The Telecommunications Industry Ombudsman is investigating SIM-Unlock fees attached to pre-paid mobile accounts to determine whether they are 'penalties' on users and therefore unenforceable.

"Some prepaid phone packages contain a condition that the customer is required to pay the carrier a 'SIM-Unlock fee' if the customer wishes to transfer their service number to another carrier within a particular period - often up to two years, but commonly within 12 months," said the TIO, John Pinnock, in the report released yesterday.

"If [a charge] doesn't relate to the amount owing or a cost recovery then it's a penalty and unenforceable [by law]," a spokesperson for the ombudsman told ZDNet Australia.

"The Australian Competition and Consumer Commission (ACCC) has been considering whether some aspects of the advertising of these packages breach the Trade Practices Act," he added. Prepaid mobiles have become increasingly popular with young people and as Xmas gifts, according to the ombudsman.

This time last year it was Early Termination Fees on mobile accounts that was being investigated by the ACCC, with the TIO holding an industry forum on the topic.

The TIO is concerned that a number of SIM-Unlock fees are for relatively high amounts and appear to bear no relationship to an administrative costs associated with porting a customer's number. The Ombudsman feels that since the fees are usually for a fixed amount they do not represent a genuine pre-estimate of loss, which might cover such matters as handset subsidies and dealer commissions.

A spokesperson for the TIO told ZDNet Australia   the TIO collects all the complaints on a certain topic and collates them.

"We then choose a particular case with a particular carrier and use that as a test case," said the spokesperson, adding that the carrier chosen was irrelevant since the outcome would apply to all carriers across the board. The TIO is conducting two test cases, one with Telstra and one with Optus, and has sent questions to the carriers to gather information about the practice.

"SIM security (SIM-Unlock) is on prepaid bundles which include a mobile handset," Optus spokesperson, Louise Ingram, told ZDNet Australia  . "This is because the cost of the handset and freecall credits often exceed the marked price on the box."

Customers who purchase a prepaid bundle from Optus face a AU$170 fee if they choose to transfer to another carrier within six months. If they leave after six months, or they bring their own phone to the plan, they don't face any SIM-Unlock fees.

Telstra charges more to unlock a prepaid account. "The price you have paid for your mobile phone will be adjusted by an additional amount of $264 if you want to remove the security lock within 2 years of activating your Pre-Paid Service," reads the Telstra Mobile prepaid users guide.

Vodafone and Virgin Mobile do not charge any SIM-Unlock fees on their prepaid accounts.

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