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.

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