The leaking of Cellnet's plans for 'Liberty', a cheaper airtime agreement, with a lower monthly rental but much higher rates for calls in peak time, has rekindled interest in cellphones for personal use.
Instead of status-seeking yuppies virtually oblivious to costs, cellphone users are now a more mature market, with established service providers fighting it out on price with newcomers who have offices in the suburbs and an ad in Exchange & Mart.
While users have become less starry-eyed, service providers have grown more cunning, with contracts that appear cheap but still reap a handsome profit.
The system works like this: to use a cellphone, its unique identifier must be recognised by the Cellnet or Vodafone networks as being covered by an airtime agreement. These agreements are typically sold as one-year contracts. The subscriber is committed to at least a year's rental and other charges, such as connection and disconnection. A majority of users will continue the contract well past the one-year minimum. A signed contract from a good credit risk is worth serious money to the supplier.
As a would-be cellphone subscriber, you don't want to pay the overheads of a service provider with a West End address, but neither do you want to be ripped off by a classified ad cowboy. What are the issues?
Choose your phone. This is a matter of personal preference and cost. Savings can be made with second-hand portables, but remember that rechargeable batteries are not immortal and replacements can be expensive.
Prices vary a good deal from supplier to supplier, but the cheapest phones may be connected via the most expensive contracts. The excess profit built into the contract subsidises the phone price.
Look at the costs spelled out in the agreement: monthly charge, unit costs and the times of the day that are actually off-peak. Half-minute billing and shorter / cheaper units save money if they fit your likely usage pattern.
One classified advertisement retailer told me unscrupulous service providers could program their computers to shorter periods than advertised. In other words, you think your 30-second units are cheap, but the computer thinks they are 25sec units. A sly way of stealing your money, and difficult to prove.
Most important, look at the terms and conditions, the (very) small print on the back of the airtime agreement. Much of the contract covers what the airtime provider doesn't have to do - if, for example, the system collapses while you are trying to clinch the sale of a lifetime.
In its way this is acceptable, but there are two key clauses that bear close scrutiny: the termination clause and the assignment clause.
The termination clause covers what happens when you want to end the airtime agreement. No matter how long the contract runs, you will disconnect one day. This clause will be activated. Some contractors will use weasel words to ensure a healthy profit at termination. Various tricks are used: 12- month notice periods; notice that can be given only on the anniversary of the contract commencement date; notice that will not be accepted until after the minimum term; unspecified and unlimited disconnection charges.
The supplier will not release your cellphone's identifier until all his costs have been paid, thus effectively confiscating your property in case of dispute.
The assignment clause is not quite as crucial, since you may not wish to sell or give your cellphone to someone else. But if it is a car phone, think hard about it. Some contracts expressly forbid any assignment, forcing the subscriber to terminate the contract and activating the termination clause.
Choose your airtime supplier carefully. If you pay a bit extra for a 'quality service', make sure you get it. Call the service department before you sign the contract. How long does it take them to answer?
If you have a cellphone and are considering a move to the Liberty scheme or one of its inevitable competitors, check your airtime agreement now. You may need longer than you think to terminate.
Nick Warne is a management consultant with Touche Ross
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