Consumers should carefully compare the total package price of personal computer/Internet access deals with unbundled equivalents, Acting Australian Competition and Consumer Commission Chairman, Mr Allan Asher, warned today.
The deals generally offer a PC for a small upfront cost (or no cost). Consumers then pay a monthly fee that includes an Internet access fee, repayment for the PC and a credit charge.
Mr Asher said that the PC/Internet deals offered some benefits for consumers by making it easier to get on the web.
"To the extent that the new deals are a sign of increased competition I welcome them. But in some other markets (such as mobile phones) we've seen competition distorted by misleading or deceptive conduct.
"The ACCC is concerned that some of the deals are so complex that the 'headline' price is meaningless. There is a risk that consumers will be misled if important conditions and the real price are only revealed in the fine print or flashed onto the TV screen for a few seconds."
Mr Asher advised that consumers should consider all the options for purchasing computers and Internet access, such as leasing or using other forms of credit. He noted that some interest rates attached to the offers were higher than credit card rates and that most of the packages require consumers to have a credit card to pay the Internet charge.
He also warned against entering long-term contracts in rapidly changing markets.
"Three years ago, the June 96 edition of Choice showed the Internet access price for 30 hours per month was almost $100. Now $30 for virtually unlimited access is commonplace. In 1996 a state of the art PC had a 200MHz Pentium chip and cost more than $4,000. Today you can buy twice that power for half that price.
"Consumers should ask a lot of questions before taking up an Internet/PC offer. As a start, consumers should get answers to the following:
- how does the price of the package compare to the total price for the separate components (including buying different components from different suppliers)?
- if interest is charged, how does the rate compare to other forms of credit over the term of the contract ('interest free' periods often get made up later)?
- how much of the monthly charge is for Internet access and how much is repayment of the PC? how do the features of the PC compare with other PCs? What is the processor?
- How fast is the modem?
- What software is included?
- Is a printer or other peripheral included? what support services are provided for the PC and the Internet access?
- how much 'unlimited' Internet access will you realistically use?
Many Internet service providers offer free trial periods for the first month.
- are there any limitations on the Internet service is it available in your local call area, at all times?
- How reliable is the Internet service provider's connection?
- are there charges for exiting the Internet contract early?
- does the contract let the Internet service provider change the access charge during the life of the contract?
- what if you change your mind is there a 'cooling off' period or can you get a refund?
- what happens if the Internet service provider goes out of business? "Consumers should at least find out how much it costs to end the agreement early.
"The ACCC will be monitoring the new promotions to ensure that all the important terms and conditions and the full cash price are disclosed."