TCP code: friend or foe?

TCP code: friend or foe?

On September 1, a lot changes for retail telcos

A new consumer protection code for Australia’s tele-communications industry has been announced, giving retail telcos just six weeks to comply with the changes.

The Australian Communications and Media Authority (ACMA) will soon register the new Telecommunications Consumer Protection (TCP) code, outlining how telecommunications providers should engage with their customers.

Changes to the code include:

  • The majority of telco advertisements to include the cost of a two-minute national call, the cost of a standard SMS, and the cost for 1MB of data.
  • Telcos required to offer a Critical Information Summary (CIS) that includes all pricing information, inclusions and minimum spend information for each product in a standard form.
  • Customers to receive warnings when they have used 50 per cent, 85 per cent and all of their monthly allowance for phone and data.

But how will these changes affect the telecommunications industry and will it fulfil the challenges that it currently faces?

Communications Alliance (CA) CEO, John Stanton, said the new TCP code is the most comprehensive upgrade of consumer protections ever achieved in the telcommunications sector.

“This code heralds a sea-change in the telco consumer experience in Australia and a new industry monitor called Communications Compliance fills a vital gap in the co-regulatory framework,” Stanton said.

ACMA chairman, Chris Chapman, said he expects the new code to significantly reduce the costs.

ACMA’s inquiry estimated the annual recurring costs associated with the industry’s unsatisfactory performance under the previous code included $1.5 billion associated with consumers choosing the wrong plan, $108 million for the costs of telephone complaints and $113 million for the costs of writing off bad debts.

Industry structure

According to Telsyte senior telco analyst, Chris Coughlan, the TCP code will not affect the operations of larger telco service providers as their practices already fall in line with the TCP code changes.

“The larger telco players will not have to react that much, they are pretty compliant. Some other telcos will have to do a fair bit of investment to adapt and conform to the new TCP code, but the provision period will help them adjust to it.

“But will there be any change in industry structure as a result of the code or will there be any players that emerge stronger out of this implementation? I don’t think so,” he said.

Cooper Mills technology lawyer, Peter Moon, thinks otherwise.

“The vast majority of communications retailers are only dimly aware of the demands soon to be made of them. Even though intending buyers will be able to spread a few competing offers on the table and readily compare features and value, there has been no market research done to validate the efficacy of the CIS,” he said.

Each telco has until April 2013 to get its act into gear and adjust myriad policies and processes to square up with the code. Everything from marketing and sales, billing, debt collection, customer service to complaints handling will be imapcted.

“It won’t just be a matter of doing it right, but also of documenting and auditing compliance, and reporting successes and failures to the Communications Compliance.

“We expect tremendous pressure on smaller operators to roll out notifications much sooner, because they’re bound to be a big selling point. As far as we know, nobody has even tried to calculate the compliance cost burden on a typical communications reseller,” Moon said.

Once the code takes effect, it will make clear how rapidly the large carriers with both wholesale and retail arms facilitate the notification technology for their smaller wholesale customers.

“As much as industry needs to meet the challenge of embracing the new TCP code, the regulators must regulate their own tempers over the next year, and create a fertile, cooperative environment in which the code can take root,” Moon said.

Increase investment

Moving forward, Coughlan mentioned telcos have to increase investments in research as those that have been scoring high in research forums around service are most likely the ones that are already practicing the changes or are close to being compliant now.

Buddecom telco analyst and director, Paul Budde, agreed with Coughlan: “In order for the industry to make this happen, they have to install much more advanced customer care systems that are predictive in seeing trends happen before they result in problems. The software, billing systems and customer care systems are much more sophisticated and provide better information to operators and customers.”

He warned operators to be vigilant and use the information without breaching privacy rules as although it will reduce customer bill shock, it might result in an increase in complaints about privacy breaches. Another potential problem arising from the changes may be enforcement.

The Australian Communications Consumer Action Network (ACCAN) is concerned customer service and complaint handling problems will continue unless ACMA is given greater powers of enforcement. Currently, if ACMA finds a provider has breached the TCP code, it can issue a direction to comply but cannot directly fine or otherwise penalise the provider.

“The Australian Competition and Consumer Commission [ACCC], for example, has much stronger powers and its issuing of fines has sent a strong message to the telecommunications industry that its advertising cannot be misleading,” ACCAN chief executive, Teresa Corbin, said.

ACMA claimed as each new key rule comes into effect, it will focus on educating providers by monitoring and promoting compliance for a short while, but over time will decrease it and focus on investigation and enforcement.

Surge in complaints

The body also predicts a surge in complaints as a result of people becoming more aware of their rights.

As for consumers, the telecommunications industry experts claimed the changes will give rise to a much needed, much improved, customer experience.

Consumers can expect more uniformity in the way service providers provide information as far as advertising goes, and the terms and conditions it is provided under. They will get notifications when they get close to usage limits. There are also provisions for consumers to be treated uniformly if they move from one provider to another.

“We’re hopeful that its adoption will result in clearer advertising, easier comparison of products, better information about contracts and better tools to help consumers avoid bill shock,” Corbin said.

According to Chapman, telco companies, having established the clearest possible roadmap of what they need to deliver, will be driven to perform.

“Compliance with the code is no longer an option. The next step in this whole process is the longer term industry response,” Chapman said.

ACMA’s registration of the code takes effect from September 1. CA has also put together a TCP compliance training course in Sydney (August 28) and Melbourne (August 30).

TCP Code 101

1. What is the TCP code? The Telecommunications Consumer Protection (TCP) is the most comprehensive upgrade of consumer protections ever achieved in the telco sector.

2. Who will be most affected? Every retail telco, some more than others, smaller more than bigger, depending on who you listen to.

3. What will telcos have to do? Fundamentally, provide a lot more information to the customer including a Critical Information Summary (CIS) that includes all pricing information, inclusions and minimum spend information for each product in a standard form.

4. What other areas does the Code affect? Everything from marketing and sales, billing, debt collection, customer service to complaints handling will be affected.

5. When does it start? September 1, 2012. Telcos then have until April 2013 to meet all the demands of the new code – and there are a lot.

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