TIO fees don't help customers: telcos

TIO fees don't help customers: telcos

Summary: The three big telcos have raised concerns about the fees that telcos pay the Telecommunications Ombudsman for complaints made against them, stating that the organisation's reliance on the fees for funding is not appropriate.

TOPICS: Telcos, Optus, Telstra

The three big telcos have raised concerns about the fees that telcos pay the Telecommunications Ombudsman for complaints made against them, stating that the organisation's reliance on the fees for funding is not appropriate.


(The telephone image by Sam Garza, CC2.0)

The Department of Broadband, Communications and the Digital Economy today published 22 submissions for the government's inquiry on reforming the role of the Telecommunications Industry Ombudsman, first outed last month.

Complaints-handling within the TIO ranges from level one to level four. When a customer first complains, the telco is charged $31 for a level one complaint; however, the cost sharply increases to $260 for level two, $475 for level three and $2250 for level four. The aim of the fee is to recuperate the TIO's costs for investigating complaints and to incentivise the telco to resolve complaints to the TIO at one of the lower levels.

Vodafone Hutchison Australia (VHA) doesn't believe the system is appropriate.

"While the TIO scheme is designed to cover its costs, it has no incentive to manage its costs efficiently," it noted in its submission. "The TIO receives revenue from its members through 'volume related fees' and through 'operating and capital costs', which are based on the value of complaints charged to each member as a proportion of the total value of volume related fees charged to all members. The more complaints handled by the TIO, the more funding the TIO receives."

Telstra said that the fact that the TIO receives more money for higher level complaints needs to be examined.

"Telstra believes the linkage between the fee structure and the escalation process introduces an unnecessary tension between the members and the TIO around the reasons for an escalation. This also has the potential to negatively impact consumers as their complaint takes longer to resolve as it is escalated between the various levels. Telstra therefore considers that the linking of the escalation and funding process needs to be reviewed."

One of the proposed reforms of the TIO suggested by the government in the discussion paper is for the fee-charge at level one to be much higher to give telcos more incentive to resolve consumer complaints before it even reaches the TIO.

VHA rejected this proposal, stating that it wouldn't encourage telcos to offer better customer service, but only to prevent customers from reaching the TIO with their complaint.

"Of course, this would lead to a fewer complaints to the ombudsman than would otherwise be the case, but it does not mean that systemic problems are identified or addressed by the carrier or eligible carriage service provider. The TIO scheme must be careful not to provide disincentives for genuine customer complaints to be escalated," the telco warned.

Optus said that it has a "principle" objection to level one fees being raised, and said that the company's own key performance indicators are aimed at reducing all complaints coming to the telco, regardless of whether that complaint originated from the TIO or not.

"Notwithstanding this, we have procedures in place to specifically drive reductions in all TIO-referred complaints," Optus added. "This is because we consider any customer who has felt the need to utilise the TIO to resolve a complaint with Optus has had, by definition, a poor experience with us. This is completely contrary to our number one corporate objective of leading the telecommunications industry in providing an outstanding experience for our customers."

Instead of the level system, VHA proposed a basic level of funding for the TIO to cover the costs for all complaints below a certain benchmark. The company suggested that if a company received more complaints on one particular issue than the benchmark, eg, five complaints per 1000 complaints, then the telco would face a larger charge for the TIO to resolve the customer's complaint.

The telcos also rejected proposals to put information about the TIO onto customer bills to raise awareness of the ombudsman, stating that it may just serve to confuse customers about the complaints process and the TIO's role as the last resort in that process.

Vodafone said that the TIO doesn't need more powers to act against telcos, as competition in the market is strong enough to drive telcos to offer good services.

"From time to time, carriers or eligible carriage service providers may experience a sharp spike in complaints. However, such spikes tend to be temporary in markets, such as the mobile services market, where competition provides carriers and eligible carriage service providers with a strong incentive to provide customers with a high level of service quality or risk those customers churning to another service provider. In less competitive markets, systemic issues may be more problematic."

Topics: Telcos, Optus, Telstra


Armed with a degree in Computer Science and a Masters in Journalism, Josh keeps a close eye on the telecommunications industry, the National Broadband Network, and all the goings on in government IT.

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  • This is one of the few government systems that I think has a good pricing model. Telcos are complaining because it costs them, which it should. The TIO is essentially 'funded' to the level it needs to be. More complaints to the TIO means more work, means more funding from the Telcos.

    If complaints go up, the TIO is funded appropriately and the Telcos are charged a fee for service. If complaints go down, TIO funding reduces accordingly and Telcos don't have to pay as much.

    Telcos are just looking at another avenue to reduce their costs, and they are starting at the wrong end. Avoid the complaints in the first instance, and then they'll save money.
    Scott W-ef9ad
    • Simple business maths would tell you that ultimately it is the customer who pays the TIO fines, not the ISP. The ISP will just factor the fines into each customers monthly fees.. Ultimately the consumer will suffer because of a growing number of people who will abuse the TIO processes. Monthly bills would be less if ISP didn't have to pay for idiots abusing the system.
  • No Wonder VHA is complaining. They're the parent company of 3 Mobile & Vodafone.
    3 Mobile's phone contacts are horrible and apparently Vodafone had serious network issues not too long ago. They're claiming that competition is keeping them in line? I've had people tell me they've been in the queue to talk to vodafone for over 2 hours. Telco's are the definition of poor service and we need the TIO as a stick to put them in their place when they're out of line. I just wish more people knew of the TIO.
  • The TIO an esential part of keeping telcos in line - the thing is there are a lot of complaints that go to the TIO that shouldnt even be looked at - things like a virus on the users pc causing slow speeds - or customers that make a TIO complain BEFORE a problem is reported to the telco - all this does is waste te TIO's time and the Telco involved money - maybee a level 1 which is no cost that sorts through these initial complaints and then it is started to charge the Telco at fault
    N B
  • The TIO also receives a lot of 'the telco said no to me' complaints which is the appropiate answer in most cases. The Telcos need to push back if the request from the TIO is inappropiate. It's just like when mum says, no ask nanna...
  • The TIO has always been a great idea - really badly implemented.

    The lack of natural justice afforded the providers just creates an "us vs them" atmosphere that doesn't encourage them to improve their processes. ISP learn they can just throw money at the people complaining and the TIO thinks that is a good result all 'round!
    Noni Mouse