Mobile phone contract price hike anticipated by information technology association in shorter deals
In the heart of Berlin, the Bundestag is debating a new bill today - the "Act on Fair Consumer Contracts." This legislation, if passed, could potentially change the landscape of consumer contracts, including mobile phone contracts, gym memberships, and newspaper and magazine subscriptions.
The bill proposes that 24-month contracts for these services would only be permitted if a contract for the same service with a maximum duration of one year is also offered simultaneously. This change has sparked concerns from industry leaders and consumer advocates alike.
Bitkom, a prominent German digital association, has warned against enforcing short contract durations for mobile phone contracts. They argue that this could lead to the loss of the financing option for high-quality smartphones in monthly installments.
Klaus Müller, Germany's top consumer advocate, shares similar concerns. He believes that shorter contracts may be up to 25 percent more expensive, making them unaffordable for many consumers who depend on short contract durations.
The current system in Germany sees most mobile phone contracts with initial fixed terms of 12 or 24 months, with a mandatory commitment period. This means that consumers cannot cancel without penalty during this period. After this period, they gain the right to cancel with one month's notice.
These longer contracts allow providers to offer cheaper monthly prices and bundled handsets. However, shorter contracts reduce the provider's risk coverage time, leading to higher prices per month or reduced subsidies.
If the regulation passes, two-year contracts would remain the standard, but the important competitive impetus for the economy could be lost, according to Müller. He also warns that only consumers with the corresponding financial means would be able to conclude a 12-month contract in the future.
Rebekka Weiß, head of Trust and Security at Bitkom, echoes these concerns, stating that shorter contract durations could result in more expensive monthly rates. She further adds that this could lead to a two-tier society among consumers, with those who can afford longer contracts enjoying lower prices and better deals.
As the debate continues, it remains to be seen how this proposed regulation will impact consumers and the telecom industry in Germany. For now, the focus is on striking a balance between consumer flexibility and provider cost recovery and pricing strategies.
[1] Source: [Link to the source] [2] Source: [Link to the source]
(A photo of a young woman on the phone, as reported by dts Nachrichtenagentur, accompanies this article.)
The Act on Fair Consumer Contracts, if passed, could present a challenge for the finance sector, particularly in relation to mobile phone contracts, as Bitkom warns that shorter contract durations might lead to the elimination of financing options for high-quality smartphones in monthly installments. Klaus Müller, Germany's top consumer advocate, is concerned that shorter contracts could be up to 25 percent more expensive, potentially making them unaffordable for many consumers, thus creating a two-tier society among consumers.
The new policy, if implemented, might also hinder economic and social policy goals, as the potential loss of the competitive impetus for the economy and the increased cost of business technology services might adversely impact both the telecom industry and consumers.
