New Code Will Force Phone Companies And ISPs To Be Honest About What They Charge

Bill shock over unexpectedly large mobile phone bills is a major problem in Australia (even our politicians aren't exempt). Those issues should be reduced when the new Telecommunications Consumer Protections Code starts coming into effect from September 1, forcing companies to clearly state their charges and banning misleading terms like 'cap'. What benefits will it offer to consumers, and why do we still have to wait another two years for some of the best features for consumers to come into effect? We have all the details.

Picture by Caroline McCredie/Getty Images

The code has been a long time in development. The Australian Communications and Media Authority (ACMA) issued its recommendations on what rules the industry should follow last September. Industry body Communications Alliance responded with its own proposal in February, but ACMA wasn't happy with some of the modifications suggested in that approach (particularly industry resistance to specifying how many 2-minute calls could be made on a given plan). Fortunately, speculation that the code wouldn't meet its August deadline haven't come to pass, with the new code agreed before August and in place from September 1 — albeit in a somewhat limited form initially.

What we like

Once the code is fully implemented, we'll get all these benefits. The catch is that many of them won't happen for a year or more, but we'll get to that when we cover what we don't like.

Unit pricing for mobile plans. Unit pricing has been great in supermarkets, and it's a welcome addition to phone plans. Figures that will have to be quoted whenever a plan is advertised:

•The cost of calling standard Australian numbers (either mobile or landline) •The cost of sending a standard text message in Australia •The cost of downloading 1MB of data

The Critical Information Summary. On web sites and in documentation, providers will have to include a standardised summary of the plan, rather pretentiously called the Critical Information Summary. This will include the unit pricing data, the length of contract involved, plus an estimate of how many 2-minute calls could be made on a given plan. Most plans allow credit to be shared between calls, text and data; on those plans, the wording "If you restricted your use solely to Standard National Mobile Calls each of 2 minute in duration, you could make x number of calls" must be used. (Why it says "minute" and not "minutes" is anyone's guess.) We've applied that model to current BYO contract plans in this follow-up post.

This more or less replicates the 'call minutes' approach used widely elsewhere in the world, though since most people will presumably also send some texts or access internet services during a month it still represents something of a best-case scenario. It's undoubtedly better than being told you have '$900 worth of credit'. The Critical Information Summary must also list any bundled services (such as pay TV or a landline) that are part of the deal.

The word 'cap' has been banned. The term 'cap' has always been meaningless, since that amount doesn't represent the maximum you'll spend, but the minimum. Under the code, it can only be used if the number represents an absolute maximum you can spend, with no possibility of spending more. (Virtually no mobile plans meet that description, since even those which offer unlimited Australian calls will charge for international calls.) Other "misleading terms" are also banned.

Better billing information. Companies must provide access to two years of billing information, and include summaries of the total of the previous two bills on each bill. Notifications for direct debits must be sent 10 days before they are charged. Companies can't charge for anything older than 160 days (which still sounds a little on the high side — why would it take almost six months for a charge to register?)

A unique reference number when you complain. It's shame-making that not all companies do this already, forcing you to endlessly re-explain your problem as you are passed from staff member to staff member. Definitely a welcome improvement. Complaints must be resolved within 15 days, and urgent complaints must be resolved within 2 days.

Spending management tools. On plans with a set amount of credit, notifications via SMS or email must be provided within 48 hours when 50 per cent, 85 per cent and 100 per cent of available data or expenditure has been reached. Notifications should ensure customers don't receive unexpectedly large bills.

Broadband speed claims must be realistic. Providers must not make inaccurate claims about the speed of broadband connections. This should be less of an issue with NBN plans, since the speeds are set by NBN Co and are effectively guaranteed, but it remains a major issue with ADSL connections.

Picture by Dan Kitwood/Getty Images

What we don't like

The code is a big improvement on current arrangements, but there is one big problem with it and a number of smaller annoyances.

Delayed implementation. The code kicks in from September 1, but many of its useful features won't be implemented until much later. Unit pricing isn't a requirement until October 27, 2012; the Critical Information Summary and access to historic billing information isn't required until March 1, 2013. Notifications about approaching the 50, 85 and 100 per cent data thresholds aren't required until September 1, 2013. Large telcos also need to provide expenditure notifications by that date, but small telcos get another year. So if you pick a small provider, they won't have to tell you that you've exceeded your voice call allowance for another two years.

The claim from telecommunications companies is that these systems are expensive and time-consuming to develop. I'd be mildly more sympathetic to that argument if the code was a brand new idea, but the issue has already been debated for over a year. Any company that thought this wasn't going to happen had its head entirely in the sand.

No real time information. While information on usage has to be "readily available" and spend notifications must be sent within 48 hours, real-time usage information isn't required. The official explanation is that it is too hard for the network providers to distribute that information to their MVNO partners. To be frank, that is self-serving BS on the part of providers who don't want to spend money improving their systems. If they can't keep track of exactly what has been used as it happens, how can any of them sell prepaid plans?

Lengthy complaint acknowledgement. Complaints lodged by phone must be acknowledged (and given a reference number) immediately, but complaints lodged through other channels have a much longer acknowledgement period: 2 days. Here's hoping companies don't actually take that long!

Picture by Mike Flokis/Getty Images

What happens next?

ACMA will officially register the code on September 1, and all communications companies will have to sign up to it from that date. As we've noted above, they don't have to immediately start doing everything; it will be a full year before large providers (Telstra, Optus, iiNet, Vodafone) have to completely comply, and longer for smaller players.

Further modifications are a distinct possibility, with ACMA chairman Chris Chapman emphasising the need for the code to be flexible and enforced:

The ACMA will very closely monitor its progress and will not hesitate to communicate to industry the need for further change, if that need arises. This is an important point as the code will apply to every service provider in Australia. Compliance with the code is no longer an option. The ACMA obviously stands ready to use its powers of investigation and enforcement if participants choose not to comply with these new code obligations.

The code is definitely a good step forward, and it's to be hoped that providers don't all wait until the last possible moment to make these changes. Companies that provide accurate information rather than trying to confuse consumers with deceptive terminology and unexpected bills deserves to be supported.


Comments

    So glad the "cap" farce has been pushed out of the picture. My first phone plan had what they called "minimum spend", which was exactly the same as a cap plan except for your $40 a month you got $40 worth of calls, not an obscure $560 worth. The value was more transparent because the calls were cheaper, so the sting in going over your minimum spend wasn't nearly so bad...

      I've always been annoyed at the Disney dollar cap values they advertise. When I switched away from 3 (after some bill shock thanks to them removing my data plan and not informing me that I as now being charged an obscene amount of money per MB), it was fun to compare the business plans and the normal plans.

      Business plans would have significantly lower rates across the board but the normal plans would offer the same effective value for the price (within a reasonable margin).

      While a business plan might charge 16c/minute for standard calls, a normal cap plan would charge 90c/minute but they'll give you some inflated amount of value for $X per month for $Y so that if you did the maths, the call was effectively 18c/min (assuming you used all of your quota).

      It's a pretty deceptive practise and the inflated figures they used to make their plans look like better value are definitely a major factor in bill shock (as they continue to use them after you exceed your quota).

      By being forced to give accurate information about what you're actually paying for, they can't get away with these bill shock shenanigans any more.

      I really look forward to seeing some transparency here.

    2 Days to acknowledge a complaint. I'm sorry but I'd already be lodging a complaint with the TIO by that point. If a Telco isn't on the ball with complaints then I'm already moving on.

    This is long overdue. I've always hated selecting a phone plan, punching in numbers into a spreadsheet, and then still having no idea what the hell it's going to ACTUALLY cost.

    Whoops! You put "spending management tools" in the "pro" list, not the "con" list. Ok, I know you actually think it's a plus, but some of us are really good at keeping an eye on our limits and don't want to be spammed 3 times a month about something we already know! I hope this is able to be opted out of, but from the sounds of it companies are being forced to implement the tool and nobody has considered that some customers might not want it.

      I get spammed at the moment Telstra Pre-Paid anyway.

      I get a message whenever my packs (data, sms, voice etc) are 4 days from the expiry date, and another one when they expire. I get these messages regardless of whether I completely used up those packs or not. I also get messages when I use up the packs.
      And for the data packs, I get warning message that my data pack is low, seconds before I get informed that it has run out. What level is the trigger set to? 500KB to the low warning? 100?

        The notification system isn't 'live' - it only calculates your data percentages occasionally. So if it recalculates, then you chew through all your remaining data, then it recalculates again, you'll get multiple notifications since you satisfy the conditions for each message to be sent.

        It could definitely use some improvement, but I guess creating a live system which simultaneously logs data from millions of devices around the country is a tricky job.

          It's to hard to do live now because there is to much BS numbers to reference.

          I.e. a 5 min call for user x can be completely different to user y because if the plan they are on. I.e. would need to subtract different amounts on the current balance level.

          A prepaid SIM in India (I think) gave balance updates at the end of each call or data session. ( Network message not a SMS)

          With that SIM card calling Australia directly was about the equivalent of aud$0.20 per min

    What about Pre-Paid caps, which actually DO cap your maximum spend a certain amount of usage, and the usage reporting is real-time.

    How about Pre-Paid caps? They are not misleading as far as maximum cap limit

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