The telecommunications regulator has delivered a ruthless set of proposals for improving the telecommunications industry, particularly how it advertises, and says telcos need to be more direct about what consumers are actually buying.
The “Reconnecting the Customer” report seeks to address what the Australian Communications and Media Authority says is a disconnect between telcos and consumers, saying the current structure “has not provided appropriate community safeguards in relation to advertising practices”.
The report also comes after numerous court battles between telcos and the Australian Competition and Consumer Commission, with many telcos in hot water over the use of the word “unlimited” to describe deals which actually cap data and voice usage.
Ovum research director David Kennedy says if all the proposals in the report were enacted into law, the industry would see “quite a dramatic change”.
“In relation to advertising, I think this would have a very big effect on the way that packages are advertised in the future,” he says.
“It’s important to remember these are still proposals, however, and they haven’t been decided upon, and there will now be a period of consultation with industry. But this report does reflect a lack of confidence in the current regime.”
The ACMA report identifies six key problems with the industry and recommends six subsequent proposals:
ACMA has essentially found that consumers are too confused about telco products, with words such as “cap” and “unlimited” often meaning different things to what consumers believe they do.
The report is also a response to the growth of “bill shock”. As smartphones and mobile data services become more popular, users access these services without realising how much it will actually cost them – bills often run into the thousands of dollars without users’ knowledge.
ACMA’s research found users are confused not only about pricing structures, but also how to monitor their usage. It wants to see the telcos provide more services for monitoring usage, and also wants them to be more up-front with users on what their limits are.
Allowing consumers to set a point at which their services cut off is one key recommendation.
“Customers find it difficult to compare different products and choose one that is best for them,” ACMA said. It added that consumers “don’t have good information about products and often don’t understand some important features about their product before they sign up”.
The TIO regularly reports on complaint-handling within the industry. Telstra and Vodafone have already spent substantial sums of money hiring more customer service staff to reduce the level of complaints.
Kennedy says the recommendations wouldn’t necessarily make the industry’s products become less complicated, but they would address at least some of the problems facing the industry.
“It is a fact of life that telco products are more complicated than things like electricity or gas, but it will make it clearer and easier for consumers to get to the bottom of what is exactly being offered.”
“It’s still up to the customer to make an effort here.”
The report has mostly been welcomed by the telecommunications industry, with Vodafone director of customer service Cormac Hodgkinson saying “the draft report provides a clear direction for future customer service improvements in the telecommunications industry”.
The Communications Alliance also welcomed the report, saying it signals “ACMA’s continued willingness to work with industry to achieve the common objective of improved customer service”.
Kennedy says the report is part of a growing trend towards the industry regulating after the fact, and is instead introducing laws that will prevent future incidents.
“We’ve actually been in a period of re-regulation in this industry, and there’s a shift away from post-regulation to setting up rules before the fact,” he says.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
