A new mandatory code of compliance designed as ‘a rulebook for telcos’ has been introduced in Australia, primarily to stem the number of ‘bill shock’ cases and complaints about misleading advertising and confusing plans. The far-reaching code will affect all CSPs in the country, and compliance is no longer an option.

The Sydney Morning Herald reports that Australians spend US$1.54 billion more than they need to each year on mobile phone bills, something the new rules aim to prevent by ensuring plans are worded more clearly. The word ‘cap’ is also to be avoided (unless there really is a hard cap), and consumers will be warned before they go over their data limit.

Australian CSPs and their customers spend US$111 million resolving complaints, while CSPs, themselves, write off up to US$116 million annually in bad debts incurred through bill shock. This appears a staggering amount of money for a population of around 23 million people. The country’s independent Telecommunications Industry Ombudsman (TIO), self-titled as a fast, free and fair dispute resolution service for small business and residential customers who have complaints about their phone or internet service, receives over 200,000 new complaints each year so it’s easy to see why the country needs a more effective code of conduct.

Under the new 102-page code, which will be enforced from September 1 this year and progressively phased in over the next two years, customers will receive warning messages when they have reached 50 percent, 85 percent and 100 percent of their monthly allowance for calls, messages and data. But there’s a catch: data notification warnings won’t have to be sent in real time and could be received by customers up to 48 hours after reaching a certain limit, apparently due to some CSPs’ billing systems being incapable of alerting customers of their usage in real time. That alone should be concerning in 2012!

Customers will purportedly benefit from the code’s key points including:

  • Standard information in advertising for easy plan comparison between different CSP’s offerings;
  • Summary of critical plan information at point of sale;
  • Spending alerts to avoid ‘bill shock’;
  • Substantiation of claims about broadband speeds being offered;
  • Ban on confusing advertising terms such as ‘caps’;
  • CSPs must provide information about accessing and altering plans;
  • CSPs must provide overseas charging information;
  • Tracking of customer complaints;
  • Overhaul of complaint handling procedures;
  • And the establishment of a new industry compliance body.

CSPs will also be required to offer customers a ‘Critical Information Summary’, which details pricing and minimum spend information across all products in a standardized format. Most advertisements will have to include the cost of a two-minute national call, a standard SMS and 1MB of data. This is so customers can make quick and easy comparisons between competing plans before making a decision which to opt for. Currently, and this is not only a problem in Australia, advertised plans are so convoluted and mired in small print, only a certified actuary or maths professor could possibly compare plans accurately.

Although the Australian Communications and Media Authority (ACMA) will be policing the new code mainly by issuing directions to CSPs to comply, it cannot actually fine or penalize them for not adhering to it – though it can still take them to the Federal Court. With all the best will in the world it would appear that a ‘toothless tiger’ will be left to protect consumers. As the telecoms’ regulator, ACMA has had its fair share or legal wrangles over the years with telcos armed with very large, well-funded legal departments. If history is any indication, it may find policing the new code quite a handful.

However, the biggest damage could come from a familiar source – the press. No doubt it will be watching social media eagerly for customers that report the code’s failings. These days, consumer backlash is far more devastating than any slap on the wrist by the regulator.

First published at TM Forum as The Insider, 12 July 2012