The jungle drums are sending negative messages about the new TCP Code proposed by Communications Alliance.  

What’s it all about?
In a nutshell, the Australian Communications and Media Authority has been calling for stronger telco consumer protections since it completed its ‘Reconnecting the Customer’ enquiry last year. In response, Communications Alliance developed an upgraded version of the current Telecommunications Consumer Protections Code, hoping it would be accepted and registered by ACMA. (That’s how industry codes become ‘legal’.)
But signs are appearing that ACMA might reject the new draft Code as being too soft … despite the fact that it is by far the most demanding code of its type that the industry has ever faced.

ACCC has its say
First, the Australian Competition and Consumer Commission lodged its own submission during the public exposure stage of the code process. In a blunt assessment, ACCC rated the new draft as too little, too late. The regulator was highly sceptical that any consumer protection system based on industry self-regulation would cure the ills that, as far as it and ACMA are concerned, plague the retail telco sector.

A knowing wink from The Age
On 8 January 2012, The Age newspaper ran a piece that reeked of a little inside information from ACMA. Nothing improper, we hasten to say, but the journo clearly has a strong feeling that the proposed new code is doomed.

So what would happen instead?
If the draft TCP Code is binned by ACMA, the authority will draft its own set of rules, called an Industry Standard. Obviously, it would make them even tougher than the proposed code, and the Standard would have the force of law under section 128 of the Telecommunications Act. Apart from other enforcement options, the Federal Court can impose penalties of $250,000 per contravention of an Industry Standard.

Good news and bad news
For telcos and ISPs that were dreading the burdens of the proposed new TCP Code, a delay in the introduction of new rules will be welcome. And an Industry Standard might omit some elements of the draft TCP Code. But overall, we have to assume that it would be significantly tougher on telco retailers than the draft code.

The Information Paper has been developed to assist ISPs and Telcos in ensuring that their advertising for mobile and wireless internet is compliant with the Trade Practices Act 1974, and in particular the consumer protection provisions such as s52.

In launching the Information Paper, ACCC Chairman, Graeme Samuel said that:

“The ACCC is concerned by companies over-promising and under-delivering the speeds available on mobile and wireless internet, particularly in the context of network upgrades and increasing wireless internet subscriptions,” “This Information Paper is intended to assist the whole industry – mobile and wireless internet retailers, resellers, and network owners – to comply with the law.”

The ACCC has warned ISPs/Telcos not to advertise terms such as ‘maximum’, ‘up to’ or ‘peak network’ speeds, “if those speeds are not generally achievable or likely to be achieved by consumers using the network.”. The ACCC warning indicates that it is taking a similar approach to that previously taken with ADSL2+ advertising.

The ACCC has expressed the view that ISPs/Telcos should:

1. only make speed claims based on ‘appropriate tests of network performance’ to show speeds that can generally be achieved; and
2. prominently state the factors affecting mobile and wireless internet speeds such as congestion, location, and other variables.

The Information Paper also contains an Industry Checklist to assist with compliance – ISPs/Telcos are reminded that they should also remember to ensure compliance with CommsAlliance Code C628:2007 TCP Code (Prices Terms and Conditions). Significant effort must be applied in light of the ACCC’s warnings and recent actions in securing enforceable undertakings against some of Australia’s largest ISP/Telcos.

Web Ace is the trading name of Jason Kenneth McKay of Perth, WA.  ACMA says that McKay has been extracting payments from customer credit cards without authority, and failing to refund.

The issue was first publicised on Whirlpool, the Australian internet users’ town square.  In May 2008, Whirlpool user ‘yabbitboy’ posted:

I am signed up to webace’s email only plan ( $60 a year ), I get unauthorized billings by webace 4 times already, 4*$60. I had contacted them by email – never got replied and also tried contacting them by phone – I do speak to them by person to person but they said they are ‘busy’ and say they will call me back which is *******.

ACMA has now used its power to direct McKay not to extract payments without issuing a bill and in accordance with customer authorisation.

Effect of an ACMA direction

We’ve explained before what an ACMA code compliance direction means.  Any further breaches by McKay could cost him $50,000 each.

So will McKay comply ?

As late as last Saturday, Whirlpool user ‘tudorose’ reported another unauthorised debit.  We’ll watch with interest to see whether the customers’ nightmare is really over.

The industry was already expecting the Mobile Premium Services Code, which was finalised a few months ago and will take effect on 1 July 2009.

But in a move ACMA hopes will be decisive, it has revealed three other weapons in the battle against shonky premium SMS outfits.
 
ACMA to make ‘service provider determinations’

Under section 99 of the Telecommunications Act 1997, ACMA can make ‘mini-laws’ for carriage service providers on a range of topics.  They’re called ‘service provider determinations’.  ACMA proposes to make three new rules.

‘Do not contract’ rule

A register of premium SMS content providers and aggregators will be established.  Obviously, the rules for listing on the register will be aimed at keeping the shonks out – especially the shadowy offshore operators.

ACMA’s rule will then ban mobile carriage service providers and aggregators from contracting with content providers and aggregators who are not on the register.

‘Do not bill’ rule

ACMA’s rule will ‘sin bin’ content providers and aggregators responsible for serious breaches of the Mobile Premium Services Code for a specified period.  They won’t be allowed to operate in the Australian market for their penalty period.

‘SMS barring’ rule

ACMA’s new rule will mandate universal ability for customers to bar premium SMS messages by July 2010.

Our take on it

This can work. 

Combined with the Mobile Premium Services Code and existing powers under the Spam Act and the Trade Practices Act, the new service provider determinations have the capacity to clean up the premium SMS industry.

We only hope the new determinations won’t contain loopholes that allow existing arrangements to continue or permit Australian mobile operators from continuing to collect for pariah operators in any circumstances.  If ACMA covers those issues, it’s a great job.

The report is a good opportunity to review what’s required of CSPs by the Telecommunications Consumer Protections Code.

According to the TIO, by category there were a number of complaint trends outlined below:

Mobile services:

• Provisioning (an increase of 37.7 per cent, from 297 to 409)
• Customer Transfer (up 40.5 per cent, from 412 to 579)
• Complaint Handling (up 25 per cent, from 4,340 to 5,427)

Landline services:

• Complaint Handling (increasing by 55.1 per cent, from 3,957 to 6,137)
• Phonecard (up 70.1 per cent, from 281 to 478)
• Disability (up 117.4 per cent, from 46 to 100)
• Billing and Payments (up 40 per cent, from 6,999 to 9,796)

Internet services

• Complaint Handling (rising 31.5 per cent, from 2,782 to 3,657)
• Credit Management (up 30.7 per cent, from 1,177 to 1,538).

The figures seem to indicate some concerning issues around complaint handling by ISPs and Telcos, with increases across internet services, land lines and mobile services.

This information carries even more significance in the fact that the TIO has indicated that it intends to remind its members of their obligations under the Telecommunications Consumer Protections Code C628:2007.

It is a good opportunity to remind ourselves of the obligations imposed by clause 9 of the TCP Code.

The key to clause 9 is effectively:

1. having a complaint handling process (clause 9.1.1)
2. having a documented complaint handling policy (clause 9.1.2)

It is also important to note that clause 9.1.4 of the TCP Code also requires that:

Suppliers must give the TIO a copy of their internal Complaint handling policy and advise the TIO of any significant changes within 7 days of the change, or as soon as practicable after that time.

The success of compliance can in large part be impacted by staff training and awareness of the procedures and policies. This needs to be addressed to ensure effective TCP Code compliance.

Non-compliance may not only prompt the TIO to make adverse findings, but the ACMA may also intervene by issuing formal directions or taking other enforcement action.

Hint - the Telecommunications Consumer Protections Code (C628:2007) (‘TCP Code’) has the answer.

Clause 7.1 of the TCP Code says:

7.1.1 Credit Assessment rule: If a Customer applies to a Supplier for the supply of a Service, the Supplier must:
(a) undertake an appropriate Credit Assessment to determine whether to supply a Service to that Customer; or
(b) supply a Service which includes measures to effectively limit the Customer’s expenditure or usage by:
(i) a Hard Cap;
(ii) a Pre-paid Service;
(iii) the barring of international and premium service calls;
(iv) reducing broadband internet download speed on reaching a limit; or
(v) any other equivalent measure.
7.1.2 Credit Assessment process: Where a Supplier undertakes a Credit Assessment, the Supplier must Inform the Customer, at the time of the Credit Assessment, of its general nature and effect.

Answer

Yes – but telcos and ISPs can do one of the following (to comply with the TCP Code):

(a) undertake an appropriate Credit Assessment to determine whether to supply a service to a customer; or

(b) provide a customer with a service to effectively limit expenditure or usage by any of the means specified in clause 7.1.1(b);

and where a credit assessment is done, don’t forget to let the customer know, it’s a requirement of clause 7.1.2.

From a practical point of view most telcos and ISPs don’t go to the trouble and expense of credit assessments for individuals or low value services.

Our suggestion, if option (b) is chosen, is to send the customer a welcome email or letter (like some telcos and ISPs do) pointing out the ‘features’ of the services, particularly if those measures include online usage information (if they do, provide a hyperlink and clear login details) or automated email reminders of data usage volumes, for example.  At the risk of  stating the bleeding obvious (yes, telcos and ISPs still forget this !) keep a copy on the customer account.  This may become critical where the TIO is investigating a complaint, particularly with reference to its position statement  ‘unlimited credit – financial over commitment’.

 The answer has some pretty serious consequences.

When the word ‘Consumer’ is used, one usually thinks mum, dad and the kids, right ? Well, its potentially more like mum, dad, the kids, the local milk bar operator, the local accountant, the local builder and the local solicitor, just to name a few under the TCP Code. So this puts a heap of contracts for telecommunications services into the contracts with ‘Consumers’ pile.

The TCP Code

The TCP Code defines a ‘Consumer’ as:

(a) a person who acquires a Consumer Product for the primary purpose of personal or domestic use; or

(b) a business or non-profit organisation which at the time it enters into the Consumer Contract:
(i) does not have a genuine and reasonable opportunity to negotiate the terms of the Consumer Contract; and
(ii) has or will have an annual spend with the Supplier which is, or is estimated on reasonable grounds by the Supplier to be, no greater than $20,000, other than a person acquiring a Consumer Product for resale.

And ‘Consumer Contract’ as:

an agreement between a Supplier and a Consumer for the supply of a Consumer Product, other than for the supply of content services by third parties who are not Carriage Service Providers.

(Note ‘Consumer Product’ includes a Carriage Service)

Fair Trading Laws

It is worth noting that state-based consumer fair trading laws, like Victoria’s Fair Trading Act 1999, contemplate ‘consumer contracts’ as being:

an agreement, whether or not in writing and whether of specific or general use, to supply goods or services of a kind ordinarily acquired for personal, domestic or household use or consumption, for the purposes of the ordinary personal, domestic or household use or consumption of those goods or services

Don’t forget

This inconsistency makes it even easier for the industry to forget its obligations under the TCP Code, not to mention those under the state-based Fair Trading laws.

Don’t get caught out !  Our tip is to carefully refer to both your TCP Code obligations and those under state-based consumer laws at the same time when reviewing your customer-facing processes.

Clue … there’s a Communications Alliance Code that’s relevant, and a TIO policy.

 Answer

• Your main obligation is to try and get all current charges onto the current bill – see clause 6.5.4(a) of the Comms Alliance Telecommunications Consumer Protection Code.
• But the TCP Code does allow a CSP to bill charges up to 190 days after they were incurred by the customer – see clause 6.5.4(d) of the Code.
• White Pages directory charges are a special case.  They can be billed up to 220 days after the directory’s public closing date – clause 6.5.4(e) of the Code.
• And the TIO won’t necessarily argue with late charges for mobile roaming calls and international reverse charge calls.  According to its policy:

These types of calls are not limited to any backbilling period because the Australian carrier is unable to force a foreign carrier to bill for charges within the 190-day period. … When handling complaints that involve these exceptions, the TIO will judge each case on its merits.