Disconnection of service due to non-payment of another service

The Telecommunications Industry Ombudsman receives complaints from consumers that their provider has disconnected a service because an account for another service is overdue. For example, a consumer may report disconnection of a landline because their mobile account was not paid by the due date.

The terms and conditions of the contract for the disconnected service may state that the company reserves the right to disconnect all services if payment for one of those services is overdue. We take the view that such a condition may not be fair or reasonable, especially if the disconnected service is under a separate contract from the service with the unpaid charges.

The possible unfairness of disconnecting a service where it is supplied under a separate contract is spelled out in Clause 5.1.3 (d) (xvi) of the Telecommunications Consumer Protections Code (PDF 352kb):

Assessment of terms for unfairness …when assessing a term for unfairness it is relevant to consider whether the object or effect of the term is to … permit the Supplier to suspend or terminate a service on the breach of another Consumer Contract between them, unless there are reasonable grounds for believing the Consumer represents a credit risk.

With this in mind, when we investigate a complaint of this type we seek answers to the following questions to help us decide if a provider’s action to disconnect a service was reasonable:

• Did the provider supply the disconnected service to the customer under the same contract as the service with the unpaid charges?
• Did the provider advise the customer that it would disconnect this service if the consumer had overdue accounts for other services? If so, when and how did the provider advise this?
• Was the customer up-to-date with paying the bills for the service that was disconnected?
• What is the customer’s payment history for the disconnected service? Do they usually pay bills for this service on time?
• If the provider had not issued a bill before it disconnected the service, what was the customer’s pre-bill usage at the time of disconnection? Was it higher than the customer’s average usage of that service?

Service type: standard telephone services provided under the Universal Service Obligation

In all cases, a factor that we will take into consideration is whether the disconnected service is a standard telephone service provided under the Universal Service Obligation (USO). For information about a consumer’s rights under the USO, see the Australian Communications & Media Authority’s factsheet, Your rights to a telephone service.

Where available information indicates that the disconnected service was a standard telephone service supplied under the USO, we may ask a provider to reconnect the service so the consumer has basic access to a telephone service.

Possible outcomes

Separate services

If on investigation it appears that:

• the disconnected service was not supplied under the same contract as the service with overdue charges,
• the provider did not clearly advise the consumer that the service may be disconnected if payments for another specified service became overdue, and
• billing and payment records for the service confirm that the consumer is not a credit risk,

we may decide that it was not reasonable for the service to have been disconnected. In such a case, we would generally ask a provider to reconnect the service. We would also consider any claims for loss resulting from the disconnection of the service. See our position statement, Compensation and the TIO.

Bundled services

We would be more inclined to view a provider’s disconnection of a service for non-payment of another service to be reasonable if:

• both services had been supplied under the same contract, i.e. they are a “bundled package” of services
• both services are billed on the same account
• the provider could provide evidence that it had clearly advised the customer, before they agreed to the contract, that non payment of one service would result in disconnection of the other, and
• the service was not a standard telephone service provided under the Universal Service Obligation.

Note: a bundled package of services is not the same as a “consolidated” billing arrangement. The services on a consolidated bill have generally been offered under separate unrelated contracts, but charges for those services are presented on a single bill for administrative convenience.

Last updated: 3 December 2007
Previous update: 22 December 2003