‘Incidental Service Providers’ and the TCP Code

One kind of ISP deserves special consideration when it comes to the TCP Code. These are better described as ‘Incidental Service Providers’ than ‘Internet Service Providers’. A typical example is an IT support company that also supplies a few internet access services to its customers, as part of general support arrangements.

Fortunately, many of these may not be covered by the TCP Code, even if their customer spends less than $20,000 a year on the telco component. We say ‘fortunately’ because we’re not aware of any evidence that small businesses are in dire need of consumer-type protection from their IT support, and the costs of Code compliance would be prohibitive for suppliers who are only supplying a few services, more to support their client than as a real money making part of their business.

First impression: The Code applies

At first glance, a company that provides a customer with an SDSL link between two offices at $1,000 a month is subject to the TCP Code, with its 1,000+ separate requirements.

But first glances can deceive. There are two reasons we consider this provider may not be covered by the Code.

It’s all in the definition of ‘consumer’

You may have heard that the ‘extended’ definition of ‘consumer’ in the TCP Code brings in businesses with an annual spend no more than $20,000. But you also need to note two things:

  • Nothing says that figure only refers to the customer’s telco spend. The Code just refers to it as the ‘annual spend with the supplier’.  If the client spends eg $30,000 a year with the support company, including $12k on the comms link, a plain reading of the Code says that the ‘annual spend with the supplier’ is more than $20k.
  • There’s another carve out from the extended definition.  A business that spends no more than $20k is not covered by the Code if it has ‘a genuine and reasonable opportunity to negotiate the terms of the [telco] contract’.  Now, IT supports and other ‘incidental service providers’ generally are willing to negotiate terms.  They have to, in order to win a lot of business.  So this carve out may often apply as well.

A couple of further comments

In reaching the conclusion that a plain reading of the Code shows that ‘incidental service providers’ can count the customer’s overall spend when applying the $20k test, we don’t think that is an inappropriate result.  As we noted above, there is no evidence (that we have heard) that businesses need protection in this situation.

And we think there’s a conceptual link between the two bullet points above.  If a customer spends eg $100k a year with a medium to small support company, and $5k of that is telco spend, the customer has huge bargaining power with the support … even if they choose not to exercise it.  Heck, if every private mobile phone customer in Australia was in a position to move revenue equal to twenty times their phone spend to another provider, if they were unhappy with the current one, we probably wouldn’t need a TCP Code for anybody.

Wrapping up

The consequences of ignoring the Code, if it potentially applies to you, can be severe.  Nobody should glibly assume it doesn’t really apply to them.  If you supply carriage services, you need to carefully consider where you stand.

But we are confident that, on proper examination of the background, many ‘incidental service providers’ won’t need to conform to the 2012 TCP Code.



About Peter Moon

A telco lawyer with a truckload of experience
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