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What changes are occurring in Australia’s telco consumer protection regulatory regime?

15 August 2018

#Technology, Media & Communications

Angela Flannery

Published by Angela Flannery

What changes are occurring in Australia’s telco consumer protection regulatory regime?

What changes are occurring in Australia’s telecommunications consumer protection regulatory regime?

There is significant and ongoing change in Australia’s telecommunications sector. Technology is rapidly evolving and an ever increasing number of innovative services and products are available to Australians. 

From an infrastructure perspective, the national broadband (NBN) network continues to roll out, with over 4 million premises now connected to that high speed network. On 13 August 2018, the Australian Competition and Consumer Commission (ACCC) announced that one third of all NBN services are now high speed plans of 50Mbps, meaning more than 1.45 million customers have plans for 50Mbps. At the same time, Australia’s mobile network operators continue to excitedly announce their plans for 5G mobile networks that will be operational from 2020 or thereabouts. 

The improvements in communications infrastructure have led to a broad and expanding range of services and products being available to consumers, not only communications services such as Skype, WhatsApp and Zoom, to name a few, but also including an ever increasing array of entertainment, educational and other services that can be streamed directly to any device, anywhere and at any time. The internet of things revolution also continues, with Australians already able, if they so wish, to run their homes from their smartphones – whether they are at home on the couch, at work or elsewhere.

Where then does this leave Australia’s telecommunications consumer protection regulatory regime and has it kept up with these technology and service and product changes in providing protections that are adequate and appropriate for Australians?

Current regulatory framework

The current telecommunications consumer safeguards regulatory framework is set out in legislation, particularly the Telecommunications Act 1997 (Cth) (Telco Act) and the Telecommunications (Consumer Protection and Service Standards) Act 1999 (Cth) (TCPSS Act) but also in generally applicable consumer protection laws such as the Competition and Consumer Act 2010 (Cth) and the Privacy Act 1988 (Cth); regulation made under that legislation; and co-regulatory codes registered under the Telco Act, including the Telecommunications Consumer Protections Code (TCP Code). 

This regulatory framework focuses on fixed line and mobile voice and internet services and the regulation of carriage service providers (CSPs), with a particular emphasis on fixed line voice services and on Telstra, which has long been the dominant provider of both fixed line and mobile services in Australia. There has been limited change to this regulatory framework in recent years and so now is an appropriate time for a rethink.

Australian Government’s Consumer Safeguards Review

Terms of reference

In early 2018 the Australian Government released the Terms of Reference for a Telecommunications Consumer Safeguards Review (Review). The Review was originally announced in the Government’s response to the 2015 Regional Telecommunications Independent Review Committee report. As part of that response, in February 2016, the Government stated that it was time to consider telecommunications consumer protection regulation, given much of the regulation was designed for a fixed line voice environment. That sentiment is reflected in the Terms of Reference for the Review. The Review is to be undertaken in 3 phases over 2018. These phases are:

  • Consumer redress and complaint handling mechanisms: ensuring Australian consumers have access to the most appropriate redress and complaint handling model, with a system for collection, analysis and reporting of complaints data that is transparent and holds the sector accountable for its performance
  • Service level standards: ensuring the availability of reliable communications services for Australians, including protections for the reliability and performance of the underlying telecommunications networks and assurances that connections, faults, repairs and appointments are performed within a reasonable time period
  • General protections: providing for consumers to receive accurate and relevant information to allow informed consumer choice of services and to ensure consumers receive appropriate service in the areas of contracts, billing, credit and debt management and when switching providers.

Consumer redress and complaint handling mechanisms 

The Consultation Paper released by the Australian Government for the first phase, Consumer redress and complaint handling mechanisms, put forward the following reform proposals:

  • telecommunications providers must put in place complaint handling policies which detail their processes and procedures for handling consumer complaints in compliance with the Australian Communications and Media Authority’s (ACMA) complaint handling standard, which is discussed in the next section below. This recommendation does nothing other than require CSPs to comply with existing regulation
  • a new external dispute resolution body, independent of industry, should be established to deal with complex complaints that are unable to be resolved directly between a customer and a provider. Consideration is proposed to be given to the appropriate governance arrangements to support the body, with the requirement for independence seen as critical
  • responsibility for the collection of data relating to industry performance and complaints should be transferred to the ACMA. The ACMA would be required to publish reports detailing analysis of this data, as well as including complaints data in its annual communications report.

The second and third recommendations essentially suggest replacing the existing Telecommunications Industry Ombudsman (TIO) dispute resolution scheme, which is established under the TCPSS Act, with an alternative scheme and requiring complaints data to be provided by the new scheme to the ACMA for reporting, rather than allowing the alternative scheme to publish the complaints data itself (as occurs in the case of the TIO).  

There is no doubt that consumer complaints to the TIO have increased in the last few years, with most stakeholders agreeing this is at least in part due to disputes arising in relation to the NBN rollout and what the Consultation Paper refers to as “handballing” of complaints between different providers in the service supply chain. The Consultation Paper notes that the TIO’s 2016/17 Annual Report indicated that 158,016 complaints were received in that financial year, a 41.1% increase from the previous financial year. However, there is no clear evidence provided in the Consultation Paper that this increase in disputes has been contributed to by a failure of the TIO and no clear rationale for why a different independent dispute resolution scheme will be more effective than the TIO, which is itself an independent dispute resolution service, in resolving such disputes.

The consultation period for the first phase has only recently closed, meaning it is not clear that all phases of the Review will be complete by the end of 2018.

Action by the Australian Regulators

Australia has 2 regulators with responsibility for consumer protection in the area of telecommunications services, the sector specific regulator, the ACMA, and the ACCC. Both have been active in promoting reform.

Australian Communications and Media Authority

In the case of the ACMA, it has focussed its regulatory action on problems that Australians have experienced with transferring services to the NBN. Research undertaken by the ACMA has found there are numerous problems with the transfer process which had led to significant consumer complaints. Issues uncovered by the ACMA’s research include that over 15% of households moving to the NBN were left without functioning connections for at least 7 days (for approximately 10% of households this period exceeds 14 days). 

In an attempt to protect the interests of consumers, the ACMA has introduced the following NBN specific regulation, all of which will take effect from 21 September 2018:

  • Telecommunications (NBN Consumer Information) Industry Standard 2018: this standard requires CSPs to provide relevant pre-sale information to consumers to assist consumers to transfer to the NBN and select an appropriate NBN service and plan. 
  • Telecommunications Service Provider (NBN Service Migration) Determination 2018: the determination provides protection for consumers where, on transfer to the NBN, the consumer’s existing service is to be disconnected. The protections provided are intended to ensure that consumers are not left without a working service. 
  • Telecommunications (NBN Continuity of Service) Industry Standard 2018: this standard, like the determination referred to immediately above, is intended to minimise the possibility that consumers will be left without a working service when moving to the NBN. This may require, in some cases, a terminated service to be reconnected or for a mobile service to be provided until issues are resolved.

The ACMA has also recently introduced the Telecommunications (Consumer Complaints Handling) Industry Standard 2018 and the Telecommunications (Consumer Complaints) Record-Keeping Rules 2018, each of which took effect from 1 July 2018. These regulations provide for a new set of complaint-handling rules for NBN services.

The ACMA has warned the sector that, now this new regulatory scheme is in place, it will be monitoring compliance closely and will take enforcement action (which may include injunctions and civil penalties of up to $10 million) where necessary.

Australian Competition and Consumer Commission

The ACCC has, like the ACMA, had a focus on the NBN. For example, it is undertaking a “Measuring Broadband Australia” program to measure broadband speeds and therefore help Australians determine if their NBN plan is delivering the speeds that were promised. The ACCC issued guidance to industry in the second half of 2017 on how to advertise speeds for fixed line broadband services. It has actively monitored compliance in this area, with MyRepublic being the CSP most recently penalised for false and misleading claims about its NBN service. 

The ACCC has not only focussed on the NBN. For example, in April 2018 it released the final report of its Communications Sector Market Study. This ambitious study, which took more than 18 months to complete, assessed competition and consumer concerns and regulatory action required in the communications sector as a result of the rapid changes that are being experienced. The ACCC made 8 recommendations to Government for regulatory change, including in relation to the NBN but also regarding Australia’s radiocommunications regulation and the Government’s proposed rollout of a “consumer data right” in the telecommunications sector. Most of these recommendations have received a somewhat muted response from the Government and it is not clear how many will be implemented. The ACCC also set itself a list of 20 action items, which it has attacked with gusto, including commencing an inquiry into the regulation of wholesale mobile voice and SMS services and an inquiry to determine whether declaration of the domestic transmission capacity service (DTCS) remains appropriate. 

Co-regulatory codes

Not to be left behind, Communications Alliance, the peak communications industry body, is consulting on amendments to the TCP Code. The TCP Code, which is registered with, and enforced by, the ACMA under the Telco Act, provides for regulation in the area of sales, service and contracts, billing, credit and debt management and a regime for changing service providers. Changes that are proposed, as set out in the consultation draft of the TCP Code that was released for comment in July 2018, cover a range of areas including more clarity in billing of third party charges, making it easier to seek financial hardship assistance and to align with the ACMA’s new Complaint Handling Standard. It is expected that the new Code will be submitted to the ACMA for consideration for registration before the end of the year. The reforms in the new TCP Code will overlap with the third phase of the Review. 

Concluding comments

The current focus by the Australian Government and regulators on the telecommunications consumer protections regulatory regime is well overdue. Consumers are not well served by the current regulatory regime, which does not reflect changes in technology that have occurred and are continuing or the changes in the services and products that are available to consumers. 

However, there is a question of whether the reforms that are being considered, particularly those being considered in the Review, will allow for a new framework that adequately and appropriately protects consumers. The first phase of the Review, with its very narrow focus on complaints handling, does not indicate the Australian Government is considering a holistic analysis of the regulatory framework to ensure that it will remain fit for purpose. Indeed, it is possible to argue, as some stakeholders have done in their submissions to the Review, that the first part of the Review is in fact unnecessary given the ACMA’s new Complaint Handling Code and a lack of “hard evidence” in the Consultation Paper that the TIO is not doing its job properly. In this regard, it is hoped that the final two phases of the Review take on board the input from stakeholders and look closely at the appropriate regulatory framework that will continue to protect consumers over the longer term.

Whatever the outcome of the Review, telecommunications service providers will need to ensure that they monitor the changes in the regulatory regime and put in place appropriate policies and procedures to ensure compliance.

Author: Angela Flannery

Contacts:

Sydney
Angela Flannery, Partner
T: +61 2 8083 0448
E: angela.flannery@holdingredlich.com

Ian Robertson, National Managing Partner 
T: +61 2 8083 0401
E: ian.robertson@holdingredlich.com

Melbourne
Dan Pearce, Partner 
T: +61 3 9321 9840
E: dan.pearce@holdingredlich.com

Brisbane
Paul Venus, Partner 
T: +61 7 3135 0613
E: paul.venus@holdingredlich.com

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Angela Flannery

Published by Angela Flannery

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