New rules for telecoms companies to cut mobile and internet bill shock.
INTERNET and mobile phone customers will get a warning when they hit 50pc of their monthly usage allowance under tough new consumer protection rules for telecoms companies.
The new Telecommunications Consumer Protection (TCP) code, which will be enforced from September 1, will act as a rulebook for telcos on how to engage with customers, forcing the companies to make radical changes to the way they market to and bill users.
Under the new code, which was today accepted by the Australian Communications and Media Authority (ACMA) after months of revisions, telecoms companies will be required to include the cost of a two-minute national call, the cost of a standard text message and the cost for 1 megabyte of data in some forms of advertising.
Telcos will be required to offer a ‘Critical Information Summary’ (CIS) that includes all pricing information, inclusions and minimum-spend information for each product in a standard form.
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Customers will receive warnings when they have used 50 per cent, 85 per cent and 100 per cent of their monthly allowance for phone usage and data, to help prevent bill shock.
The code will also introduce an industry-funded body called Communications Compliance that will monitor companies and refer breaches to the regulator.
The new code has been in the making since 2010 when the telecommunications ombudsman and ACMA received record numbers of complaints about telecoms companies. At that time the ACMA warned that unless the telecoms industry significantly improved its performance in regards to consumer protections, it risked losing the right to develop its own consumer protection rules and would instead face the prospect of direct regulation.
In subsequent inquiries by the ACMA, it was found that the annual recurring costs associated with the industry’s unsatisfactory performance under the previous code included a $1.5 billion hit to consumers who chose the wrong mobile or internet plan, a $108 million cost to telcos to cover complaint calls and a further $113 million cost to the companies for writing off bad debts. It is hoped that the new code will significantly reduce these costs.
“In February, Communications Alliance (CA), the telecommunications industry’s peak body, asked the ACMA to register a revised code,” ACMA chairman Chris Chapman said. “However, it didn’t go far enough in meeting the inquiry’s mandated outcomes and the ACMA reiterated the benchmarks that were necessary.
“Today, I am in a position to announce that industry stepped up – the code has now met the mark. The ACMA’s evidence-based approach, in this increasingly challenging space of convergence, and its ability to work with its stakeholders has delivered.
“The code arguably represents a tipping point for the industry in terms of its relationships with its customers. We’ve already started to see industry participants refocusing their resources on their customers … as they now increasingly compete at the retail level on brand equity and customer care. So the next step in this whole process is the longer term industry response.”
The Australian Communications Consumer Action Network (ACCAN) welcomed the code, saying that the new rules were more fair than those previous.
“We’re encouraged that ACCAN and other consumer representatives, the ACMA and [industry body] Communications Alliance, working together, were able to improve the TCP Code and are hopeful that its adoption will result in clearer advertising, easier comparison of products, better information about contracts and better tools to help consumers avoid bill shock,” ACCAN chief executive Teresa Corbin said.
ACCAN said, however, that there was still some concern that customer service and complaint-handling problems could continue unless the ACMA was given greater powers of enforcement.
Under the rules, if the ACMA finds a telecoms provider has breached the code, it can issue a direction to comply, however it cannot directly fine or otherwise penalise the provider. ACCAN has written to Communications Minister Stephen Conroy urging him to bolster the ACMA’s powers.
“The big issue here is that the ACMA does not at present have strong enough powers to enforce the Code,” Ms Corbin said. “Enforcement powers are essential in getting industry compliance. The Australian Competition and Consumer Commission, for example, has much stronger powers and its issuing of fines has sent a strong message to the telecommunications industry that its advertising cannot be misleading.”