Do telcos owe consumers pricing clarity?

Do telcos owe consumers pricing clarity?

Summary: A new telco code to protect consumers has been given the OK today by the industry regulator, but will it really fix things or will buyers still need to remember the "caveat emptor" principle?

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If you're not already aware of how hard the telecoms industry works to hide behind vague numbers and complex pricing plans, you haven't ever tried to comparison-shop a mobile or broadband service. Yet, with industry regulators clamping down on endemic telecoms trickery in recent months, the findings of a review into the Australian Communications Consumer Action Network (ACCAN) suggest that we still have a long way to go before the telecoms industry reaches transparency Nirvana.

Right now, we're barely at transparency Poison, and only starting to look towards transparency Pearl Jam — although, the new agreement on an industry code of practice may create a significantly better sound. Heaven knows, consumer groups have tried for years to change things with multiple campaigns, for example, one to make 1300 and 1800 numbers work like they're supposed to.

The time it's taken to get to this point reflects opposing interests — and highlights just how philosophically removed telcos have been from the idea that consumers should know exactly what they're signing up for.

In the early days of the deregulated industry, Telstra's competitors sought to woo customers with broadly advertised per-minute rates for STD, international and untimed local calls. The rise of mobile telephony has changed all that, however: competition is as fierce as ever, but the real cost of telecoms services is hidden behind asterisks, fine print and mathematical manipulations, such as those that have shaped capped mobile plans for years.

In the mishmash of regulatory and policy structures swirling around our telecoms industry — which is theoretically managed by ACMA, but has recently seemed to be dominated by the pro-competition group ACCC, as well as being influenced by the Comms Alliance and ICT groups, like the Australian Information Industry Association — the conceptual disagreement between consumer and telco organisations is a pointed reminder that, just because the market has forced carriers to compete, doesn't mean they like it.

Little wonder that the ACCC has been working overtime to bat down companies like TPG and Optus for false advertising — yet, even as ACCC chair Rod Sims says he is "tired" of having to school the telecoms industry about telecoms transparency and is planning to ramp up his pursuit of renegades, it appears that even the ACCC isn't above numerical shenanigans.

TPG, after all, was fined $13,200 for misleading advertising over its VoIP services — its second offence, after being hit over its ADSL pricing last year.

By contrast, Optus was fined $5.26 million for what was adjudged to be equally deceptive advertising. The amount was cut to $3.61 million on appeal in March, but that's still a startlingly high punishment, given that Telstra received an $18.55 million fine for years of actively and deceptively blocking competition.

While it's hard to believe Telstra's peccadillo was anything less than a broad strategy to extend the life of its infrastructure monopoly, it's easier to accept that Optus, TPG and the other companies may have assumed consumers simply knew more about the real cost of landline rental and speed limiting. But you'd think they would have learned by now to be careful; being caught time and again for the same sorts of trickery is just, well, lame.

Whether or not the ACCC is forced to step in yet again, to bat down another telco for similar deception, is anybody's guess — but I'd say the chances are good. Just look at telcos' insistence on nebulous capped mobile plans: sure, it sounds like carriers are giving you generous allowances for calls — but when those same plans include per-minute calling rates that are astronomical by comparison, that prepaid cap doesn't go so far.

Worse still: by creating a layer of conceptual isolation between the user and their money, telcos have freed themselves to manipulate per-minute pricing, without the average punter being any the wiser; that information, which is critical to informed decision-making, is routinely buried in small print in the terms and conditions. Consumers may have a nagging feeling thatthey're being ripped off — but telcos do as much as they can to make sure it's never clear.

Little wonder carriers in the US and elsewhere simply sell mobile plans based on the number of minutes' usage they offer; that's proper transparency, because it relates the service customers pay for, to something they can relate with. There are no complicated conversions between the price of mobile services and what you actually get for that money.

Of course, the new Australian telco consumer code will see the phasing out of "caps", that have in the past so successfully hoodwinked innumerable customers. And telcos will be forced to provide standard pricing summaries at the point of sale, so that buyers can compare apples with apples. But does that mean that telcos will just find a new way to make things confusing?

What do you think? Are authorities' clampdowns forcing telcos to get more transparent? Will the latest agreement make a difference? Or does the "caveat emptor" principle go hand-in-hand with open competition?

Topics: Telcos, Government, Optus, Telstra

About

Australia’s first-world economy relies on first-rate IT and telecommunications innovation. David Braue, an award-winning IT journalist and former Macworld editor, covers its challenges, successes and lessons learned as it uses ICT to assert its leadership in the developing Asia-Pacific region – and strengthen its reputation on the world stage.

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