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< Back to overview page: "BEREC Consultation Platform"

Draft BEREC Report on Terminating Contracts and Switching Provider BoR (18) 229

Starting: 12 Dec Ending

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BEREC invites stakeholders to comments on the draft BEREC Report on Terminating Contracts and Switching Provider.

The ability and willingness of consumers to terminate contract or to switch between service providers is in the respect of electronic communications services (ECS) a key facilitator of consumer choice and effective competition in a competitive telecommunications environment. All consumers should have the right to choose their service provider at any time.

This report collates information on the approaches to switching across different communications services focusing on nine categories. It discusses the processes used in MS and the applicable rules in each MS to ensure that there are robust safeguards and adequate protection for consumers against any failures or drawbacks within the switching process.

This public consultation will run from 12 December 2018 to 18 January 2019, 17:00 CET.

Enquiries about the consultation, including registration problems with the online platform, should be sent to the following email address: BEREC_PC_Contract_Termination@berec.europa.eu

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P12

Rules relating to TPs save / Win-back practices apply in 14 MS[70] (in MT, this rule is only applicable when the end-user requests number portability), while 14 MS[71] have no such rules. In EL, for example, for bundled offers, providers may offer discounts in order to retain the customer. On the contrary, in IT and in MT it is prohibited for the TP to contact the consumer during the switching process.

In ES, the majority of mobile operators arranged a voluntary Code on best practices to regulate retention practices during the switching process (e.g. TP can attempt to contact transferring consumers, through one SMS with a specific text or with a maximum of 5 calls).

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P13

During the switching process, there can be some failures with providing services to consumers. This sub-section presents the practices in MS regarding technical issues that may arise during switchover period.

Responding NRAs indicate that in 20 MS[72] rules regarding technical service failures / losses during or as a result of switching apply (in PT and MT, this only applies when the end-user also requests to port their number). There are no such rules in BE, CH, DK, HU, LV, LT and PL.

Rules regarding delays in porting by the TP apply in 21 MS[73] (in PT, this only applies when the end-user also requests to port their number) but not in 6 other MS (AT, CH, CY, DK, LT and PL).

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P14

The final questions in this section of the questionnaire were about any practices, decisions or legal requirements regarding compensation for loss of service during switchover, compensation for delay in porting or any other compensation mechanism.

As seen in Figure 9 below, rules regarding compensation for loss of service during switchover, apply in 14 MS[74] (in PT, this only applies when the end-user also requests to port their number). For example, in HR end-users get compensation 35 EUR per day until the service is connected. In Norway, loss of service should not exceed one working day, while in CZ in case of the loss of service due to technical reasons the CP is obliged to rectify the failure and to adequately compensate for the failure by lowering the price to the consumer. In DE, the TP providing the service in case of a switching process can only ask for 50 % of the remuneration agreed upon in the contract beforehand in case of a delay or service disruption – note; this is not an automatic liability regardless of negligence or fault and furthermore, general civil law obligations and rights for compensation apply.

Figure 9: Number of MS in which rules related to compensation of consumers apply

Significantly more MS have rules regarding compensation for delay in porting; in PT, this only applies when the end-user also requests to port their number. Such rules are applied in 20 MS[75]. In HU, for example, in cases of delay in number portability the RP or TP shall pay a penalty 5000 HUF (15.53 EUR) per ported number to the subscriber. In IT there is 6 EUR compensation per day in case of complete interruption of the service and 1.5 EUR per day in case of delay in porting.

In BE, the rules require that consumers get 3 EUR per day of delay per number and legal persons 5 EUR. Further, the provider has to pay 10 EUR for each missed appointment with the technician, which is not attributable to the consumer.

12 responding NRAs have also indicated that in their MS[76] there are other compensation mechanisms that apply (in MT, this rule is only applicable when the end-user requests number portability). In Greece, a consumer is entitled to compensation, if:

they are switched to another provider without explicit consent,

- a number portability request is cancelled without their explicit consent,
- the TP rejects the number portability request for an invalid reason, and
- he files a request in time to cancel the number portability request but the portability procedure is completed against his will.

In addition, in Slovakia in case the number is ported against the will of subscriber the compensation is at least 20 EUR and maximum 100 EUR. In a similar manner, in PT, the RP must pay the consumer compensation of 20 EUR per number that was ported without their consent, for each day that it stays unduly ported, up to a maximum of 5.000 EUR per portability request.

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P15

One of the aims of this report it to identify which are the biggest factors that might inhibit consumers from switching their ECS provider. However, because of the increasing complexity of contracts with the increase of bundled services (double, triple and quad-play service, for example), NRAs were asked to consider a non-exhaustive list of 19 factors and to indicate the four most significant issues, which, in their experience, represent the biggest obstacles in their MS to switching between communications providers for each of the nine categories of ECS, namely:

- Fixed NB-ICS
- Mobile NB-ICS
- Fixed IAS
- Mobile IAS
- NI-ICS
- Pay TV
- M2M
- Bundled offers as defined in the Glossary (in Annex)
- Bundled Offers that are defined differently to the Glossary

P16

With respect to fixed NB-ICS, amongst the 19 identified obstacles, the four most significant issues for the 30 responding NRAs are:

- contractual obstacles, which have the effect of discouraging switching, or which create disputes between the consumer and TP due to the consumer’s intention to switch
- actions by the TP to hinder/burden the switching decision by the customer
- lack of consumer information, and
- offer/technology availability.

As seen in Figure 10, of the 30 responses to the questionnaire, 15 NRAs[77] indicated that in their experience, contractual obstacles is among the most significant issues, which might inhibit consumers from switching their fixed NB-ICS provider. 10 of the responding NRAs[78] indicated that actions of the TP to inhibit or discourage switching is an obstacle to the well-functioning of the switching in their MS. 9 NRAs[79] indicated that lack of consumer information, (e.g. lack of consumer awareness of the switching process, lack of tariff transparency and lack of price comparison information) is a factor restraining the switching process. Finally, among the 30 responses, 9 responding NRAs[80] consider the availability (or lack thereof) of alternative offer/technology (e.g. the option of a cable platform may not be available) as among the most significant issues which might present an obstacle to switching.

MT and LT point out that termination fees discourage consumers from switching. PL adds that provider’s bankruptcy could be an obstacle for a functional porting process. IE specifies that the main driver for consumers to switch NB-ICS provider is price.

Figure 10: Number of NRAs who identified the most significant factors inhibiting switching of fixed NB-ICS

The NRAs were further asked about specific “sub-elements” included in the broader term of contractual obstacles”. Based on the 14 responses received, Figure 11 below sets out the greater detail, with long minimum contract duration being considered clearly the most common factor that most inhibits consumers from switching their NB-ICS provider.

Figure 11: Contractual factors which inhibit switching NB-ICS provider

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P17

NRAs were asked to indicate the 4 most significant issues, which in their experience, represent the biggest obstacles to switching between communications providers for Mobile NB-ICS from among a list of 14 specific issues.

As seen in Figure 12, of the 30 received responses to the questionnaire, the 4 biggest obstacles indicated by the NRAs in relation with mobile NB-ICS, from among 14 specific issues, were:

- actions taken by the transferring provider (TP) to hinder/burden the switching decision by the consumer one of the two biggest obstacle, for 14[81] NRAs;
- contractual obstacles which have effect of discouraging switching, or which create disputes
- between consumer and Transferring provider due to the consumer’s intention to switch, also for 14[82] NRAs;
- the service is a part of a bundle, for 10[83] NRAs;
- offer/technology availability, for 9[84] NRAs.

Figure 12: Number of NRAs who identified the most significant factors inhibiting switching of mobile NB-ICS provider

While “actions by the TP” was indicated as among the most prevalent factors, NRAs identified the following issues as sub-topics within this broad category heading as being significant factors to inhibit consumers from switching their mobile NB-ICS provider:

- activities to save or retain the consumer and prevent them from switching before or during the process, for 11[85] NRAs;
- win-back practices after the switching process, including data protection considerations - using information about former consumers to target marketing, for 5[86] NRAs;
- not providing the consumer with the authentication code needed to switch, for 3[87] NRAs;
designating specific requirements for terminating contracts, for 3[88] NRAs;
- prescribing the method by which the TP specifies how the consumer must cancel the contract i.e. by phone, in writing with original signature, by email, etc.…, for 2[89] NRAs.

Figure 13: Number of NRAs who identified a sub-topic of Actions by the TP as a significant factor

In addition, some NRAs commented or suggested other factors that might also inhibit consumers from switching their mobile NB-ICS provider:

- FR pointed out that billing problems can happen, but it does not seem to discourage consumers from switching. RS noted that sometimes the RP bills the whole month instead of the period starting from the date of switching.
- IE highlighted “CP’s requirements for consumers to provide 30 days’ notice to terminate a contract on foot a contract change notification” (i.e. consumers that wished to terminate their contract as a result of the CP changing the terms of the consumer’s initial contract were required to serve a minimum notice period of 30 days before their contract was terminated), illustrating it with a case where a provider was using that notice period to dis-incentivize consumers from switching (not honouring the contractual terms related to cancellations by post or email, forcing consumers to call a phone number that was not always available), which was contrary to regulation.
- PL adds that a provider’s bankruptcy could be an obstacle for a functional porting process.

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P18

As shown in Figure 14, amongst 19 identified obstacles, the most significant issues indicated by the 30 responding NRAs are:

- offer/technology availability;
- contractual obstacles which have the effect of discouraging switching, or which create disputes between the consumer and transferring provider due to the consumer’s intention to switch;
- the lack of consumer information; and
- technical issues or other deficiencies within the switching process and the service being part of a bundled offer

Figure 14: Number of NRAs who identified the most significant factors inhibiting switching of fixed IAS

13 NRAs [90] have indicated that the (lack of) availability of the offer or the technology is the commonest among the most significant issues inhibiting consumers from switching their fixed-IAS provider. 11 of the 13 NRAs stated that “technology being unavailable (e.g. fibre)” was a significant factor, while 8 of the 13 NRAs stated that “Bad network coverage (very few providers or poor quality of service), was, in their experience, a significant factor inhibiting switching of fixed-IAS provider.

13 responding NRAs[91] indicated that contractual obstacles as an important issue to the well-functioning of the switching in their country.

The third most frequent important issue, according to NRAs responses, is the lack of consumer information: 11 responding NRAs[92] consider this category as an obstacle to switching.

Then, among the 30 responses to the questionnaire, 9 NRAs[93] indicated that technical issues were an important obstacle. Also, the service being part of a bundle was mentioned in 9 cases[94].

In SE, the NRA highlighted that the administrative burden can restrain consumers from switching.

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P19

As seen in Figure 15, in relation to mobile IAS, the 4 most significant issues, which, in their experience, represent the biggest obstacles to switching between communications providers for mobile IAS from among a list of 14 issues, were:

- Contractual obstacles which have the effect of discouraging switching, or which create disputes between the consumer and Transferring Provider due to the consumer’s intention to switch, for 12[95] NRAs;
- Offer/technology availability, for 10[96] NRAs;
- Actions by the Transferring Provider to hinder/burden the switching decision by the consumer, for 7[97] NRAs;
- The lack of consumer information, for 7[98] NRAs.

Figure 15: Number of NRAs who identified the most significant factors inhibiting switching of mobile IAS

As shown in Figure 15, for the issue indicated as the most prevalent, NRAs identified the following sub-topics as being significant inhibitors, within the broader heading of “contractual obstacles”:
- contract length, including long minimum contract periods, for 9[99] NRAs;
- requirement to return free or discounted equipment, for 5[100] NRAs;
- penalties for early termination of contract, for 6[101] NRAs;
- use of rollover contracts, for 4[102] NRAs;
- minimum notice periods, for 3[103] NRAs;
- remaining/outstanding consumer debt to the Transferring Provider, for 2[104] NRAs;
- fees for damaged/ lost / unreturned equipment, for 2[105] NRAs;
- unfair conditions in the contracts, for 1[106] NRA;
- service fees or other compensation payments to the Transferring Provider, 1[107] NRA.

Figure 16: Number of NRAs that identified a significant sub-topic of within the broad heading “Contractual obstacles

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4.5.1. Number Independent Interpersonal Communications Services

P20

The number of submissions received for obstacles blocking the switching is small. In total, only 6 NRAs[108] considered there are obstacles that could hinder/block switching from one provider of NI-ICS to another. 3 NRAs[109] mentioned the availability of offers/technology as a reason for not changing the providers. In addition, technical issues or other deficiencies within the switching process and contractual obstacles were mentioned by the same 2 NRAs[110]. 1 NRA considers that network effects can be a strong deterrent for switching due to the lack of interoperability of these services.

Although only 10 of the categories of obstacles out of the 19 identified in the questionnaire were applicable to NI-ICS, a large number of respondents did not mention any obstacles in respect of NI-ICS and so seem to perceive NI-ICS as being sufficiently flexible to facilitate a change the provider without a hindrance or perhaps due to insufficient data in this area.

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4.5.2. Pay TV Broadcast

P21

As shown in Figure 17, of the potentially 11 factors/obstacles applicable for Pay TV Broadcast, which may make it difficult for consumers to switch provider, the following were adjudged to be the most significant:

- The contractual obstacles, which have the effect of discouraging switching, or which create disputes between the consumer and TP, were nominated most of the times, by 9 NRAs[111].
- The service being part of a bundle constitutes the second mentioned obstacle. 7 NRAs[112] notified this issue among the ones preventing consumers to change their Pay TV provider.
- The availability (or lack thereof) of offers in their area or of the latest technology was cited by 5 NRAs[113] as an important issue when consumers consider switching to other Pay TV providers.
- Also, obstacles resulting from a switch of infrastructure[114] and technical issues or other deficiencies within the switching process[115] were noted in the responses of the NRAs to the questionnaire.

Figure 17: Number of NRAs who identified the most significant factors inhibiting switching of Pay TV`

Considering the contractual obstacles, the contract length, including long minimum contract periods (5 NRAs[116]), seems to be the most important issue, that could prevent users from switching. Other elements are the requirement to return free or discounted equipment (4NRAs[117]) or the penalties for early termination of contract (3 NRAs[118]).

One NRA (BE) argued that the requirement “Receiving CP providers (i.e. RP) bespoke equipment” under “Issues relating to the portability of end users equipment" is also relevant for switching digital TV provider, e.g. replacing set-top-box or CI+ card.

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