Unit pricing: Optus warned it wouldn’t be easy

Unit Pricing:  Optus warningA year before the 2012 Telecommunications Consumer Protections Code was launched, Optus warned that unit pricing was only suitable for ‘basic, simple products’ and that unit pricing fans needed to ‘be careful what you wish for’.

It turns out that Optus may have been right.

Telcos have made a real effort

TCPCode.com.au thinks that the industry has made a genuine effort to comply with the unit pricing rules, which came into force under the TCP Code on 27 October 2012.  But it turns out that the rules either aren’t clear enough, or haven’t been explained well enough, or maybe aren’t even appropriate, to deliver their anticipated benefits.

The issues

Serious questions remain open about what products the rules apply to, what numbers have to be stated, and whether (and how) they apply to bundles.  We’ve discussed some of these in earlier articles.  Different telcos interpret and apply the rules differently, and even the regulators may not necessarily agree on how they work, or should work.

This doesn’t mean that unit pricing is entirely ineffective or making no contribution to consumer welfare.  On the contrary, there’s plenty to be pleased about.  But unit pricing is held out as one of the new TCP Code’s central reforms, and if it isn’t working as it should in many cases, the value of the Code is significantly diminished.

The history

As reported on iTnews.com.au last year:

  • Optus [spoke] out against proposals to introduce unit pricing across telcos, warning common mobile and broadband products could not be priced the same way as ‘boiled rice’.
  • [Optus director of government and corporate affairs Maha Krishnapillai] warned the proposition would be difficult to accomplish.
  • Krishnapillai said that: ‘Some form of unit pricing will be possible but because of the number of different plans and the different ways people use things, I think in some ways that will be harder to do than people realise’.
  • ‘Be careful what you wish for,’ he said, warning that unit pricing would only work easily for ‘basic, simple products’.
  • He said, ‘What worries me a bit is, because of the thousands of plans and options that are across fixed and mobile and everything else, unintended consequences of unit pricing we’ll have to watch very carefully.’

And in another article, IT news reported:

  • The ACMA had initially proposed to expose unit prices not only for a standard two minute call but also for the same call once a consumer exceeded their monthly call value.
  • A spokesman for the regulator said late yesterday it had abandoned the idea based on industry consultation because there was not one set rate for calls once a consumer exceeded their plan’s value.

The complexities suggested by the above comments are now evident in the marketplace.  And ACMA hasn’t entirely let go of the idea of quoting two prices to satisfy the unit pricing rules.

So what’s the solution?

Unit pricing guidanceThe industry needs some guidance from the regulators as to how unit pricing should be approached in various scenarios.  That won’t be easy, because ‘guidance’ can’t be used to re-write the law.  But telcos seem willing to approach unit pricing in the right spirit, so if the true spirit and intent of the TCP Code can be explained more thoroughly and consistently, we may see the fullest possible benefits of the new rules.


About Peter Moon

A telco lawyer with a truckload of experience
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