Nearly 80 percent of all cell phone rates include a “value retention clause” that gives carriers the right to raise prices in line with inflation. This was the result of an investigation by the network operator Ventocom, which operates the mobile communications brand “Hofer Telekom” (HoT). But only about 20 percent of customers are aware of this, according to a current survey of market agents. Ventocom boss Michael Krammer therefore recommends checking contracts carefully.
“We have never experienced an inflationary environment in this sector, such real inflation as is happening now,” said Krammer. Ventocom therefore took a close look at the Austrian mobile communication landscape and looked for so-called ‘value protection clauses’ in the general terms and conditions. Not only the contracts that are now being offered were checked, but also the old rates, the conditions of which must still be available online. “Almost 80 percent of the mobile phone rates currently available on the Internet have a clause somewhere in the conditions according to which rates can be adjusted each year according to inflation,” says the mobile phone boss.
Majority not aware of index clause
There are big differences between operators. For some, the index adjustment only applies to the base rate, for others it also includes service flat rates and other rates. In this context, survey agency Marketagent conducted a survey among 1000 people between the ages of 14 and 69. Among other things, it showed that only about 20 percent of the respondents knew that such a value retention clause was included in their mobile phone tariff. About 41 percent did not know and about 39 percent said they would not be affected by an index adjustment. “That’s absolutely wrong,” Krammer said. “Fact and personal feeling are different. Of course no one reads page 33 of the terms and conditions.”
Of the 20 percent who are aware of the index adjustment, 40 percent believe that they have an extraordinary right to cancel in the event of an index adjustment. “Wrong, you haven’t,” said Krammer. In the event of a price increase, about one in two respondents would change their mobile phone provider. The main reason for not switching providers is that the respondents are satisfied with the quality of their mobile network.
Similar clauses also apply to permanent contracts
Value protection clauses are also common for internet connections. The research is more difficult here because the provider landscape with the regional providers is larger. “According to our projections, the number of indexed contracts here is over 80 percent,” says Krammer. Consumer knowledge here is “as bad as mobile communication”: nearly 20 percent of respondents were aware of the value retention clause, “the rest misjudged or did not know.” The belief in an extraordinary right of termination is even greater than with mobile communication, and that is “of course also wrong”, according to Krammer.
The Ventocom boss sees a great lack of information about the value retention clause among mobile phone customers. This is also due to the fact that until now it was irrelevant because inflation was so low. “But now it’s getting relevant,” Krammer says, referring to high inflation. He therefore recommends carefully examining contracts.
“SIM-only contracts”, ie contracts where you only get the SIM card and buy the mobile phone yourself, are almost always cheaper than contracts with a mobile phone, also because there are longer minimum contract terms here. Mobile phone users should “in any case no longer enter into long-term contracts” and may not renew such contracts. It is better to buy the terminal device yourself on the free market and to conclude a SIM-only contract without a value protection clause.
Source: Krone
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
