Telcos must compensate users for misleading advertising, lobby group says

The telecommunications industry must introduce compensation for users misled by deceitful advertising and actually impose real caps on internet plans instead of simply reducing speeds after breaching a quota, industry lobby group ACCAN says.

The comments come as the Australian Competition and Consumer Commission has taken action against Optus in the Federal Court, the second instance this year, alleging it misled customers by neglecting to give details on how users would have internet speeds reduced after breaching quotas.

Theresa Corbin, deputy chief executive of the Australian Communications Consumer Action Network, says the new case is simply another piece of evidence the industry isn’t able to regulate itself properly.

“There are too many unhappy customers, and I think there are thousands that don’t even bother complaining because they don’t think it makes a difference. It’s not just about getting outcomes from regulators, but we want happy on customers,” she says.

The comments also come as the telco watchdog, the Australian Communications and Media Authority, prepares to approve a review of the industry code of conduct next year. Although the consumer protection code is self-regulated, ACMA says it will impose its own standards unless customer satisfaction lifts.

“The banks used to be like this, but have lifted their performance over the past 10 years,” ACMA chairman Chris Chapman told The Australian. “I’m saying to the telco industry, your time has come.”

“We will invoke a standard in the event the code didn’t provide sufficient consumer safeguards,” he said. “At the moment there is a disconnect between the provisions of the code and the outcomes, and the outcomes aren’t good enough.”

ACMA was contacted by SmartCompany for comment this morning, but was unable to give any further information on the review process.

Currently the telco ombudsman receives thousands of complaints every week regarding inaccurate billing, faults and connection problems, more than any other industry. Corbin says the recent Optus case shows why the industry requires drastic reform.

“The reason we’ve had good response to consumer protection in some areas is because ACMA has had the authority to give out significant fines, and they don’t muck around,” she says.

The ACCC said yesterday it took issue with Optus’ advertising for its “Think Bigger” and “Supersonic” promotional campaigns. The watchdog claims Optus is advertising an internet package where users pay a monthly fee, and then receive an allotted amount of bandwidth for peak and off-peak periods.

However, it also says that once these quotas are reached, the customers’ internet speeds are “shaped”, or reduced, to a speed of 64kpbs. “The ACCC alleges that Optus did not sufficiently or clearly disclose, and in some cases did not disclose at all, these qualifications.”

Optus has responded, with a spokesperson saying: “Optus acknowledges the claims made by the ACCC and looks forward to working with the ACCC to resolve any concerns they may have. We go to great length to offer the best products and services to our customers and to explain the value of those offers clearly.”

But this isn’t the first time Optus has come under attack for its internet advertising. In June, the ACCC said Optus misled customers by allegedly offering “unlimited” internet plans.

While in theory these plans did provide unlimited downloads, the ACCC said Optus didn’t fully disclose that when consumers breach a certain amount of downloads, their speeds are reduced. The ACCC said this negates the very notion of “unlimited” plans.

Corbin agrees. She says the industry needs to start cracking down on the huge number of complaints related to misunderstandings and billing mistakes.

“We want to see individual consumers get compensation for being ripped off because of any advertising, and they should be able to back out of their plans without any sort of fee. These companies should also pay into some sort of education fund to combat against this happening.”

ACCAN also wants the use of the word “cap” scrapped from both internet and voice plans. Corbin says the term is misleading because voice and data isn’t actually “capped”, and users are charged exorbitant amounts for excess downloads.

Instead, she says “caps” should refer to plans that actually stop users from downloading any more data, or making any more voice calls, over and above the specified, advertised amount. She points to the recent advertisements from ISPs like TPG, iiNet and Internode, which have advertised a set rate of one terabyte.

“The term “capped” is so misleading because there is no such thing. There is no plan that says ‘you cannot talk or download past this amount’, and that’s what a cap should really mean.”

“It’s much more responsible give a set amount, but even with that they really need to be careful about advertising if there are any caveats on that, like reducing speeds after a certain amount. The advertising needs to be clear and not misleading at all.”

The telco industry continues to receive a huge number of complaints. These range from complaints regarding billing procedures to companies taking far too long to restore broken connections.

Data from the TIO released in July revealed the number of formal complaints dropped to 52,730 in the March quarter. Despite the drop, ombudsman Simon Cohen said in a statement at the time the results are still unacceptable.

“Complaints remain at very high levels, and I welcome the renewed focus and commitment across the telecommunications industry on better customer service and complaint handling.”

The issue also comes after Telstra said last month it continues to record a number of customers suffering from “bill shock”, as they struggle to pay fees for downloads over and above their quotas. That admission also prompted ACCAN to call for actual caps on downloads, which would stop users from accessing any more mobile broadband services unless they paid the extra fees first.