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.

The warning comes after disputes were alleged to have remained unresolved, as a consequence of this ISP’s refusal to comply with the TIO Scheme.

According to ACMA:

The TIO referred this matter to ACMA because Bytecard had failed to cooperate with the TIO in relation to two continuing matters. Both the TIO and ACMA have made attempts to encourage Bytecard to voluntarily comply with the TIO Scheme, without success.

ACMA’s power to direct compliance

Part 6 of the Telecommunications (Consumer Protection and Service Standards) Act 1999 imposes obligations on Carriers and CSPs (who are referred to as eligible carriage service providers, as defined by s127) to:

1. Enter into the TIO Scheme; and
2. Comply with the TIO Scheme.

Eligible carriage service providers are defined by s127 as:

(a) a carriage service provider who supplies:

(i) a standard telephone service, where any of the customers are residential customers or small business customers; or

(ii) a public mobile telecommunications service; or

(iii) a carriage service that enables end users to access the Internet; or

(b) a carriage service intermediary who arranges for the supply of a service referred to in subparagraph (a)(i), (ii) or (iii).

In this instance, ACMA’s formal warning came about because of the alleged failure of ByteCard (who is an eligible carriage service provider) to comply withe TIO Scheme in breach of Part 6 of the Act.

We have previously examined issues with the TIO Scheme and frustrations that some CSPs encounter, but the law is the law, unless a CSP is exempt (under s129) they must comply with their obligations under Part 6.

Obviously in many situations the TIO does a great job at resolving disputes in a fair and equitable manner.

We have recently seen a spike in the number of telco and ISP clients seeking advice on TIO disputes.  Sure, they are often to blame for poor communication and poor account management (which in our view is symptomatic amongst many industry players) but we also see disputes that are manufactured by customers attempting to avoid contract obligations.

Sometimes customers are just plain dishonest.

A case in point

One particular matter caught our attention recently.  Our client – ISP ‘X’ - had a contract for a single DSL service to a corporate customer with annual turnover in the tens of millions of dollars.

The customer exceeded its monthly download quota and received several automated warnings both before and after going over the limit.  Being a corporate they incurred several thousand dollars in excess charges.

When the matter ultimately reached the TIO, ISP X correctly asserted that it had acted reasonably and had complied with all Industry Codes and laws.  On this basis ISP X refused to waive the all the charges, which is what this corporate customer wanted. 

The TIO’s approach was ‘if you don’t give the customer what they want, we will continue to escalate the dispute to a higher level’, ultimately costing ISP X thousands of dollars in TIO fees.

It seemed to us that the TIO was doing everything within its power to give the customer the outcome it desired, even though neither the TIO nor the customer could identify a single breach of a law or Industry Code.  Is this truly an ‘….independent alternative dispute resolution scheme for small business and residential consumers in Australia’  ?

This is just one instance where the TIO has departed from its ‘independent position’.

Solutions

Where a dispute is over a solid amount, a CSP could be best advised to issue normal court proceedings, locking the TIO out.  It would be sad if an actual or perceived lack of fairness to the industry drove CSPs towards the courts as a better solution, but that could happen.

In other cases where larger sums were involved, after we issued legal proceedings and the customer became aware that the TIO had no power to intervene, the issue quickly resolved itself – with common sense and responsibility prevailing.  Funny that. 

Another solution is for ISPs and Telcos to properly account manage larger customers and keep the communication channels open.  In many instances customers have unresolved disputes which, if properly handled, would not result in them looking for a solution by fair means or foul.

Probably most controversial, if the TIO imposed a filing fee (yes, we know there are some obstacles to that) with a sliding scale for individuals – small fees – and business – higher fees – with the usual dispensations for people who would suffer hardship from a fee, we might see fewer opporunistic complaints.

Almost every internet and phone contract says the provider can withdraw or limit customer entitlements.  Many even comply with the Telecommunications Consumer Protection Code and allow affected customers to cancel contracts if that happens.

But allowing cancellation rights may not be the end of the matter.

The Crazy John case

On 27 December 2008, Whirlpool user SusanM posted:

I signed up for their $49 cap plan for 2 years in early September 2008 based only on the fact (after much research I might add) that they had NO CALL EXCLUSIONS…now after only 4 months, me and many friends who also took out Contracts for the same reasons, receive a letter telling us ‘Great news…’ they are changing the Cap Plan from March 2009 to give us not only the current $310 for the $49 cap BUT an extra $290 credit to call our mates also on Crazy John’s! woohoo! Now, not $310 as we signed up for….but $600!!!! WOW!

Yes you’d think great news…until you read the fine print….no more premium calls, overseas calls etc etc etc…in other words…what you signed you’re Contract for will no longer be covered! What the…?????

The Optus case

On the very same day, the Sydney Morning Herald reported:

Optus makes it harder to call home

ANGRY customers have accused Optus of greedy behaviour after it cut off their access to cheap international mobile telephone calls on Christmas Eve.

The company texted customers this week telling them they would no longer pay local mobile-to-mobile rates for services that use the internet to make overseas phone calls.

And here’s an interesting quote the SMH attributes to Optus:

An Optus spokeswoman said she could not comment on whether the service was costing Optus more than the cost of a national mobile-to-mobile call.

But she said the pricing change was in line with the terms and conditions of its timeless and cap plans, which exclude international calls.

This could be important.  Optus hasn’t claimed any change in circumstances.  There’s no suggestion of increased charges from overseas networks.  It just ‘brings it into line’.

But surely it was out of line from the first day Optus offered the pricing ?

So what’s the (legal) problem ?

Well there could be a few.

• If either company offered the plans expecting to withdraw features a little later on, it is likely to be in breach of section 52 of the Trade Practices Act 1974. That would be misleading and deceptive conduct.
• It could be the same if they represented that the features would be available until the end of a term. We don’t know about Optus, but SusanM posts about Crazy John:

(trust me…I mean it, I called CJ’s call centre 3 times to confirm with their staff and then in the shop was verbally guaranteed they WOULD NOT change call restriction once I signed on the dotted line!) and explained very clearly that all I wanted was a phone to enter comps…ie: premium calls!! They even had the nerve to tell me I was not alone…they had signed up heaps of other users for the same reasons! Damn this makes me mad!

So SusanM has a case

It doesn’t matter that Crazy John’s contract strictly allows it to change plan features.  Putting it in layperson’s terms, section 52 of the Trade Practices Act overrules contracts.

And it gets even better (for SusanM)

SusanM may worry that the sales promises made to her were just ‘verbal’.  But thanks to the TIO’s recently adopted sales records policy, Crazy John may be in difficulty if it can’t produce proper records of what SusanM was told.

We have criticised the sales records policy as being ‘overboard’ and we stand by that view.  But that doesn’t make it go away.  CSPs that withdraw features have to live with it.

So what about Optus ?

As we noted above, the SMH quote attributed to Optus is interesting and concerning.  It is at least consistent with a suspicion that Optus had it in back of mind to withdraw the feature from the start.

If it was selling contracts on that basis, it has serious questions to answer.

In a nutshell

A CSP that offers a feature for a plan term must really intend to offer it for the term, and have reasonable grounds for creating the impression it will do so.  Otherwise – contract rights or no contract rights – it may be liable for a breach of the Trade Practices Act and corresponding State laws.

in this second part, we look at how to effectively respond to the TIO and achieve the best outcomes.

In the first part we determined who the complainant is and what the complaint is.   Now it’s time to respond to that TIO complaint.  The way you respond can have a significant impact upon the final outcome.

The TIO isn’t quite a level playing field

Although the TIO scheme is an impartial alternative dispute resolution process, many of the investigators assume the telco / ISP is at fault, and use a number of techniques to trap unsuspecting telcos / ISPs and effectively force a complainant-friendly resolution.  Much of the time telcos / ISPs enable this because of the way they respond.

Rule Number 1

Answer the question.  Not only questions posed by the TIO but questions raised by the issue itself.

Too often we see CSPs who have responded to the TIO only to receive 6 page replies, asking further questions and repeating questions that they asked in the first place.  The cause of this is the nature of the response.  Having determined what the complaint is, a response needs to address the questions in issue and those posed by the TIO.

A proper response the first time can save a lot of correspondence going back and forward.

Rule Number 2

Keep it simple.

Too often we see responses that have been drafted, which detail the history of the Roman Empire.  It is these responses, which more often than not, raise more issues for the TIO to investigate – leading to an adverse finding against the CSP.

The best way to respond is to keep it simple.  The skill of drafting is being able to write less – less really is more.

Address the questions and claims made by the complainant in a systematic and methodical way.  It is best to support a response with a copy document attached, instead of trying to copy slabs of a document into you response.

State the point, or the response, and then refer to Exhibit A or Exhibit B and so on.  This not only makes your response more credible, but makes it easier for the TIO to easily understand the point you are trying to make.

Besides, we have seen many situations where the TIO has not properly read responses, because of their length.  This only resulted in further questions being asked, even though the response actually addressed them.

Food for thought

In summary, handling a TIO complaint should be dealt with by using a simple process and remembering basic rules:

1. Determine the complainant
2. Determine the complaint
3. Answer the question
4. Keep it simple

With these things in mind, the results you achieve should speak for themselves.

In recent times, popular peer to peer software has started to use the UDP protocol as opposed to the more common TCP protocol.

What is UDP ?

UDP means ‘User Datagram Protocol’.

This protocol was designed to send short packets of data and is renowned for its speed.  It is typically used in the operation of the DNS (domain name system).  Unlike TCP protocol which has built in error checking and sends data in an order and without duplication, UDP does not have these characteristics.

Some Peer to Peer software (such as Emule) is now using UDP due to its speed.  The use of UDP causes problems for ISPs because it does not support error checking.  So requested packets of data may not actually be received by the computer requesting that data.

What is the problem for ISPs ?

Among other things the absence of error checking results in a situation where, for example, a customer using a 1.5mbps DSL service downloading data using UDP-enabled peer to peer software may request 6 gigabytes of data.  The service cannot obviously download all of that data quickly due to the bottle neck at the DSL service.

Although the customer may not be able to pull down all of the data, the the data still responds to the request, so it passes across the ISP’s network boundary through a wholesale network (such as Telstra’s).

As the data has passed over the ISPs network, the ISP is charged for that whole of the 6 gigabytes of data, even though the customer may have only downloaded a fraction of that across the ‘last mile’ DSL tail.  Most ISPs’ systems can capture this data for billing purposes, but many don’t have effective T&Cs in place that allow them to charge for this data.

A customer in a TIO complaint or legal action could argue that they never downloaded or used the 6 gigabytes of data, and they could prove this if they counted the data that entered their network.

What should ISPs do ?

ISPs should carefully review their terms and conditions to ensure that their terms unambiguously allow them to bill for data requested by the customer, that passes across their network and across the network boundary, but which may not necessarily reach the customer or their service.

It is equally important that ISPs notify their customers of the risks of peer to peer software and the potential for them to incur significant excess charges on their bill.  Effective education and resources for customer use, could prove pivotal in defeating a TIO complaint.

As the telco industry well knows, customers will regularly contact the TIO hoping to use the system to their advantage, whether it be getting out of a fixed term contract, or trying to avoid paying excess charges. The biggest mistake Telcos and ISPs make with the TIO is not dealing with the complaint in a proper and systematic way.

In this two part series you will learn how to better deal with TIO complaints, and how you can achieve better outcomes. In this part 1, we are going to look at the basic questions in dealing with TIO complaints.

A TIO complaint should be approached with a couple of questions in mind:

1. Who is the complainant ?
2. What is the complaint ?

Who is the complainant ?

It sounds straight forward, but in many cases it is not clear.

In one recent case, an ISP received a TIO complaint made by Miguel Sanchez (not his real name) who was a Director of the XYZ Constructions., When the ISP checked its customer records it found that there was no account in that name, but rather in the name of XYZ Constructions Pty Ltd.

In this situation, the actual identuty of the complainant had a bearing on the ISP’s Consumer Protection Code obligations.  The customer was a sophisticated business with an annual telco spend of about $50,000.  If the complainant hadn’t been correctly identified, the TIO may have made an adverse finding against the ISP for failing to comply with the Consumer Protection Code.

What is the complaint ?

Again, simple I hear you say.  Well that’s not the case.

In many TIO complaints, the complainant or the TIO (and in many cases the telco or ISP themselves) either incorrectly identify the issues or are very unclear as to what the issues are. This is a point where telcos and ISPs can have an adverse finding against them, unless the issues in dispute are clearly identified and dealt with.

An analogy can be drawn between a charge the police lay and a complaint made against a CSP.  For instance, the police can charge someone with recklessly causing injury and or intentionally causing injury.  Although both charges relate to an injury being caused, the defence to these charges is different, one has a deliberate mental element and one doesn’t.

Like complaints made, unless you are clear about what the precise complaint is, you may end up failing to address the issue.

If you can ask these 2 basic questions from the outset you are well on your way to successfully dealing with a TIO complaint.

In Part 2 we will look at how to respond to TIO complaints.

According to some bright spark in the office of the Telecommunications Industry Ombudsman (TIO), every sales staffer should be able to produce a written record of every discussion with a customer if there’s a complaint. It’s red tape on steroids.

The requirement applies courtesy of a new TIO policy that was unveiled in April. It sets out the TIO’s expectations of the evidence a service provider should produce in case of complaint.

According to the policy, the TIO reckons providers are well placed to record and store comprehensive records of the information they provide to consumers during a sales transaction, if the information provided is likely to lead to the consumer buying a product.

Apparently there’s a very simple test as to when information was likely to lead to a sale. It’s the fact that there was a sale. The retrospectoscope is such a handy tool. The policy offers no guidance at all as to where the line is drawn between a sales transaction and general enquiry and information.

Once the test is retrospectively met, the range of records the provider should produce is daunting. Complete copies of all phone recordings in the sales process. A formal, signed statement from the sales or door-to-door sales representative who spoke with the consumer, with a copy of their ID to verify their signature. The number of verbal exchanges the representative had with other consumers that day / week and / or since that day (or the average number of exchanges they would have had).

You’d almost think the industry was being set up to fail.

The fact is that most service providers keep no such sales records and the TIO knows it. Being an organisation with a broad discretion as to how it resolves consumer complaints, any policy that slants the playing field one way or the other is systemic bias. The telco and ISP industry is on notice that its present practices will lead to an increasing proportion of cases being resolved against it.

Not for a moment do we applaud poor sales tactics. This column only recently railed against the absurdity of the term ‘cap’ when applied to phone and internet plans where it means ‘minimum spend’, not ‘maximum’. Scratch the surface of many marketing campaigns and you’ll find substandard information.

Take Virgin Broadband’s new hot deal, for instance. Over two years, $39 a month gets you a wireless modem and 5 gigabytes of included traffic. Even though that includes uploads as well as downloads, it’s a nice price. But the small print on the web site explains the costs of quitting early in a very different way from the same explanation on Virgin’s paper flyers. We think they probably add up to the same thing, but the difference isn’t helpful.

Neither is the fact that the web site won’t allow users to copy and paste the small print. If you were prudent enough to want a record of what you were told, it wouldn’t be easy to make.

Virgin’s Frequently Asked Questions is clear that you can’t use any other wireless modem with the service, and that you’ll own it outright after 24 months. But it forgets to say whether the modem could be used on another service. If not, owning it outright isn’t quite the bonus it might seem.

Worst, Virgin’s mobile broadband offering isn’t really broadband in areas where Optus’ 3G/HSPA network doesn’t reach. If you want to know where that might be, both paper and web advertising refer you to a coverage page that tells you nothing more than whether your home or office address is in a covered area. Since most of us want a mobile service for precisely those times we are not at home or the office, it’s a pretty useless fact.

So three cheers to the TIO and any other regulatory white knights for keeping the techno-bastards honest. But the new record keeping policy isn’t realistic or balanced. Witness this passage: ‘[TIO takes] the view that it is not enough for a provider to give us one recording of one call, if the consumer claims there were several separate calls.’

A consumer’s claim, it seems, is gospel truth at the TIO these days.