Rewriting the rules: Strengthening telco safeguards for the new world

Presenter: Cynthia Gebert, Ombudsman

Event: ACCC National Consumer Congress

Date and time: Thursday 16 June 2022, 9.35am

Duration: 10 mins

Transcript: Check against delivery

Media enquiries: TIO Media Team on 0437 548 540 or mediaenquiries@tio.com.au

I’ve been the Telecommunications Industry Ombudsman for six weeks, but my experience of phone and internet began in the late 90s, which I’m sure is the case for most of you in this room.

I grew up on a rice farm in regional NSW. Back then, if I wanted telephone service at my mum and dad's, I would have to stand under the overhead petrol tank – which is hardly the most sensible place to stand – just to get reception.

In a lot of areas across Australia, this kind of patchy service is still common, and that makes it hard for people in these parts of the country to truly participate in society the way that metro areas take for granted.

There’s the impacts of climate change and the reliability of Australia’s telecommunications to hold up during bushfires and floods, and although these impacts are felt hard in the regional and rural centres, the big cities can see the flow-on effect of damage to telco infrastructure too.

When consumers have poor phone or internet service, we see a recurring theme of helplessness and feeling at risk, knowing they have no way to contact emergency services if an emergency occurs.

And there’s also the impacts of the pandemic which catapulted Australia forward by many years in terms of how we use our internet and mobile phone services, and what we need them to do.

In this new world, reliable phone and internet is essential for work and school.

• It's essential to accessing healthcare and social services.
• Its essential to do your banking,
• and it's essential for social connection.

My sense is the telcos understand how important their role is for us to be functioning and participating members of society.

I also sense they’re increasingly comfortable with more self-service being pushed to our devices, because this means people must have phone and internet services like never before.

Because of this need, we have a real opportunity to design a new framework that effectively supports consumers who are struggling with the technology, struggling to pay for their services, and struggling to use phone and internet services that deliver the intended benefits of the push for self-service.

There is also the opportunity to meet the customer service needs for people who may not be as digitally literate or feel supported when not talking to a real live person.

Telcos are benefiting because of the decisions of government and business to drive consumers to their phone and internet services, but what work has been done to support and underpin this drive?

There is a real opportunity for the telco industry and government to reset their thinking on what is considered fundamental to how people live.

We also see the convergence of markets, where the same providers providing phone and internet services and energy, which is well-established as an essential service.

It’s time to see telecommunications as essential, and it’s time to take action to support the telco industry and its customers to operate and thrive.

It’s time to rewrite the rules governing telecommunications to safeguard consumers for this new world.

And how do we do this?

How do we start to protect tomorrow’s consumers today?

One mechanism to implement change is the Government’s Telecommunications Safeguards Review.

In 2018, the previous Federal Government announced it was reviewing Australia’s telecommunications consumer safeguards to prepare the framework for a post-2020 environment.

In announcing the Safeguards review, the Government recognised “the consumer safeguards we have in place today were mostly designed around fixed-line voice services delivered over the existing copper telephone network.

The ongoing relevance and usefulness of these protections is decreasing as Australia's telecommunications environment, and consumer use of telecommunications services, continues to change.”

This review recognised the need for change, and this was before the seismic shift instigated by the pandemic.

Part A of the review focused on complaints handling and consumer redress.

Part B looked at reliability of telecommunications services and Part C focussed on choice and fairness in the retail relationship.

Part C has not progressed beyond initial consultation, yet it has the potential to be the most fundamental set of regulatory changes to telco since 1997 when the Telecommunications Consumer Protection Code (or TCP Code) was introduced.

In our submission to Part C of the review we identified three recommendations that, if implemented, will go a long way to ensuring choice and fairness in the telco sector, and can contribute to shoring up the essentiality of phone and internet services:

The first recommendation is to introduce a registration scheme for telecommunications providers,

The second recommendation is to use direct regulation when it comes to consumer safeguards,

And the third recommendation is to ensure the telco regulator has strong powers to respond when things go wrong, and the ability to report transparently on complaints.

These recommendations are founded on insights and observations developed by our organisation over many years, expressed in systemic investigation reports and many policy submissions. I’ll explain these recommendations in a little more detail.

Recommendation one: a registration scheme for telecommunications providers.

Unlike other essential service sectors, the telecommunications sector does not have a registration, authorisation, or licensing scheme for service providers that sell directly to consumers.

Telco providers should be required to demonstrate they can satisfy the minimum capabilities required to deliver such an essential service to Australian consumers.

Why should just anybody be allowed to sell telco? Where’s the barrier to entry? Where’s the protection for consumers?

I keep being told the TIO has the most accurate list of participants in the telco sector when it seems to me it really should be the regulator who has this information.

The telecommunications market has outgrown the policy settings that prioritised competition.

The original policy intent of having no barriers to market entry and no registration requirement for providers was designed to open up competition after Telstra’s privatisation in 1997.

Given the broad changes to product and service delivery, and very healthy competition in a marketplace of over 1500 telco providers, now is the time to renew the policy settings to ensure there is proper regulation of the telecommunications market.

A registration scheme would ensure providers can meet the minimum requirements expected by consumers.

Recommendation 2: direct regulation when it comes to consumer safeguards.

The impacts of the pandemic have highlighted the need to align telco regulation with other essential services such as energy, where essential consumer protection rules are directly regulated.

The current co-regulatory model in telecommunications has the bulk of telco-specific protections residing in codes written by industry, and approved by the regulator ACMA. The TCP Code – is an example of this.

The current consumer safeguards in the TCP Code came into effect in 2019, prior to radical shifts in telco consumer behaviour that took place during the pandemic.

People and small businesses who complain to us tell us they view telecommunications in much the same way as they see other utilities. They make comparisons between the essential nature of utilities and the need for reliability.

Accountability and responsibility for the delivery of phone and internet services should sit with the government and the regulator.

In some cases it can be a matter of life or death.

For a medically vulnerable consumer, if they are not given high priority or treated with 'urgency' in having a working telecommunications service, there can be grave consequences.

Further, during the pandemic we heard stories where families needed to park their car outside the local public library just so their kids could access reliable and free wifi for schooling.

In this new world, government should regulate the minimum standards consumers can expect.

I’ve come from the energy and water sector, a sector that is much more directly regulated, and I can tell you first-hand that direct regulation has benefits for consumers and industry.

Introduction of direct regulation would promote consistent outcomes for consumers and guarantee a basic quality standard. 

And it would bring the telco sector in line with the policy approach in other essential areas, such as energy and water.

When the rules sit with the government, as they should, they then need to be enforced by a strong regulator.

That brings us to recommendation three.

The regulator, the Australian Communications and Media Authority, should have strong powers to respond when things go wrong, and the ability to report transparently on complaints.

In my experience, for an Ombudsman scheme to be effective it needs a strong regulator.

This means a regulator with tools that are stronger than infringement notices when things go wrong. 

ACMA has reported that, at the end of December 2021, Australia had over 44 million services in operation[1] being delivered by over 1,500 service providers.

For the ACMA to monitor whether these telcos are following the rules, and take action when they aren’t, it will need more tools, more resources, and more funding.

Additionally, if the ACMA’s data collecting and reporting capabilities were enhanced it would enable market performance transparency.

This would give consumers, industry and government visibility over the issues driving complaints.

This visibility could enhance informed choice for consumers based on a telco’s performance.

The TIO reports quarterly on phone and internet complaints to our office, including the Top 10 telcos for complaints made to our scheme.

But we can’t rely on our data alone, it isn't enough.

We need to understand the full picture in internal dispute resolution, where consumers are making their complaint directly with their provider.

To this end, the ACMA should be empowered to name telcos in its public reporting.

Transparent reporting can provide all stakeholders with comprehensive information on the telecommunications market in Australia.

To be fit for purpose, it is important essential consumer protection rules reflect the current state of the market, its participants, and the continuously evolving nature of telecommunications products and services.

Both voice and internet services are increasingly essential to the everyday lives of individuals and businesses.

Technological developments and innovative product choices have also evolved significantly.

And while this means more options for consumers, it can also make it harder for consumers to engage with the market and make informed choices about an essential service.

We ask the new Government to legislate adequate consumer protections to protect consumers who may suffer without full access to this essential service.

The Telecommunications Industry Ombudsman calls on the new Government to ensure the Telecommunications Consumer Safeguards Review’s “Part C Choice and Fairness” is seen through to completion.

This important piece of work has the opportunity to embed the essentiality of phone and internet services in our personal and business lives, for now and the future.

The Government, with the help of the ACCC, is considering options for a Digital Platforms Ombudsman, a huge leap forward for consumers and small businesses needing help to resolve problems with digital platforms such as Facebook, Google and Twitter.

And the Telecommunications Industry Ombudsman is ready to play whatever part is required to bring this to life.

But while a Digital Platforms Ombudsman has the power to transform the way Australians have their problems resolved with the tech giants, there are basic actions the Government can take to protect consumers and help the telcos meet the essential needs of today’s phone and internet consumers.

How do we protect tomorrow’s consumers in this new world?

By rewriting the rules today to strengthen consumer safeguards for Australian telco consumers.

Thank you.

[1]ACMA’s “Telco complaints-handling performance report” for quarter ending Dec 21.