Opinion: ACCC crackdown could shift the mobiles market

Expect your mobile phone carrier to offer less variety in mobile devices with its plans after today's announcement by the competition watchdog.

The Australian Competition and Consumer Commission (ACCC) has decreed that mobile network operators in Australia must honour a replacement warranty for a mobile handset for the entire length of a customer's mobile phone plan.  

In Australia, it is common practice to bundle the cost of handset into a 24-month plan - amortising the cost of the phone and allowing the telco to lock in a customer for two years.

(I've always suspected that the 24-month plans don't work in the consumer's favour in the long-run, as the immediate appeal of the shiny new gadget blinds us to the higher call costs that can be thrown in with it. But that's another matter.)

The watchdog's decision, ACCC chairman Graeme Samuel told us today, was based entirely on Australian law.

"I'm not aware of any international precedents on this - we haven't looked," Samuels said.

"It simply talks to Australian law as it is. If you sell a mobile phone in connection with a service contract, it is in our view misleading and deceptive to represent to the phone purchaser that the warranty on that phone won't last the duration of the contract.

"Under Australian law, products sold to consumers should be fit for purpose. And if the contract is for two years, the phone should work for two years, not six months.

"It's important that the telcos understand that they can't have it all their way. You can't say to the customer - who is paying $49 or $79 a month under that plan - that they have to keep paying that monthly amount for the full 24 months even if the handset dies within 12 months.  That is not legal."

Australia's telcos sell a phenomenal array of mobile handsets with their plans. Walk into any Telstra, Optus or Vodafone shop and the choice of handsets is staggering. Beyond mobiles, there are the netbooks now being bundled with plans - and we all know how buggy those cheap little machines can be.

I wonder - with the returns of some models - or indeed entire brands - being far higher than others, whether Samuel's crackdown will compel telcos to pay closer attention to quality control when evaluating new devices.

I would expect devices that already have a poor returns record will be dropped very soon - particularly if the vendor in question doesn't provide a replacement or credit to the telco for returned devices (I'm checking with the telcos on this).

I'd also expect that models like the Apple iPhone - which come with a 12-month manufacturer's warranty, won't be sold under 24-month plans, or will only be sold on 24 month plans at far higher prices. Those battery issues could just about put a mobile carrier out of business.

As iTnews readers have raised on a number of occasions, support for mobile devices is becoming a complex issue.

Consider Android phones - devices with hardware from one company, an operating system from another, apps from everywhere and a telco thrown in.

There is going to be some buck-passing when it comes to supporting these devices, without question.

If I were a Telstra, Optus or VHA right now, I'd be taking this ACCC issue to the handset and netbook manufacturers.

A spokesperson for Telstra told iTnews that the company already in discussions with vendors to "ensure our customers have the right solution for the duration of a 24 month contract". In other words, Telstra will be requesting that its vendors move to a two year warranty. 

"We will continue to work with the ACCC," Telstra said.

Another key telco executive asked whether fridges sold on a payment plan by Harvey Norman would be subject to the same rules.

Have you ever had a warranty dispute with a telco? What devices have you found the most buggy?