Swisscom, Sunrise and Salt face annual price increases

“50 percent discount forever”, “66 percent discount for life”: Swiss mobile operators lure customers with such offers. Especially the accompanying cheap brands such as Yallo (Sunrise UPC), Wingo (Swisscom) or Go-Mo (Salt). But now comes the rude awakening: Despite the discount promise, mobile phone subscriptions can become more expensive. And automatically, because the subscription price is now linked to inflation.

But from the start. At Sunrise UPC, all subscriptions will increase by 4 percent as of July 1, as announced this week. The reason given by the second largest Swiss telecom provider is higher energy prices and inflation in general. Understandable so far. At the same time, however, Sunrise is making an explosive change to its Terms and Conditions (GTC).

This is how the rip-off mechanism works

There it says new: “Sunrise may set the price per service once per calendar year adjust to inflation.» This is based on the national consumer price index (LIK). And further: “In the event of a price adjustment due to inflation, the customer has no right to terminate the service prematurely.”

This means: customers of Sunrise and their low-cost providers Yallo and Lebara should be prepared for annual, automatic price increases that need only be justified by inflation. And this doesn’t even give you the right to cancel a subscription.

The problem is that the other two major players in the Swiss telecom market, Salt and Swisscom, have already included a similar clause in their terms and conditions in recent months. You just haven’t applied them yet. Since Sunrise is now leading the way with a price increase, the inhibition threshold for the others should not be too high either.

A look at the situation in the Swiss telecom market shows that the three major players completely dominate the mobile phone subscription market. Swisscom has a market share of about 60 percent, Sunrise 24 percent and Salt about 16 percent. Only the vanishingly small share of 0.2 percent is accounted for by other providers, according to figures from the Federal Office of Communications.

The big three have enormous market power: if all three decide to take the same measure – as with the automatic price increase – consumers are effectively at their mercy.

Sara Stalder of the Consumer Protection Foundation finds clear words: “It’s a joke. The consumer should just accept it.” Since all major telecom companies have the same clause, it makes no sense to cancel the subscription and switch to another provider: “There is simply no real freedom of choice.”

It is also problematic for consumer advocates that a price spiral is set in motion. Because if the subscriptions become more expensive, inflation and the national consumer price index (LIK) will also rise. This is then used as an argument to raise subscription prices again. “That’s absurd,” explains Stalder. It becomes even more dangerous if other sectors also abuse this mechanism.

Unlike Sunrise, Swisscom and Salt have not yet applied the clause. You now have to see if they follow, explains Stalder. The consumer advocate has a particular eye for Swisscom as a state-owned company and market leader.

Why the Competition Commission does not intervene

What can the Competition Commission (Weko) do in such a case to protect consumers against the negative consequences of market dominance? The simple answer: not much. Frank Stüssi, Deputy Managing Director of Weko, explains:

There is no evidence for that in the present case. If the companies just observed what the others are doing and then followed suit, the Weko would not become active. The fact that there are hardly any alternatives is not a problem under cartel law.

Another question, according to Stüssi, is whether the automatic price increase is compatible with the law against unfair competition (UWG). However, this assessment is not in the hands of Weko. In the event of possible violations of the UWG, however, the government will only act if a report is made.