A giant leap for Telcos with the new TCP code

With the introduction of the Telecommunications Consumer Protections (TCP) Code and more regulator scrutiny, telecommunication and internet service providers must ensure their advertising, customer service and billing models comply.

The TCP Code was first registered by ACMA last year. Almost 12 months on, the next phase to be rolled out requires telcos to provide better protection for their customers in an effort to prevent high bill shock, ambiguity in mobile plans and improved customer experience for complaints-handling – all of which have traditionally not been consumer friendly. The changes to the Code clearly spell out the obligations of telcos, which are already in effect, and include high penalties for breaches.

What does this mean for service providers?

The Code is being phased in gradually to help providers adjust their systems to comply with the Code. Following extensive sector review, ACMA and the ACCC are taking the changes seriously. The ACCC has taken action against a number of telcos recently, so it is important to ensure that current customer offerings comply with these strict new obligations.

The next phase involves the implementation of ‘spend management alerts’ to customers. Providers are required to send alerts notifying customers when they have reached 50%, 85% and 100% of their data, voice calls and SMS usage limits; and additional notifications of the applicable charges when the customer has exceeded 100% of their data or expenditure. These requirements apply to large carriers from 1 September 2013, and to small carriers from 1 September 2014.

Advertising and sales practices are also affected, which are in addition to the obligations under the Australian Consumer Law. Importantly:

  • ‘Critical Information Summary’ sheets must be prepared by service provides and available both in-store and on websites
  • costs must be prominently disclosed on all advertising material, including the cost of making standard calls, sending SMS and using data for post-paid plans
  • strict rules surrounding the use of representations contained in headlines, disclaimers and terms such as ‘unlimited’, ‘cap’ and ‘free’
What does this mean for consumers?

Following some key recommendations of the ACMA report, Reconnecting the Customer, the TCP Code has already assisted telcos with improving the clarity of advertising, better complaints-handling processes and dealing with customers facing hardship. Gone are the days when campaigns only advertise ‘cap’ and ‘bundle’ prices – instead providers are required to prominently show total prices and avoid ambiguous terms and fine print.

More recently, telcos and internet service providers have been providing customers with access to data about pricing, usage and comparison between products and services to allow for easier comparison and informed choices when it comes to which provider they choose.

The new Code also means that urgent complaints are to be resolved within two days, and a better complaints-handling procedure all round. A reference number for complaints will also be provided to assist customers to track the progress of complaints.

What happens if the Code is breached?

ACMA is empowered to enforce the Code, which is being monitored for compliance by all telecommunications and internet service industry participants.

If there is a breach of the Code, the Telecommunications Act 1997 provides for two enforcement options. First, a formal warning can be issued by ACMA and that warning is not subject to merits review. Second, ACMA may, by written notice, direct the industry participant to comply with the Code. Such direction is subject to a merits review; at first instance, internally by ACMA and subsequently by the Administrative Appeals Tribunal.

In the event that a direction to comply has been breached, the ACMA has the power to:

  • issue an infringement notice with a fine
  • accept enforceable undertakings
  • direct that specific steps be undertaken
  • seek civil penalties in the Federal Court of Australia of up to $250,000 per breach

It is important to highlight that if the relevant breach relates to matters dealt with by the National Privacy Principles, the ACMA must first consult with the Information Commissioner before issuing any directions.

In addition to the powers of the ACMA, the telecommunications industry will take responsibility for regulation and compliance with the Code by forming a regulatory body, whose function will be to monitor compliance by industry participants with the Code.

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