Vodafone in particular, have tried this in the past and it's failed to do well, Mr Brislen says.

"New Zealanders are a bit over network operators locking them in to long term contracts and to on-net discounts as evidenced by the large number of customers moving to 2degrees. The way to win customers is by offering them a better service at a better price, not by restricting their ability to migrate."

* RAW DATA: The Commerce Commission's April 2008 letter to Vodafone over handset locking (PDF) | Vodafone's response (PDF)