Starting in June, cable subscribers will no longer have to pre-pay fees before service begins, the National Communications Commission (NCC) said yesterday.
The commission approved the draft of the standardized contract between cable service operators and consumers, which will enable consumers to either pay for the service in advance or after use.
Commission spokesperson Lee Ta-sung (李大嵩) said cable providers would also have to provide guarantees of their ability to meet the terms of the contract.
“Either they have to set up a trust fund account for their assets, or financial institutions must issue a warranty proving that the service operator can fulfill the terms in the contract,” Lee said. “They [the service operators] can also deposit guarantees in an account, or provide guarantees in other ways approved by National Communications Commission.”
The guarantees would be contingent on how cable providers charged their customers, Lee said. If customers have to pay two months in advance, for example, then 2 percent of a firm’s revenues would be required as a guarantee, while a guarantee of 20 percent of revenues would be required if customers were asked pay a year in advance, Lee said.
“In principle, the more they charge the customers in advance, the higher risk the customers have to bear, the more guarantees the service operators should provide,” Lee said.
The measure was designed to safeguard consumer rights in case cable operators have financial problems, the commission said, using the bankruptcy of Alexander Health club in 2007 as an example.
The Cable Broadband Institute in Taiwan, which represents the majority of cable operators, said it would dicuss with the commission how the government will implement the contract revision. The group said no cable service had been suspended because of financial problems since 1998, when the government issued the first cable license.
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