TIO fees don't help customers: telcos

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 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."