Is telco advertising out of control?

Is telco advertising out of control?

Summary: Dodo has been taken to task for misleading advertising. But is telco advertising in Australia misleading in general? What can be done to make it easier for consumers to understand?

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Dodo has been taken to task for misleading advertising. It's one of many cases handled each year by the ACCC.

In a desperate bid to gather more customers, the industry accounts for half of all complaints to ACMA for breaches of the Do Not Call Register. Last year the industry's Ombudsman saw a 40 per cent jump in complaints. All this evidence points to a sector that is over-promising and under-delivering.

In today's Twisted Wire we explore how the industry's behaviour is attracting more attention from the regulators, who are being armed with more legal power. Are telco marketers kidding themselves that they are doing the right thing for the customer?

In this half-hour podcast you'll hear from:

  • Phone Choice spokesperson Doug Purdie
  • Murray Deakin, a partner at commercial law firm Middletons
  • ACCC deputy chair Peter Kell
  • Optus corporate marketing director Mike Smith
  • ACMA manager of telemarketing investigations Jane Cole

What do you think about telco advertising? Is it misleading? What can be done to make it easier for consumers to understand? Add your thoughts in the Talkback section below.

Topics: Telcos, E-Commerce, Government, Government AU, Optus

About

Phil Dobbie has a wealth of radio and business experience. He started his career in commercial radio in the UK and, since coming to Australia in 1991, has held senior marketing and management roles with Telstra, OzEmail, the British Tourist Authority and other telecommunications, media, travel and advertising businesses.

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Talkback

7 comments
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  • Oh absolutely!

    However annoying their cold calling tactics are I find there is a greater problem the ACCC should do something about, and that is two things:

    The issue 1). is grossly misleading data quantities. Giving transfer quantities in Gb (Gigabits) can be extremely misleading, this is because all solid media (eg DVDs, Hard drives) are sold in GB (Gigabytes) which is a massive 8 times more data than the unit ISP's sell bandwidth in... ...this confusion is leveraged by sales people to con customers quite frequently! Most salespeople I have spoken to don't even KNOW the difference, however they don't mind making claims that a 5Gb plan can download just over a DVD(4.7GB) when in fact it would need over 37.6Gb transfer to actually complete.
    I have also heard someone attempt to say that a 5Mb per second connection could download a 5MB mp3 in one second! Grossly overestimated! I would still assume people are only learning this difference as they read this!

    The other issue is slighty different: 2). grossly overselling network speeds. How can we have a system when the good people of Australia sign up to internet plans for up to 36 months ($1000's) where companies will not guarantee the speed of the service provided? Broadband companies advertise speeds as "up to 30Mbps" when customers have no chance in hell of receiving these speeds? I can't stress how important it is that people receive accurate speeds when buying broadband - It should be a given. EVERY retailer of any goods in ANY other industry is subject to to rigorous testing of their weights and measures by the government, if a $3 bag of potatoes was not more than 1KG someone would get fined, why not for ISPs who charge $1000's? It's not like co.'s can't test their line speeds these days - they can. I believe a law should be passed that states that speeds MUST be achieved at the EXCHANGE and that this must include actual bandwidth, and not including mysterious "overhead".

    Buying internet in Australia is a minefield, and I haven't even got into issues like counting of upload/download together yet! The ACCC needs to look at internet plans a whole lot more closely and enforce some parity on these issues so that Australians (and especially technical vulnerable Australians) can have a standard base to compare.

    Allow me to say that these issues are expanded on http://freedomofcommunication.org.

    I would love it if ZDnet would take up this case too.
    Ps. Your podcast is quality! Feel free to release it more often. Laurei
    anonymous
  • Re absolutely

    Not only the above, but they also use Bait & Switch tactics to lure unsuspecting victims.
    I signed up with Optus via an attractive offer on their website only to discover soon after that I was being charged for a more expensive plan than I had signed up for. After being told on the phone that my agreed plan was no longer available, i re-visited their website & confirmed this plan was still on offer.
    I eventually convinced a supervisor to reinstate the original offer only to discover it was withdrawn again a month later despite still being advertised on their website.
    I no longer deal with Optus (or Telstra, but that's another story!)
    anonymous
  • I also agree 100% + more

    It may be only one small gripe but it shows how vulnerable people can be fooled. I have had a Telstra salesman (read agent) call and promised a far better deal than I have at present, when I asked for the offer on a document I was told it could not be done.
    If I had agreed over the phone I would have found my ISP changed with all costs associated with it.
    This is deceptive practice and I have since talked to others that have had the same experience, some guidelines need to be in place to cover customers.
    anonymous
  • Caveat emptor

    Let the buyer beware! Sure - but how can anyone, even those that are a) technically litterate and b) do their homework completely and very thoroughly, make a choice and be guaranteed that what they have signed for is what they will get, (as pointed out by others above) in, say, two years time?
    The goal posts change overnight. The contract is one-way - THEY can change the rules when they like. We can't.

    How many times have you seen great splash about, for instance, how fast the service is only to find the little symbol/number in 6 point font or smaller, often yellow on orange background, to find just about all the claim de-claimed in the fine print. Telstra, for instance makes a big deal about their 7.2 Mbs network speed. Ha! As I understand it, that is the theoretical maximum, which even Telstra wouldn't be able to achieve.

    I have really only dealt with Telstra, but getting ANYTHING in writing out of Telstra is nigh on impossible (but I did get a written confirmation after about three months of haggling and intervention of talkback radio = bad publicity).

    It was a battle that many people simply couldn't do. There were bullying tactics, important decisions made that weren't logged on THEIR computer records, information that 'went missing', and just when you thought you were making progress, suddenly that case manager 'was no longer available' and you would have to start all over again.

    Am I talking about high powered advertising here? No. Just me trying to get the telco to honour their well advertised promise that no-one would be worse off using NextG.

    The list of dirty tricks used by Telcos is almost endless. The only loser is the consumer - they are being fleeced mercilessly.

    Fortunately I have a technical background. I know what I can expect without some pimply-faced person (who has just read the Telco "How-to-dupe-the-customer" booklet) quoting spin-doctored facts and figures to me. I can sift the bullshit from the truth, and make decisions based on information which I know to be more accurate.

    Yes. ALL the telcos need regulating. Their claims need to be standardised, similar to the mandated fuel consumption figures and crash test ratings for cars.
    anonymous
  • Ummmmm ...

    Reference your point 1
    I don't know about other ISP's, but my "BigPond 7.2 Home Network Gateway" account is in GIGABYTES (GB) not gigabits (Gb).
    In practice, given the amount of downloads I do (and my browser records downloads in gigabytes) I am being charged for gigabytes NOT gigabits.
    Maybe you could check if this is true of other providers?

    HOWEVER - I am pretty sure that
    a) my data plan will be decimal based GB's (like hard drive manufacturers quote) and not binary based GB's (ie 1024 bytes to a kilobyte, etc) like we used to have in days gone by; and I know that
    b) this will be UPLOAD and DOWNLOAD data combined.

    Telstra and Dodo are just two ISP's I know of that combine upload and download data to calculate plan usage. Unfortunately, once one starts, the others will have to follow, just to remain competitive.

    The rest of your comments pretty much are in line with my experiencces over the years.
    anonymous
  • Industry regulation is vital

    The ugly face of the comms industry that we see today reveals the absolute contempt that many of the various mouthpieces and spinmeisters seem to have for the end-users and customers.

    For an industry that enjoyed almost uncontrolled "self-regulation" (ROFL) under the previous government, they don't seem to have much idea of the responsibilities that go with that. When you see companies with a battalion of lawyers pushing the corporate line, instead of focussing on meeting the needs of their customers, you have to wonder what the priorities might be.
    anonymousI
  • Regulators don't always help

    One problem in straightening out the industry is lack of uniformity between regulators. The Comms Alliance Codes aren't sufficiently supported by ACCC, and are downright undermined by Consumer Affairs Victoria.

    It takes a very clear message to have an impact on this sector, so it would help a lot if all the regulatory stakeholders were reading from the same page.

    They also need to adopt a zero tolerance approach to some problems. The fact that some operators get away with certain practices makes it very hard to convince others to play ball.

    For some detailed war stories about telco and ISP advertising bloopers, you might find our CSPCentral blog interesting.
    anonymous