ISPA concerned over application of CPA to bandwidth

"If Section 63 of the CPA is deemed by the Commission to be applicable to the payment in advance for data and other electronic services, we predict that it will have the effect of driving up prices considerably. This at a time when both consumers and businesses need all the help they can get," says ISPA joint chair Marc Furman. "Such a move would also have the effect of hampering the vital drive to create jobs and increase broadband penetration."

World Bank research has shown that in emerging countries there is a direct correlation between broadband penetration and gross domestic product. It is research like this that lies behind the July 2011 compact between the ICT industry and government to work together to achieve 100% broadband penetration by 2020.

Payment in advance does not fall under Section 63

Section 63 of the CPA regulates when various types of prepaid certificates, cards, credits, vouchers or similar devices expire. The prepaid device expires only when its full value is redeemed, or after three years if the full value is still not redeemed. Until the full value of the prepaid device has been redeemed, the unredeemed portion remains the property of the purchaser.

ISPA contends that Section 63 only applies to transactions in which some form of actual prepayment device (prepaid certificate, card, credit, voucher or similar device) is issued by the supplier. Payment in advance for bandwidth does not fall under Section 63 because there is no prepayment device which 'holds' the value to be exchanged for services in the future. Rather, it is a simple payment in advance for future access to services, which is specifically excluded by Section 63(1).

Implementation would disadvantage consumers

"In fact, once a consumer buys the bandwidth, it is immediately available for consumption and no further 'device' is needed to gain access to it," says Furman.

If Section 63 of the CPA is deemed to be applicable to the payment in advance of data and other electronic services, it would imply that it could be applied to all payments in advance. For example, a consumer who paid for parking in advance will then be able to roll over the days the parking bay was not used in one month into the following month.

"Applying Section 63 of the CPA in this way to bandwidth would actually have the unintended consequence of disadvantaging consumers rather than protecting them," Furman concludes.